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Evaluation of Agriculture and Natural Resources Sector in Sri Lanka

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Evaluation of Agriculture and Natural Resources Sector in Sri Lanka Evaluation Working Paper Sri Lanka Country Assistance Program Evaluation: Agriculture and Natural Resources Sector Assistance Evaluation August 2007 Supplementary Appendix A Operations Evaluation Department CURRENCY EQUIVALENTS (as of 01 August 2007) Currency Unit — Sri Lanka rupee (SLR) SLR1.00 = $0.0089 $1.00 = SLR111.78 ABBREVIATIONS ADB — Asian Development Bank GDP — gross domestic product ha — hectare kg — kilogram TA — technical assistance UNDP — United Nations Development Programme NOTE In this report, “$” refers to US dollars. Director General Bruce Murray, Operations Evaluation Department (OED) Director R. Keith Leonard, Operations Evaluation Division 1, OED Evaluation Team Leader Njoman Bestari, Principal Evaluation Specialist Operations Evaluation Division 1, OED Operations Evaluation Department CONTENTS Page Maps ii A. Scope and Purpose 1 B. Sector Context 1 C. The Country Sector Strategy and Program of ADB 11 1. ADB’s Sector Strategies in the Country 11 2. ADB’s Sector Assistance Program 15 D. Assessment of ADB’s Sector Strategy and Assistance Program 19 E. ADB’s Performance in the Sector 27 F. Identified Lessons 28 1. Major Lessons 28 2. Other Lessons 29 G. Future Challenges and Opportunities 30 Appendix Positioning of ADB’s Agriculture and Natural Resources Sector Strategies in Sri Lanka 33 Njoman Bestari (team leader, principal evaluation specialist), Alvin C. Morales (evaluation officer), and Brenda Katon (consultant, evaluation research associate) prepared this evaluation working paper. Caren Joy Mongcopa (senior operations evaluation assistant) provided administrative and research assistance to the evaluation team. The guidelines formally adopted by the Operations Evaluation Department (OED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of the management of OED, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. 80 o 00'E 81o 30'E SRI LANKA AGRICULTURE AND NATURAL RESOURCES PROJECTS t 1986--1995 i Kankasanturai a r t S Agriculture Production, Agroprocessing, and Agrobusiness k Kodikamam l a Jaffna Loan 0899-SRI Perennial Crops Development Project P Loan 0955-SRI Smallholder Tea Development Project Loan 1402-SRI Plantation Reform Project Kilinochchi Agriculture Sector Development P a l k B a y Loan 0933-SRI Agriculture Rehabilitation Project Mullaittivu Fishery Tanniyuttu Loan 1201-SRI Fisheries Sector Project Mankulam Environment and Biodiversity Talaimannar 9 o 00'N NORTHERN Loan 0816-SRI Land Use Planning Project 9 o 00'N Puliyankulam Mannar Forestry Loan 1183-SRI Participatory Forestry Project Vavuniya Gulf of Mannar National Capital Trincomalee Provincial Capital Horowupotana City/Town Anuradhapura National Road Railway NORTH CENTRAL River Provincial Boundary Tambuttegama Boundaries are not necessarily authoritative. Kekirawa Puttalam Polonnaruwa Valaichchenai Welikanda Dambulla EASTERN Batticaloa NORTH B a y o f B e n g a l Chilaw WESTERN CENTRAL Kurunegala Madampe Matale Polgahawela Mawanella Kandy Ampara Negombo Warakapola Minuwangoda Kegalle Gampola Gampaha o Badulla o 7 00'N Talawakele Nuwera Eliya 7 00'N Colombo Avissawella Welimada U V A Hatton SRI JAYAWARDENEPURA KOTTE Monaragala Moratuwa Bandarawela Ratnapura WESTERN Wellawaya Kalutara Pelmadulla Balangoda SABARAGAMUWA Alutgama Elpitiya Ambalangoda N Hikkaduwa Akuressa SOUTHERN Hambantota 0 10 20 30 40 50 Galle Matara Tangalle Kilometers I N D I A N O C E A N 80 o 00'E 81o 30'E 07-0278a HR 80 o 00'E 81o 30'E SRI LANKA Agriculture Production, Agroprocessing, and Agrobusiness AGRICULTURE AND Loan 1552-SRI Second Perennial Crops Development Project NATURAL RESOURCES PROJECTS Loan 1639-SRI Tea Development Project 1996-- 2005 Agriculture Sector Development Loan 1462-SRI North Central Province Rural Development Project Kankasanturai t Loan 1913/14-SRI Plantation Development Project i a r Loan 2027-SRI North East Coastal Community Development Project t Kodikamam S Jaffna Fishery k l a P Loan 1910/11-SRI Aquatic Resources Development and Quality Improvement Project Kilinochchi Environment and Biodiversity P a l k B a y Loan 1716-SRI Coastal Resource Management Project Mullaittivu Loan 1767-SRI Protected Area Management and Wildlife Conservation Project Tanniyuttu Forest Mankulam Talaimannar Loan 1744-SRI Forest Resources Management Sector Project 9 o 00'N NORTHERN 9 o 00'N Puliyankulam Water Resource Management Mannar Loan 1545-SRI Upper Watershed Management Project Loan 1757-SRI Water Resources Management Project Vavuniya Gulf of Mannar National Capital Trincomalee Provincial Capital Horowupotana City/Town Anuradhapura National Road Railway NORTH