Agriculture - including forestry and fishing - accounted for over 46 percent of exports, over 40 percent of the labor force, and around 28 percent of the GNP in 1986. The dominant crops were paddy, tea, rubber, and coconut. In the late 1980s, the government-sponsored Accelerated Mahaweli Program irrigation project opened a large amount of new land for paddy cultivation in the dry zone of the eastern part of the island. In contrast, the amount of land devoted to tea, coconut, and rubber remained stable in the forty years after independence. Land reforms implemented in the 1970s affected mainly these three crops. Little land was distributed to small farmers; instead it was assumed by various government agencies. As a result, most tea and a substantial proportion of rubber production was placed under direct state control.

Changing Patterns

Since the beginning of the twentieth century, agriculture has been dominated by the four principal crops: rice, tea, rubber, and coconut. Most tea and rubber were exported, whereas almost all rice was for internal use. The coconut crop was sold on both domestic and international markets. The importance of other crops increased in the 1970s and 1980s, but no single crop emerged to challenge the four traditional mainstays.

Tea, rubber, and to a lesser extent, coconut are grown on plantations established in the nineteenth and early twentieth centuries. Before the plantations existed, villagers carried out three main types of cultivation. The valley bottoms and lowlands were occupied by rice paddies. These paddies were surrounded by a belt of residential gardens permanently cultivated with fruit trees and vegetables. The gardens in turn were surrounded by forests, parts of which were temporarily cleared for slash-and- burn cultivation, known as chena. Various grains and vegetables were grown on chena lands. The forests were also used for hunting, grazing for village cattle, gathering wild fruit, and timber. In some villages, especially in the dry zone, there was little rice cultivation, and people depended on the gardens and forests for their livelihood.

Under legislation passed in 1840, the title of most forestland was vested in the government. In order to stimulate the production of export crops, the colonial administration sold large tracts to persons who wished to develop plantations. At first most buyers were British, but by the end of the nineteenth century many middle-class Sri Lankans had also acquired crown land and converted it to plantation use. The early coffee and tea plantations were often situated at high elevations, some distance from the nearest Sinhalese villages, but as time went on more estates were developed on land contiguous to villages. The precise impact of the plantations on village society remains controversial, but it is widely believed in Sri Lanka that the standard of living of villagers suffered as they lost use of the forestland.

Although the large coffee, tea, and rubber plantations relied mainly on Tamil migrants from southern India for their permanent labor supply, Sinhalese villagers were employed in the initial clearing of the forests, and some performed casual daily labor on the plantations in seasons when there was little work in the villages. The coconut plantations, being spatially closer to villages, employed considerable Sinhalese labor.

By the early twentieth century, there was no longer much land suitable for the expansion of cultivation in the wet zone, and in the 1930s the focus of agricultural development shifted from the wet zone to the dry zone and from plantation crops to rice. There was ample uncultivated land in the dry zone of the north-central region, but three major obstacles had to be overcome--the prevalence of malaria, the lack of a reliable supply of water to carry out rice cultivation, and the absence of farmers to cultivate the soil. The first of these problems was solved by the success of the antimalarial campaigns of the 1940s. The others were tackled by government policies that sought to restore and build irrigation works and resettle peasants from the wet zone in the newly irrigated areas. In the 1980s, the pace of this program was quickened by the Accelerated Mahaweli Program.

The most important change in agriculture in the forty years after independence was the increase in rice production. This increase resulted from better yields and the enlarged amount of land under cultivation. In contrast, with the exception of rubber in the 1950s and 1960s, the principal export crops showed only modest gains in productivity, and the amount of land devoted to tea and rubber fell. After around 1970, there was growth in the production of other crops, including onions, chilies, sugar, soybeans, cinnamon, cardamom, pepper, cloves, and nutmeg.

Fishing, a traditional industry in coastal waters, accounted for 2.1 percent of GNP in 1986. Government efforts to offer incentives for modernization had little impact. The civil disturbances of the 1980s badly affected the industry. Before 1983 the northern region produced nearly 25 percent of the fish catch and around 55 percent of cured fish, but in the mid-1980s fishing was not possible there for long periods. The value of the fish catch off the northern coast fell from Rs495 million in 1981 to Rs52 million in 1986. Production off the southern and western coasts and from inland fisheries grew during this period, but not enough to prevent a decline in the island's total catch. In 1987 the government announced plans to provide funds for investment in fishing in the North and East, but implementation was likely to depend on improved security in these areas.

