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Sri Lanka Connecting Regional Economies (Usaid/Core) SRI LANKA CONNECTING REGIONAL ECONOMIES (USAID/CORE) Assessment of Horticulture in Eastern, Uva, and North Central Provinces of Sri Lanka November 2009 This publication was produced for review by the United States Agency for International Development. It was prepared by AECOM International Development. Prepared under USAID contract Number 383-C-00-08-00500-00 Sri Lanka Connecting Regional Economies (USAID/CORE) Program AECOM Principal Contact: David Wall Engagement Manager AECOM International Development 2101 Wilson Blvd, Suite 700 Arlington, VA 22201 Tel: 1-703-682-0063 or 1-703-522-7444 Email: [email protected] In Sri Lanka: Melani Schultz AECOM Chief of Party USAID/CORE Program 34 Gower Street Colombo 5 Tel: 94-115-855-574 or 94-112-553-082 Fax: 94-112-553-036 Email: [email protected] USAID/CORE Horticulture Assessment ii SRI LANKA CONNECTING REGIONAL ECONOMIES (USAID/CORE) Assessment of Horticulture in Eastern, Uva, and North Central Provinces of Sri Lanka Submitted By: Mr. H. Samaratunge Mr. Paul Sommers Mr. John W. Varley DISCLAIMER The author’s views expressed in this publication do not necessarily reflect the views of the U.S. Agency for International Development or the United States Government. USAID/CORE Horticulture Assessment iii Table of Contents Acronyms .................................................................................................................................... 5 Executive Summary ..................................................................................................................... 6 1. Horticulture Sector and the National Economy.................................................................. 9 1.1 Introduction ............................................................................................................................. 9 1.2 Horticulture and GDP ............................................................................................................. 10 1.3 Production, Consumption and Exports .................................................................................. 11 1.4 Imports ................................................................................................................................... 12 1.5 Productivity – National Trends .............................................................................................. 13 1.6 Conclusions ............................................................................................................................ 14 2. Main Horticulture Products in Eastern, Uva, and North Central Provinces ..................... 15 2.1 Primary Producers - The Farmers .......................................................................................... 15 2.2 Input Suppliers ....................................................................................................................... 21 2.3 Agricultural Credit .................................................................................................................. 21 2.4 Marketing and Middlemen .................................................................................................... 21 2.5 Direct Buyers, Processors and Exporters ............................................................................... 22 2.6 Government ........................................................................................................................... 23 2.7 Development Agencies and Programs ................................................................................... 24 3. Horticulture Sector - Constraints and Success .................................................................. 25 3.1 Introduction ........................................................................................................................... 25 3.2 Constraints on Horticulture Sector Development ................................................................. 25 3.3 Recent Successes with Export Market ................................................................................... 28 4. Horticulture Sector Development – Way Forward ........................................................... 31 4.1 Overview ................................................................................................................................ 31 4.2 Fundamentals ........................................................................................................................ 31 4.3 Promising Crops and Opportunities ....................................................................................... 33 4.4 Policies ................................................................................................................................... 39 4.5 Implementation Issues ........................................................................................................... 41 Appendices ................................................................................................................................ 43 Appendix A: Maps of Agriculture Growing Areas in Sri Lanka .......................................................... 43 Appendix B: Contact Information - Horticulture Sector ................................................................... 46 Appendix C: High Potential Horticulture Crops for Development in NCEUP .................................... 57 Appendix D: Sri Lanka’s Import and Export Data of Selected Fruit Crops ........................................ 69 Appendix E: Extension Advice Available CD-ROMs from Department of Agriculture ...................... 70 USAID/CORE Horticulture Assessment 4 Acronyms AESD - Agriculture and Environment Statistics Division BIA - Bandaranaike International Airport BOI - Board of Investment BOO - Build Own and Operate CORE - Connecting Regional Economies DOA - Department of Agriculture FCRDC - Fruit Crop Research and Development Centre FFC - Fresh Fruit Company FS - Farmer Societies GDP - Gross Domestic Product Ha - Hectares HORDI - Horticulture Crop Research and Development Institute IFCO - International FoodStuff Company (Pvt.) Ltd. LKR - Sri Lankan Rupees MT - Metric Tons NCECP - North Central, Eastern and Uva Provinces SLEDB - Sri Lanka Export Development Board SLFVPPEA - Sri Lanka Fruits and Vegetable Producers, Processors and Exporters Association USAID - United States Agency for International Development USD - U.S. Dollars VAT - Value Added Tax USAID/CORE Horticulture Assessment 5 Executive Summary Sri Lanka has promising -- but virtually untapped -- potential as an exporter of high-value horticulture products to nearby markets in the Maldives and the Persian Gulf. Because of its tropical location and two monsoons, it can grow many types of tropical fruits and vegetables year round. In addition Sri Lanka benefits from its proximity and regular shipping connections to these markets. Faster and more frequent delivery times means that fruits and vegetables exported from Sri Lanka will arrive fresher than produce shipped from more distant countries. Freshness plus the lower cost of maritime transport are strong reasons for “best practice” horticulture enterprises to locate in Sri Lanka rather than in more distant countries. A few forward-looking entrepreneurs have already begun to invest in and develop these opportunities, but constraints, including (a) policies that make it difficult to practice horticulture on a large scale, and (b) supply chain inefficiencies in the island have kept Sri Lanka from benefiting even more from its advantages and opportunities. This report looks at the horticulture sector from the viewpoint of development opportunities and concludes that more effort to build its exports would be advantageous to the country overall. Horticulture has a strong tradition throughout Sri Lanka. Many farmers practice integrated farming that includes small scale, home garden cultivation of fruits and vegetables. This small scale of cultivation scattered over large distances makes quality control, collection and consolidation for export more difficult and more expensive. One way to overcome these problems is to integrate a large, commercial scale orchard in an area that can also partner with smaller farmers in the neighboring area who are willing and able to meet standards required. This is a strategy already been implemented successfully on a small scale in some districts of the North Central, Eastern and Uva Provinces. Early results indicate that it is a practical approach to overcoming constraints and raising rural incomes in a way that can be sustained from export earnings. The Department of Agriculture’s Five-Year Plan 2006-2010 for developing the horticulture sector, emphasized the importance of developing tropical fruits for exports, plus the need for larger, commercial scale horticulture enterprises to do so. Development of popular traditional horticulture products such as onions and chilies will also benefit many rural farmers in post-conflict zones, especially if farmers plant higher yielding varieties, adopt best agricultural practices and have access to village collection centers and simple storage facilities that will enable farmers to store some produce for sale outside the peak harvest season. In recent years, Sri Lanka has imported and consumed three times more onions than it has produced. Given the advent of peace there is every reason to expect that additional production from Northern areas will soon reach Sri Lanka’s markets, increasing the total domestic supply and reducing the amounts imported, and also helping to lower retail
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