MAHOtrain recently posted two posts on their views on farmers problems and solutions that they propose. This post is an attempt to continue and expand on the discussion they started. But with a slightly different view.
Should the farmers problems be governments problem?. Well as far as the politics and votes are concern, yes it should be. They represent a large percentage of voter base outside Colombo. But should it involve itself at the level it does today? I don’t think so.
Farmers has many problems. Their crops are not market driven. Their decisions are driven more by tradition than science and economics. There is a disconnect between them and the market. They have very high production costs and low returns. They import fertilizer and machinery, but the product is locally consumed. And when it comes to selling their harvest the middle man is pretty much a monopoly, which farmers can’t control.
I agree with MAHO in many of its points. Specially about the gap between science and farmers on the ground, Diversification, Proper Planning and Organization. But I do not agree when it comes to government should do this, that and what not.
In my opinion there is a better way. And here are few things we can do. Many go hand in hand with MAHO suggestions in principle, but differ when it comes to who is responsible of doing it. I have not put them in any specific order. Some points might make more sense if ordered differently.
1. Make Farming an Industry
In my opinion, biggest problem with agriculture industry is that, we do not do it as an industry. Or at least our farmers are not a part of our ‘Agriculture Industry’. They are simply not industrialized. For them, it is a way of life or self employment. This has to change inside out. Starting from farmers. Government can only preach it and build awareness.
2. Set a Clear Vision and a Mission
Our agricultural industry need a vision and a mission. Our traditional mission of making Sri Lanka self-sufficient with rice is not good enough. Mainly because it do not cover concerns of all stake holders. We want farmers to make a good living, by earning good money. At the same time every one in the country need food at a lower cost. Those two interests simply can’t work together. Just think about it. We pay a quite a high price for food in the market. At the same time, we pay farmers to by subsidized fertilizer, seeds, and to create an artificial certified price for them. It’s you and me who pay that money. End of the day farmers are still poor.
3. Open up more markets.
Our mission of making Sri Lanka self-sufficient with rice also implies that our production is consumed locally. This don’t need to be the case. We can have businesses who by from local market and sell internationally after packaging and branding. This work well for Tea. Why not for other products. Indi recently posted about one similar non-profit movement. In my opinion, it don’t have to be non-profit. It is perfectly ok to make profit out of it. In fact profits will make more investors to take the opportunity and create the competition. Last thing we want is another monopoly.
Of course government can do this, but any one with some international trading capabilities can do this too. So there is no need to wait till the government do this.
4. Invest and Innovate in Supporting Industries.
When an Industry is wide-spread, more other industries pop up to support that industry. This improve the quality and efficiency of parent industry and reduce cost. For example, entire software industry is there to support other industries. But has this happen in Sri Lanka when it comes to agriculture. Only things that are local about local agriculture is our lands, water, seeds and labor. We import everything else.
Why can’t local businesses produce fertilizer and farming machinery instead of importing most of it, which is the largest cost component of farming. Public money that is spent to subsidize fertilizer can be spent only on locally produced fertilizer and machinery. Even without subsidies locally produced stuff will be relatively cheaper.
This is not technically impossible, these machines are not that complicated. We have enough creative people. We only need the vision. I know at least one person who is an engineer turned part-time farmer. He design his own farming machines and get them built at local welding shop.
5. Fight Monopolies
Monopolies are bad. But to kill it, all you need is more people joining the same business. At every region, there should be a competitive environment when it comes to food processing, marketing, transport and selling. Having ten places to sell your crop in ten different places it not the solution. You need ten buyers competing in the same region. Government can’t do this. Because government is only one player. It’s a monopoly it self. Just think about it, what would happen there is only one company who is buying Tea from central auction and export them?
What we need is, small scale, regional entrepreneurs to step up at grass root levels. Government may get involved by facilitating loans for such regional businesses, if it is difficult for them to get loans from commercial banks. Government can organize trade events to allow such people to network until an industry body take over. But whatever government does it must make sure not to become another monopoly.
6. Own and Control Supply/Value/Distribution Chain
Farmers in a specific region can get together and setup food processing and distribution businesses. That way they can own and control their distribution channels. Farmers can become share holders of these businesses. That will bring them more revenue. More importantly, it will connect farmers with the market. This will give them vital market feedback which they can in turn use, when making decisions on how and what to farm.
7. Add Value to By Products
Take Cuba for example. One of their main industries is sugar cane. They make sugar, use leaves to make bio fuel and then use the throw away stuff to burn in power plants.
Of course we throws whats left of the paddy plant after harvesting back to field as carbonic fertilizer. And we burn rice shells in bakeries. IMO producing electricity from them might be more profitable at least until we come out of our current energy situation. Technically speaking we can burn the shells to produce carbon monoxide and use that gas in generators hooked up to national grid.
We can probably extract the red part of the rice which is rich which fibers and use them in other foods. Not just animal food.
8. Take it to the next level
Get in to the habit of R&D. Not by the governments, but by the businesses owned and controlled by the farmers and other innovators. For any industry to move forward it should innovate. And the drive should come from the industry itself, not from outside. Because when industry itself is driving the research, it will be driven more by the needs of the industry and the findings and innovations will be better adopted by the industry.
9. Governments Role
Question is, can our farmers make this change on their own. They can’t. That’s where the government should come in. They must build the awareness among farmers about what they can do, act as a facilitator, create incentives, and empower them to make the quantum leap from simply a way of life to an industry.
Under no situation government should put itself in a position where it becomes a part of the value chain. Because it is not a very sustainable model. We need multiple players at each step. Not just a government. And the government should play a facilitator role for all those players.
Government regulations should change to support local production of equipment and fertilizer. I remember once a guy from a company that import fertilizer said on TV, that it takes years/months to get government approval to import some fertilizer through following due process and safety checks. This is ok if you are importing. But if we make them locally you can’t wait years to market your stuff.
10. Our Role
From what I know investment returns in agriculture sector are exempted from taxes. Do I need to say more?
Any more ideas or feedback?
/Rakhitha
Tags: Agriculture, Agriculture Industry, Agriculture Innovation, Empower, Empower Farmer, Farmers, Farming, Food Distribution, Food Marketing, Food Processing, Framer, Government, Paddy, Rice, Sri Lanka
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