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Proposals to Eliminate the Mismatch of Demand and Supply Cultivated Agricultural Products

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PROPOSALS TO ELIMINATE THE MISMATCH OF DEMAND AND SUPPLY CULTIVATED AGRICULTURAL PRODUCTS
1. Sri Lanka’s population is 20.8 Million with a growth rate of 1.0% by year 2011 . The boundary of the island covers 65610 of Square Kilometres. Per Capita GDP was US $ 2836 by year 2011 and was composed with agriculture 11.2%, industry 29.3%, and services 59.5%. Sri Lanka had an agriculture based economy when we liberated from the British rule by 1948. There were two main categories as export and subsistence agriculture. Yet there was a very week relationship in between these categories. 85% of the total population lived in rural areas and they made their living by agriculture related activities. Agriculture was under the private sector by the time we gained freedom. Sustainable agriculture mainly depended on field crops such as rice, millet, sweet potato and maize and export agriculture depended on major plantation crops such as tea, coconut and rubber and on minor export crops such as cinnamon, pepper, cocoa and coffee. These export crops had a contribution of approximately 33% to the gross domestic production of the country. Even though livestock management was a main aspect of Sri Lankan agriculture it was neglected through the last few decades. Fishery was also such neglected field. But according to the national policy of the country it is a positive trend to see that agriculture has given a priority. All the governments established in the country after the liberation implement number of activities for the development of agriculture such as infrastructure, irrigation, agricultural loans, establishment of institutional structure for inputs and extension services. Government tends to decide the seasonal prices, buy and market agricultural commodities. Government also interferes with exporting essential food commodities and their distribution. Local agriculture has moved away from subsistence level through the last six decades. According to the free economic policies implemented from 1977, agriculture was commercialized. But when compared with national development targets it is visible that agriculture has not reached to the anticipated levels of development goals.

2. The government of Sri Lanka has identified that there are few import essential food commodities that can be cultivated in house. The main drawback of this issue that the government has faced is the mismatch of the demand and supply of these cultivated agricultural products. This mismatch is a result of various governing facts and that include the diversity of facts starting from the cultivator to the government policies.

AIM

3. The aim of this paper is to identify the governing facts for the mismatch of the demand and supply of cultivated agricultural products and to proposed possible acts to eliminate or minimize the mismatch.

FRUIT AND VEGETABLE PRODUCTION AND MARKETING SYSTEM

4. Sri Lanka has a total population of about 20 million, of whom nearly 70 percent live and work in rural areas. In 2005, agriculture contributed 17% of the GDP, down from 35% in 2000 (World Bank, 2006). Agriculture accounts for about a third of the country’s labour force. Despite a relatively high per capita income of around US$1 100,Sri Lanka shows a significant income disparity at the regional level highlighting marked rural and urban differences. The sector problems are compounded by the sluggish growth trend in agriculture over the last two decades – around 1.7 percent per annum –while the overall economy has been growing around 5 percent. In the last two decades, the population has shown a major rural-to-urban migration, notably to Colombo and its adjacent suburbs. In terms of supply, the bulk of the fresh fruit and vegetables produced in the country are grown in the drier parts of Sri Lanka, which accounts for two-thirds of the country’s physical land area. This area typically produces “lowland”, hot climate fruits and vegetables. Because of its seasonal rainfall, fresh fruit and vegetable production in the dry zone is highly seasonal. On the other hand, in the wet zone, due to a more reliable rainfall intensity and distribution, a wider range of fruit and vegetables are cultivated on a year round basis. The central hills of the country, with their milder climatic conditions, produce temperate vegetables, typically known as “upland” vegetables, throughout the year.

KEY FEATURES IN CONVENTIONAL FRESH FRUIT AND VEGETABLE SUPPLY CHAINS

5. Wide seasonal fluctuations in production with a peak in January to March and a trough in May to June is a predominant feature of the supply chain for fresh fruit and vegetables in Sri Lanka. Inadequate storage facilities lead to surpluses during the harvest period and extreme shortages during the off-season. The system therefore exhibits wide seasonal price variation. This situation is more evident in the case of fruits. During the peak supply season, the fresh fruit and vegetable supply system typically records wastage of around 30 to 40 percent. Prior to the introduction of economic liberalization policies in 1980s, the fresh fruit and vegetable marketing system in Sri Lanka was dominated by state sector interventions including the operation of commodity marketing boards, purchasing mechanisms and other interventions. This period was typically characterized by: (i) high levels of Market analyses 44 production and price risks faced by producers, (ii) the presence of multi-layered and long marketing chains, (iii) poor product quality at the retail end with little or no choice, and (iv) high price uncertainty for the consumer

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