Country Focus: Sri Lanka

by Intern Intern1
Share This:

Sri Lanka's agricultural heritage is rooted in the 19th century tea, rubber and coconut plantations established by the British, but this sector now enjoys greater diversity.

Agricultural policy. Sri Lankan agriculture has been constrained by strong controls on land ownership and use, trade and pricing, but the government is slowly moving away from such policies. A goal of diversified, market-oriented agriculture is replacing the idea of self-sufficiency in rice production. Because rice production is expensive and labor-intensive, more Sri Lankan farmers are turning to crops like vegetables, edible legume seeds and possibly maize. Government subsidies for products and inputs like flour, rice and fertilizer remain in place.

Flour milling. Rice is still the staple grain in the Sri Lankan diet, but consumption has declined because of the growing popularity of wheat flour. A highly subsidized flour distribution program is now being phased out, but flour consumption remains strong, at an average of 38 kg (or 53 kg of wheat) per person in recent years.

Bread is increasingly popular with both urban and plantation consumers, and about 80% of all flour is used in its production. Noodles, pasta and other baked products consume 20%.

The country's sole flour mill produces almost all of the 57,000 tonnes of wheat flour consumed by Sri Lankans each month; a small amount of flour is sometimes imported by the government. The privately owned Prima Mill is located near the port at Trincomalee on the island's east coast; construction of a new, private mill at Galle has been proposed.

Prima Mill has a daily production capacity of 3,200 tonnes, wheat equivalent (67,000 tonnes per month), storage capacity of 80,000 tonnes and a 20-year agreement with the government to mill imported wheat. It produces an all-purpose flour using equal parts of hard and soft wheat, retaining wheat bran and other byproducts as payment.

The Food Commissioner distributes flour to cooperative outlets at a pre-determined price via coastal vessel, truck and rail; the agency receives a service charge for handling and storage. Cooperatives then sell flour to bakeries and other users.

Because Sri Lanka's climate prevents wheat from being cultivated on the island, all wheat must be imported. The Cooperative Wholesale Establishment, a government-run company, oversees all imports; efforts to privatize the C.W.E. currently appear to be on hold.

Sri Lanka imported 950,000 tonnes of hard and soft wheat in 1995-96, and imports were expected to reach 1 million tonnes in 1996-97. A small amount of flour is sometimes imported as an emergency measure. As of Jan. 1, 1997, government-held wheat stocks were close to 55,000 tonnes of wheat and 15,000 tonnes of wheat flour.

Rice milling. Rice provides almost 40% of the average Sri Lankan's daily caloric intake, but average annual consumption has dipped to 95 kg per person, compared with 105 kg in 1993. Lower consumption is partly due to steep prices resulting from a 7% drop in production last year.

Price supports are maintained by the Paddy Marketing Board, but the government organization's operations have been constrained by lack of funds, infrastructure and manpower since 1990. The P.M.B. hasn't changed support levels, pegged at Rs7.42 per kg in 1996, in four years, and its future is uncertain.

Rice is cultivated in the maha (spring harvest) and yala (fall harvest) seasons. Total production for 1995-96 fell 6% to an estimated at 1.55 million tonnes following a severe drought. Assuming normal rainfall in 1997, production should rebound, reaching 1.7 million tonnes. Some experts predict an increase in rice production, but continuing ethnic violence discourages farmers and makes much growth unlikely. Labor shortages, rising wages and high fuel costs also could limit growth.

Sri Lanka's rice milling industry is antiquated; more than 6,000 small mills, each with daily capacity of less than 1 tonne, are spread across the island. Little effort has been made to modernize the milling industry, although a proposal to import milling machinery has been introduced.

Livestock and feed. Consumption of fish and fish products, other staples in the Sri Lankan diet, is also declining. The ongoing war has reduced fishing operations along the coasts and curtailed national supplies. Sri Lankans are turning to chicken, and annual consumption has grown from 0.9 kg in 1991 to an estimated 2.2 kg in 1995.

There are now about 100,000 poultry producers and broiler farms, ranging from small backyard ventures to large operations, and experts predict the industry will grow 20% over the next five years. The feed industry is likely to track that growth. Demand for maize is expected to double, reaching 250,000 tonnes in the next five years. Sri Lanka produces only 20,000 to 30,000 tonnes of maize each year. Almost all feed ingredients except fishmeal, rice polish and coconut by-products are imported.

Trade. Sri Lanka is a founding member of the World Trade Organization and a contracting party to the General Agreement on Tariffs and Trade, but participation in regional trade agreements is limited.

Traditionally, exports were dominated by tea and tea products, while imports were primarily rice and other foods. Today, Sri Lanka remains one of the world's largest tea exporters, but rice imports have declined in the last two decades as domestic production increased.

Most rice is imported from India, Vietnam and Pakistan, although imports from Australia, Argentina and the European Union are growing. The government uses import duties to encourage the purchase of domestically grown rice. Such duties are often waived or reduced after harvest to keep domestic prices from rising.

The country imports about 1 million tonnes of wheat annually, and all imports are handled by the Cooperative Wholesale Establishment through regular tendering. All wheat is shipped to the Trincomalee port. Other port facilities are limited, and even the primary port of Colombo is unable to accommodate vessels larger than 15,000 dwt. Bulk unloading facilities are also limited, capacities are slow, and feed imports are often shipped in bags.






(1,000 tonnes)






Wheat flour *





Rice **





1996-97 marketing year unless otherwise noted

* Production is 1994 figure.

** Production is milled basis.

Source: U.S.D.A.; Inter-national Grains Council