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The country's economy is limping back to normalcy after the recession in 2001. This year economists expect a small growth of around three percent in Gross Domestic Product despite the continuing adverse world market environment. However to get growth to a level of around eight percent which will mean benefits to most sectors of the population there would have to be re-thinking in a number of sectors of the economy.

The economy contracted by two percent overall last year, pulled down mostly by the decline in agriculture, which recorded a three percent decline. Contraction in the industrial sector, which is vulnerable to world market conditions was two percent and the service sector the decline was a marginal 0.5 percent.

In the agricultural sector the production of Sugar, Paddy and Coconut showed sharp decreases with even Tea and Rubber recording a drop. Correspondingly prices rose in the local market of these commodities placing a burden on the economy and the wage earners.

Contributing factors to the decline in agriculture were many. Primarily the plantations and the Paddy farmers were hit by drought conditions. Tea plantations in the hill country were the worst hit with smallholders in the south recording higher yields than the big time plantations. There were also other reasons. Economists point out that ad hoc changes in tariff structures saw a distortion in pricing that affected farmers.

This was unplanned and ill-advised government intervention that hit farmers on the one hand and consumers on the other. While housewives had to pay more for their basket of vegetables, farmers committed suicide because they could not sell their produce. If market forces had been permitted to rule here, it would have prompted both producers and distributors to react to market signals more positively and meet shortages head-on.

For decades Sri Lanka has been aiming at self-sufficiency in food. While it may have been a good idea 30 years ago in this age of globalisation such an introverted policy would be disastrous. While Sri Lanka has become a full member of the World Trade Organisation, the state continues to pursue policies that smack of the old self-sufficiency syndrome.

One of the many things that could be done is to allow heavier private sector investment in the domestic agricultural sector to develop commercially viable agricultural products. These products should be the best suited to Sri Lanka and must aim at both a domestic and international buyer. It is not worth our trying to grow potatoes in large quantities at high cost when cheaper spuds can be imported from India and Pakistan. It would be better for us to grow Carnations on that land instead and earn much more money by exporting the flowers.

But to encourage private sector investment in agriculture or floriculture, there needs to be new thinking among the policy-makers. Tax breaks need to be given to individuals or companies to go back to the land.

There has to be research done quickly to find out what best we can grow which we can sell at home and export so that our farmers can lead a more secure life. Most importantly politics must not be allowed to interfere in this decision-making. There is an encouraging note from the government in this regard in the statement made by Minister Lakshman Kiriella who reassured the Plantation Companies on Saturday that the government would not interfere in the wages issue.

A strong agricultural sector that will show resilience is vital for the country to be put on the path of recovery. But to make this sector stronger we need new policies that leave the old ones behind. For that our policy-makers have to be courageous and think out of the box. If we have the guts to sue for peace with an enemy we fought for twenty-years, there should be no reason why we cannot re-do our agricultural policy.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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