Plantation

Government Spending

• Tea Industry: Increased replanting subsidy from Rs. 142,000 to Rs. 200,000 per acre; allocation of Rs. 1,000 million for productivity improvement.

• Rubber Industry: Allocation increased by Rs. 3,500 million; guaranteed price of Rs. 300 per kilo for small growers.

• Coconut Industry: New planting subsidy raised from Rs. 7,000 to Rs. 10,000 per acre; Rs. 1,000 million allocated for soil improvement.

Impact on Exports and Local Farmers

• Exports: High-value products of tea, rubber, and spices have increased export earnings to US$ 3,000 million; overall export growth at 12%.

• Local Farmers: Financial assistance and subsidies aim to modernize smallholder plantations, improving productivity and income stability.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Increased productivity in some plantation companies; doubling of public investments in research institutes.

• Failure: Some plantation companies have not responded effectively to modernization proposals, leading to potential lease cancellations.

Future Strategies for Global Competitiveness

• Research and Development: Doubling investments in research institutes to enhance agricultural practices.

• Export Promotion: Utilizing CESS revenue to support local producers and promote high-value tea in global markets.

Infrastructure Development: Establishing one-stop service centers for trade services and reducing import taxes on packaging materials for exports. 

1. Tea Industry:

   • Liberalization of tea imports to encourage value addition through blending.

   • Two-year tax exemption for companies engaged in tea plantation.

   • Rs. 200 million allocated to strengthen the Tea Research Institute for research and development.

2. Rubber Industry:

   • Implementation of a comprehensive master plan with Rs. 100 million allocated.

   • Two-year tax exemption for companies engaged in rubber plantation.

   • Rs. 200 million allocated to strengthen the Rubber Research Institute for research and development.

3. Coconut Industry:

   • Rs. 250 million allocated for the rehabilitation of coconut cultivation.

   • Allowing the import of coconuts for value addition under strict quarantine requirements.

   • Rs. 200 million allocated to strengthen the Coconut Research Institute for research and development.

4. Subsidy Programs:

   • Transition to a cash grant system for small-scale paddy farmers to increase flexibility and productivity.

   • Setting guaranteed prices for various rice varieties to support local farmers.

Impact on Exports and Local Farmers

• Exports: Focus on producing export-quality rice and other agricultural products to enhance global competitiveness.

• Local Farmers: Financial assistance, subsidies, and guaranteed prices aim to modernize smallholder plantations, improving productivity and income stability.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Strengthening research institutes and implementing tax exemptions have encouraged modernization and value addition in the tea, rubber, and coconut industries.

• Failure: Challenges remain in fully realizing the potential of modernization efforts, particularly in ensuring widespread adoption of new practices and technologies.

Future Strategies for Global Competitiveness

1. Export Focus: Encouraging the production of high-value, export-quality agricultural products.

2. Branding: Global branding exercises for Sri Lankan spices and other products to enhance market presence.

3. Public-Private Partnerships: Collaboration between the private sector and government to improve supply chain management and productivity.

4. Research and Development: Continued investment in research institutes to innovate and improve agricultural practices.

• Tea Industry:

  1. Focus on increasing export earnings from tea to USD 5 billion by 2020 through value-added tea exports.

  2. Initiatives include extending guarantees for local tea exporters to obtain USD loans for brand promotion.

• Rubber Industry:

  1. Rs. 900 million allocated for rubber replanting.

  2. Rs. 50 million proposed for establishing a state-of-the-art Finite Element Analysis Simulation Centre at the Plastic and Rubber Institute of Sri Lanka.

• Coconut Industry:

  1. Rs. 75 million allocated to the Coconut Research Institute for producing genetically superior high-yielding planting material and modernization.

Impact on Exports and Local Farmers

• Exports: Export development is a top priority, with strategies aimed at enhancing productivity and establishing better market access for agricultural products.

• Local Farmers: The fragmented nature of land prevents economies of scale, leading to exploitation by middlemen. The government plans to transform subsistence agriculture into commercial agriculture by releasing idle land and improving access to finance and markets.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Subsidy programs, such as a 50% interest subsidy for farmers adopting productivity-enhancing technologies, aim to upgrade the agriculture sector.

• Failure: Success depends on effective implementation and farmers' acceptance of new technologies, which remains a challenge.

Future Strategies for Global Competitiveness

1. Value Addition: Focus on value-added products to enhance global competitiveness.

2. Productivity Improvement: Promote modern agricultural practices, including mechanization and high-tech irrigation methods.

