Sri Lanka needs more agricultural investment to boost productivity

The World Bank says Sri Lanka's agriculture needs more investment to diversify into high value products and boost productivity in order to reduce rural poverty.

"Governments around the world and donors such as the World Bank have been under-investing in agriculture," says Derek Byerlee, a rural strategy adviser to the World Bank

"Governments in agripbased countries spend only around 4 percent of their budgets on the agriculture sector. The figures we have for Sri Lanka are around 5 percent."

In the 1990's Sri Lanka invested heavily in irrigation, cut down forests and irrigated large tracts of new land.

However most of these people are poor, despite billions of rupees being pumped into the sector through fertilizer subsidies.

Even where the private sector has been active, in commercial tea and rubber plantations the workers are poor. The Asian Development Bank gave long term debt capital to privatized plantation in the 1990's.

"On way is to raise the productivity of traditional crops - plantation crops such as tea rubber and coconuts - is through investments in research and development," Byerlee said.

Over 70 percent the poor is in rural areas and most of them depend on agriculture for their livelihoods, World Bank says.

In the World Bank's 2008 World Development Report, titled 'Agriculture for Development' the multilateral lender says poverty and hunger by cannot be halved by 2015 unless countries paid more attention to the agricultural sector.

World Bank categorizes Sri Lanka as a transforming country as its growth is based on industry, and services rather than agriculture.

But this created new markets in 'lifestyle' products which farmers could exploit.

"With urbanization and higher incomes there are big shifts in world markets towards higher value products such as life style products and horticultural products," Byerlee said.

Lifestyle products include high value dairy products such as cheese.