Crop Diversification in the Asia-Pacific region - United Nations in ...

6. GOVERNMENT POLICIES AND STRATEGIES FOR CROPDIVERSIFICATIONGovernment policy was to reach self-sufficiency in most of the essential food cropsafter independence. Hence, government set strategies to fulfill the above policy were:a. To increase the extent under cultivation during the last four decades, the governmentplanned and commissioned several major irrigation schemes and increased theirrigable land extent to 483,000 ha.b. Seed and planting material production was handled mainly by the governmentinstitutions and seed farms were operated to meet the national demand of seed andother planting materials. Importation of seed potato was mainly handled by thegovernment.c. Subsidy schemes were formulated to encourage high input usage, especially fertilizerwhich was provided under the subsidy.d. Crop insurance was introduced to minimize risks.e. Guaranteed prices or minimum prices were set and marketing was sufficientlyintervened to activate the pricing policy. Government institutions such as the PaddyMarketing Board and the Marketing Department were established to purchase theagriculture produce.However, with the introduction of an open market system in the early 1980’s some ofthose policies were relaxed. Subsidy for fertilizer was reduced and the private sector wasprimarily responsible for marketing the agriculture produce. The government institutions formarketing were not functioning effectively. Although there was a minimum price for most ofthe commodities, the government could not maintain it as the state institutions responsiblefor marketing were ineffective. Government involvement in seeds and other plantingmaterial production was reduced to a substantial degree and the private sector participationwas encouraged and promoted. The cost of production of crops increased as the fertilizersubsidy and most of the direct and indirect subsidies were reduced.Although the import restrictions were relaxed, a certain level of protection wasmaintained. However, these measures were not sufficient to avoid the decline in localproduction of chillies, onion, pulses and potato to a significant extent.Currently, the government adopts the trade liberalization policy where GATT,SAFTA and other regional trade agreements promote free trade. This makes most of thecrop production at the existing level of technology under the present wage rate comparativelydisadvantageous. Hence, the imported produce competes with the local commodities anddeprives the local farmer of his self-employment. For example, the extent of potatocultivation, which was 4,430 ha in 1996 dropped to 1,119 ha during the last three years.However, the production area of condiments such as pepper and cinnamon has increased asSri Lanka has a significant comparative advantage in condiment production.127