3. Cooperative Formation: Encourage the formation of cooperatives among farmers to improve efficiency and market access.

4. Infrastructure Development: Establish a Food Technology Research Unit and improve infrastructure for domestic and international connectivity.

1. Tea Industry:

   • Rs. 250 million allocated to strengthen assistance for tea smallholders to improve productivity.

   • Development of a revenue model for the tea industry in the medium term.

   • Rs. 50 million allocated to strengthen the Cinnamon Training College, indirectly supporting the tea industry through value addition and quality improvement.

2. Rubber Industry:

   • Rs. 50 million allocated to support the implementation of the Rubber Master Plan, which includes 22 projects covering raw material base, manufacturing, product innovation, and new technology infusion.

3. Coconut Industry:

   • Rs. 25 million allocated to the Coconut Research Institute (CRI) to produce hybrid coconut seedlings.

   • Removal of NBT (Nation Building Tax) on domestic coconut oil and kernel products for one year to support domestic producers.

   • Introduction of regulations for mandatory packaging, labeling, and quality standardization to comply with international standards.

4. General Support for Plantation Sector:

   • Introduction of a concessionary loan scheme for producers using biodegradable materials in manufacturing.

   • Rs. 1,000 million allocated for desilting small and medium tanks to support rainwater harvesting, benefiting the plantation sector.

Impact on Exports and Local Farmers

• Exports: Initiatives aim to enhance productivity, improve quality, and ensure sustainability, which is expected to positively impact exports.

• Local Farmers: Improved income opportunities for local farmers through better productivity, quality standards, and sustainability measures.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Continued allocation of funds and introduction of new initiatives indicate a commitment to addressing challenges and improving the sector’s performance.

• Failure: No specific data on past failures, but the focus remains on overcoming existing challenges through modernization and subsidy programs.

Future Strategies for Global Competitiveness

1. Revenue Models: Development of revenue models for key plantation crops.

2. Quality Standards: Ensuring compliance with international quality standards for plantation products.

3. Support for Smallholders: Strengthening support for smallholders to improve productivity and income.

4. Master Plans: Implementation of master plans (e.g., Rubber Master Plan) to enhance innovation, technology, and sustainability.

5. Sustainability: Promoting sustainable practices, such as rainwater harvesting and the use of biodegradable materials

1. Tea, Rubber, and Coconut Industries:

   • Doubling incentives for replanting and new planting of rubber, with an allocation of Rs. 800 million specifically for the rubber industry.

   • Addressing regulatory hurdles in the coconut industry to promote investment and growth.

   • Emphasis on financial allocations to support the plantation sector, including modernization and productivity improvements.

Impact on Exports and Local Farmers

• Exports: Focus on enhancing productivity in agriculture and related export sectors to boost export capabilities.

• Local Farmers: Increased production and potential income for local farmers through value exploitation in coconut and rubber markets.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Launch of loan schemes and support programs aimed at modernizing agricultural practices, with significant allocations to address inefficiencies.

• Failure: Success depends on effective implementation and dissemination of technology, though specific outcomes are not detailed.

Future Strategies for Global Competitiveness

1. Quality Standards: Improving quality standards for exports, particularly in the cinnamon and rubber industries.

2. Export Market Access: Enhancing export market access and negotiating trade agreements with key markets like India and China.

3. Global Supply Chains: Integrating local producers into global supply chains to boost international competitiveness.

4. Sustainability: Ensuring sustainable growth through strategic initiatives that balance domestic and international market considerations.

Government Spending

• The document emphasizes the need for targeted financial strategies to support the tea, rubber, and coconut industries but does not provide specific figures or allocated funds.

• The government’s approach focuses on ensuring stable pricing and reducing reliance on imports, though detailed spending allocations are not specified.

Impact on Exports and Local Farmers

• Exports: Challenges faced by the tea and rubber sectors due to previous import-favoring policies may have reduced export capacities.

• Local Farmers: The livelihoods of local farmers are likely impacted by weakened export performance and reduced agricultural productivity.

Success/Failure of Subsidy Programs and Modernization Efforts

• Failure: Previous economic policies resulted in a weak agricultural sector, though specific data on subsidy programs or modernization efforts is not provided.

• Generalized Focus: Current strategies appear more focused on stabilizing domestic production rather than detailed financial allocations or modernization initiatives.

Future Strategies for Global Competitiveness

1. Production Economy: Strategic pivot towards fostering a production economy to enhance local agricultural output.

Global Competitiveness: Focus on improving global competitiveness, though specific funding allocations or programs for the tea, rubber, and coconut industries are not detailed. 