CENTRAL River Provincial Boundary Tambuttegama Boundaries are not necessarily authoritative. Puttalam Kekirawa Valaichchenai Polonnaruwa Welikanda Dambulla EASTERN Batticaloa NORTH B a y o f B e n g a l Chilaw WESTERN CENTRAL Kurunegala Madampe Matale Polgahawela Kandy Ampara Mawanella Negombo Warakapola Minuwangoda Kegalle Gampola Gampaha o Badulla o 7 00'N Talawakele Nuwara Eliya 7 00'N Colombo Avissawella Welimada U V A Monaragala SRI JAYAWARDENEPURA KOTTE Hatton Moratuwa Bandarawela Ratnapura WESTERN Wellawaya Kalutara Pelmadulla Balangoda SABARAGAMUWA Alutgama Elpitiya N Ambalangoda Hikkaduwa Akuressa SOUTHERN Hambantota 0 10 20 30 40 50 Galle Matara Tangalle Kilometers I N D I A N O C E A N 80 o 00'E 81o 30'E 07-0278b HR A. Scope and Purpose 1. This evaluation is part of the Country Assistance Program Evaluation for Sri Lanka. It takes sector context into account and evaluates the strategies and assistance of the Asian Development Bank (ADB) in the agriculture and natural resources sector.1 The positioning and performance of ADB’s sector strategies and assistance were analyzed. This evaluation assesses the contribution of ADB to development results in Sri Lanka and identifies development issues and lessons in the agriculture and natural resources sector pertinent to the preparation of the next country partnership strategy. Situations discussed herein were updated in March 2007. B. Sector Context 2. Evolving Political, Social, and Economic Setting. Sri Lanka’s development efforts to establish an open economy since late 1970s has subjected agriculture to various policy reforms to increase export, improve productivity, diversify and commercialize production, liberalize trade, improve access of the poor to productive assets and support services, and to foster private sector participation. To date, the road to achieving agricultural growth has been affected by political and social dynamics and equity considerations. Agricultural development has continued to face barriers to sustainable growth and poverty reduction, while measures are needed to avoid and mitigate resource degradation to foster a balance between economic activities and ecological functions. Against this background, the following highlights key issues and challenges facing the agriculture sector. 3. Sri Lanka’s land area (6.55 million hectares [ha]) is classified as dry, wet, and intermediate based on the rainfall it receives. Land is used for different purposes, and 31% is under agriculture. The country’s water resources come primarily from rainfall which annually provides nearly 13 million ha meters of water to support agriculture, industry, and domestic uses. However, scarcity and poor quality are issues in some localized areas. In 2005, agriculture accounts for 17% of Sri Lanka’s gross domestic product (GDP) and employs about one-third of the country’s labor force.2 The sector’s share is almost one third of the GDP share of the services sector (56%) and two thirds that of industry (27%). Agricultural commodities, primarily plantation or estate crops, contribute to about 20% of the country’s export earnings. Sri Lankan agriculture has traditionally been dominated by the production of rice and estate crops such as tea, rubber, and coconuts.3 Smallholders also cultivate tea. About 40% of tea and rubber lands are in the estate plantation sector, while the rest are with smallholders and private estates. In 2002, the estate sector contains the largest share of households living in poverty: estate (30%), national (23%), rural (25%), and urban (8%). Altogether with a workforce of about 650,000 people, tea plantations generate from $600 million to $700 million annually. In the last two decades, the sector has gradually diversified into other non-plantation crops,4 which now account (excluding fisheries and livestock) for nearly two thirds of the agricultural GDP (Figure 1). Livestock (comprising cattle, buffalo, swine, goat, sheep, and poultry) accounted for 1.2% of total GDP, 5.6% of the agricultural GDP, and supplied 20% of domestic milk requirements in 1 ADB. 2006. Guidelines for the Preparation of Country Assistance Program Evaluation Reports. Manila. Available: http://www.adb.org/Documents/Guidelines/Country-Assistance-Program/default.asp 2 Agriculture includes fisheries, forestry, and livestock, and is hereafter referred to collectively as agriculture or agriculture and natural resources, unless specified otherwise. 3 ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Sri Lanka for the Plantation Development Project. Manila. 4 Other crops refer to non-plantation and subsidiary food crops such as potatoes, onions, maize, and high value crops such as fruits, vegetables, herbs, and spices. 2 2005.5 Among livestock, the poultry industry registered the highest
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