Government Spending

1. Tea Industry:

   • Rs. 2,000 million allocated for development work in the plantation sector, focusing on crops like pepper, cloves, cardamom, and coffee for export markets.

   • Emphasis on modern techniques in tea cultivation and organic fertilizer use to increase profitability.

2. Rubber Industry:

   • Support for small rubber plantations to diversify income streams.

   • Focus on developing high-value export industries.

3. Coconut Industry:

   • Water conservation methods (e.g., drip irrigation) and use of barren lands for coconut planting.

   • Development of value-added products from local crops.

4. General Support:

   • Modern equipment for entrepreneurs in the plantation sector.

   • Strategies to mitigate adverse weather impacts in tea cultivation.

Impact on Exports and Local Farmers

• Exports:

  • Increased local production of high-demand crops.

  • Challenges faced by large-scale estates, reducing their contribution to exports.

  • Focus on creating high-value brands and developing a true export industry.

• Local Farmers:

  • Support for diversification into natural rubber-associated industries.

  • Need for sustainable practices to boost incomes and improve livelihoods.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success:

  • Some companies have developed high-value brands.

  • Increased productivity in small-scale tea plantations.

• Failure:

  • Limited diversification in large-scale estates, impacting profitability.

  • Mixed results from subsidy programs aimed at small-scale farmers.

  • Modernization efforts have not been uniformly successful across all sectors.

Future Strategies for Global Competitiveness

1. Trade Agreements: Formulate bilateral trade agreements to expand markets for agricultural exports.

2. High-Value Exports: Invest in high-value export industries, particularly in rubber and coconut sectors.

3. Value Addition: Develop value-added products and modern processing facilities for local crops.

4. Sustainability: Implement water conservation and organic farming practices to improve sustainability.

5. Institutional Strengthening: Strengthen public institutions to execute development programs efficiently.

6. Research and Development: Increase R&D efforts in agricultural practices and promote high-quality exports.

7. Training Programs: Enhance training for local farmers on sustainable practices.

8. Investment Incentives: Provide strategic investment incentives for agriculture-related industries.

Government Spending

1. Tea, Rubber, and Coconut Industries:

   • Rs. 5,000 million allocated for introducing new agricultural technologies, augmenting previous allocations of Rs. 17,005 million for modernization.

   • Rs. 35,000 million set aside to assist farmers in transitioning to organic farming practices, including organic fertilizers.

   • Focus on building a value-added plantation crop industry to enhance foreign exchange earnings and increase planters' incomes.

   • Plans for replantation, gap filling, and new cultivations to boost productivity.

Impact on Exports and Local Farmers

• Exports: Government initiatives aim to boost exports of tea, rubber, and coconut products, though challenges like inadequate foreign reserves and trade deficits persist.

• Local Farmers: Modernization and value addition efforts are expected to increase income levels for local farmers, but fragmented land ownership and exploitation by middlemen remain issues.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Some success in promoting import substitution industries and modernizing agriculture through subsidies and technology investments.

• Failure: Failures due to incompatible government policies, ineffective implementation, and limited diversification in large-scale estates.

Future Strategies for Global Competitiveness

1. Value Addition: Build a robust value-added plantation crop industry to increase foreign exchange earnings.

2. Private Investment: Encourage private sector investment in the plantation industry for sustainable growth.

3. Market Research: Identify and address drawbacks in export crops to improve competitiveness.

4. Infrastructure Development: Improve irrigation and water supply to enhance productivity.

5. Diversification: Expand into new markets with value-added coconut and rubber products.

6. Global Market Linkages: Connect Sri Lanka's plantation products with international markets.

7. Tourism and Wellness: Promote wellness tourism as a complementary strategy to boost the economy.

8. Export Mechanisms: Develop special programs to encourage exports and improve trade balance.

Government Spending

1. Ministry of Plantation Industries (Head 135):

   • Total Allocation: Rs. 11,969 million (Recurrent: Rs. 4,377 million, Capital: Rs. 7,592 million).

   • Operational Activities: Rs. 1,214 million (Recurrent: Rs. 1,165 million, Capital: Rs. 49 million).

   • Development Activities: Rs. 10,755 million (Recurrent: Rs. 3,212 million, Capital: Rs. 7,543 million).

   • Public Institutions: Rs. 4,693 million (Recurrent: Rs. 3,212 million, Capital: Rs. 1,481 million).

2. Specific Projects and Allocations:

   • Plantation Sector Development: Rs. 6,062 million.

   • Smallholder Tea and Rubber Revitalization Project: Rs. 1,482 million.

   • Agriculture Sector Modernization Project: Rs. 4,000 million.

   • Rubber Research Institute: Rs. 472 million.

   • Coconut Research Institute: Rs. 295 million.

   • Coconut Cultivation Board: Rs. 1,010 million.

   • Coconut Development Authority: Rs. 160 million.

   • Department of Export Agriculture (Head 289): Rs. 1,291 million (Recurrent: Rs. 854 million, Capital: Rs. 437 million).

   • Department of Rubber Development (Head 293): Rs. 1,190 million (Recurrent: Rs. 469 million, Capital: Rs. 721 million).

3. Total Allocated Funds for 2023:

   • Total for Ministry of Plantation Industries: Rs. 14,450 million (Recurrent: Rs. 5,700 million, Capital: Rs. 8,750 million).

Impact on Exports and Local Farmers

• Exports: Investments in plantation sector development and modernization are expected to enhance export capabilities, particularly for tea, rubber, and coconut products.

• Local Farmers: Projects like the Smallholder Tea and Rubber Revitalization Project aim to improve productivity and income stability for smallholder farmers.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Significant allocations for research institutes (e.g., Rubber Research Institute, Coconut Research Institute) and modernization projects indicate a commitment to improving productivity and innovation.

• Failure: The success of these programs depends on effective implementation and addressing challenges such as fragmented land ownership and limited access to technology for smallholders.

Future Strategies for Global Competitiveness

1. Research and Development: Strengthening research institutes to enhance agricultural practices and innovation.

2. Modernization: Continued investment in modernization projects to improve productivity and quality of plantation crops.

3. Smallholder Support: Expanding support for smallholder farmers through revitalization projects and financial assistance.

4. Export Market Access: Enhancing global market access for tea, rubber, and coconut products through quality improvements and trade agreements.

5. Sustainability: Promoting sustainable practices in plantation agriculture to ensure long-term growth and environmental conservation.

Government Spending

• The government is emphasizing the modernization of agriculture and fisheries industries, with a focus on enhancing competitiveness.

• Allocations include:

  • Agricultural modernization projects.

  • Smallholder agribusiness partnerships.

  • Crop diversification initiatives.

• Total budget: Rs. 2,500 million.

Impact on Exports and Local Farmers

• Exports: Modernization and value addition in agriculture aim to elevate the sector’s competitiveness, benefiting the export market.

• Local Farmers: Improved productivity and new cultivation opportunities are expected to enhance the livelihoods of local farmers.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success: Establishment of provincial agricultural and fisheries modernization boards to drive sector development.

• Collaboration: Efforts involve collaboration among the government, private sector, farmers, and agronomists to boost productivity and introduce new technologies.

• Challenges: Success depends on effective implementation and overcoming barriers such as legal constraints and fragmented land ownership.

Future Strategies for Global Competitiveness

1. Increased Production: Focus on increasing paddy production and utilizing uncultivated land effectively.

2. Crop Diversification: Address legal barriers to promote crop diversification.

3. Large-Scale Agriculture: Allocate land for large-scale agriculture activities to enhance productivity.

4. Modernization: Promote modernization in agriculture to improve competitiveness in global markets.

5. Collaboration: Strengthen partnerships between the government, private sector, and farmers to drive innovation and productivity.

Government Spending

1. Coconut Industry:

   • Rs. 500 million allocated for high-yielding coconut seedlings in the Northern region to enhance coconut production.

2. Tea and Rubber Industries:

   • While specific figures are not detailed, these sectors are included in broader agricultural and export enhancement strategies.

Impact on Exports and Local Farmers

• Exports: Initiatives aim to boost exports through better-quality products and enhanced marketing strategies, particularly for traditional exports like cinnamon.

• Local Farmers: The agriculture sector employs about 30% of the workforce and is crucial for the rural economy. Enhancing productivity is expected to improve economic opportunities for farmers.

Success/Failure of Subsidy Programs and Modernization Efforts

• Success:

  • Continuation of the fertilizer subsidy for paddy farmers with an allocation of Rs. 35 billion for 2025, supporting local production and farmer livelihoods.

  • Focus on modern agricultural practices and innovations to improve productivity.

• Failure: Specific outcomes of past subsidy programs are not detailed, indicating a need for better evaluation and implementation.

Future Strategies for Global Competitiveness

1. Productivity and Resilience:

   • Enhance productivity and resilience through initiatives like the establishment of cooperatives to boost farmers' collective bargaining power.

2. Quality Standards:

   • Improve quality standards for agricultural products to meet global demand.

3. Marketing Networks:

   • Establish marketing networks for coconut and other export crops like spices.

4. Technical Assistance:

   • Provide technical assistance to farmers to align production with global market requirements.