Land Use

Although there have been periodic agricultural censuses, they were limited in purpose and did not provide an overall picture of land use. In 1961, however, a survey of the use of the island's physical resources was compiled based on a 1956 aerial photographic survey of the entire country. The survey indicated that, of the country's total area of nearly 66 million hectares, 29 percent was under permanent cultivation, just over 15 percent under chena cultivation, 44 percent under forest cover, and about 6 percent under various types of grasses. Nearly 33,000 hectares consisted of swamp and marshlands, and about 63,000 hectares, or 1 percent, unused land. Just over 3 percent of the island's surface was covered by water. Of the total area, approximately 23 percent was in the wet zone, about 63 percent in the dry zone, and the balance lay in an area that the survey labeled "intermediate," as it had characteristics of both zones.

Of the land under permanent cultivation in 1961, which included cropland, land under plantation, and homestead gardens, the survey indicated that some 75 percent was in the wet and intermediate zones and about 25 percent was in the dry zone. Chena cultivation, on the other hand, was predominantly in the dry zone, as were the grass, scrub, and forestlands. Although forest covered almost half the country, only about 0.2 percent and 3.1 percent of the forests were characterized as of high and intermediate yield, respectively. The study further indicated that approximately 70 percent of the land in the wet zone was under permanent cultivation, whereas in the dry zone under 12 percent was being cultivated on a permanent basis.

Since 1961 irrigation has enabled a much greater proportion of land in the dry zone to be cultivated and in 1978 it was estimated that nearly one-third of the country's dry-zone area was under permanent cultivation. This proportion increased in the 1980s, when lands irrigated by the Accelerated Mahaweli Program were added to the total. As a result, the proportion of forestland declined and was estimated at just under 40 percent in 1987.

Although the forests had few high-yield timber stands, many areas suffered from deforestation because of the heavy demand for firewood in the 1980s. In 1987 it was estimated that 94 percent of households used firewood for cooking. Scarcities of firewood led to price increases well above the general level of inflation in the 1980s.

Government Policies

Government support for farmers takes several forms, including the provision of credit for producers, the setting of minimum prices for agricultural produce, the building of irrigation works, and the encouragement of internal migration to newly irrigated areas. Since the late colonial period, the government has played a growing role in the provision of credit to smallholders on favorable terms. Until 1986 the main instrument of this policy was the subvention of cooperative societies. Agricultural credit took three forms: short-term loans to farmers for the purchase of seeds and fertilizers; medium-term loans, intended for the purchase of machinery; and long-term loans for capital expenditure on storage, transport, and rice-milling apparatus. The long-term loans were not available for individual farmers, but were used by the cooperative societies to acquire infrastructural facilities.

The actual performance of credit provision through cooperatives generally fell short of expectations. Institutional credit did not displace the older sources of credit, such as the village moneylender, friends, and relatives. The inability to repay loans, procedural difficulties, and the existence of unpaid loans already taken from the cooperatives were some reasons given by farmers for preferring noninstitutional credit sources. Another problem with the credit furnished by cooperatives was the high rate of default. This rate may have been attributable partly to real difficulties in repayment, but it also was the result of a widely held impression that government loans were a form of social welfare and that it was not necessary to repay them.

The New Comprehensive Rural Credit Scheme implemented in 1986 sought to increase the flow of credit to smallholders. The Central Bank guaranteed up to 50 percent of each loan in the event of losses incurred by banks lending under the program, and eligible farmers received a line of credit for three years. Loans were automatically rescheduled at concessional rates when crops were damaged by events beyond the farmer's control. In 1986 cultivation loans under this program amounted to nearly Rs257 million, about 74 percent for paddy and the rest for other food crops.

Another important policy was the Guaranteed Price Scheme, which came into effect in 1942. Under this program the government agreed to purchase rice and some other produce at set prices. The intention was to support the farmer's standard of living. For a period in the early 1970s, when the island was threatened by food shortages, the government ordered peasants to market all of their rice through this scheme and at times set the price at a level lower than that of the free market. This policy had the effect of reducing the incentive to grow rice. The program lost some of its impetus in the 1980s. In 1986 the government set the price below the free-market rate for most of the year. As a result of the policy, purchases under the program accounted for only about 6 percent of the rice crop, mostly from districts where private traders were unwilling to operate because of the poor security situation.

Since the 1930s, governments have promoted irrigation works and colonization projects in the dry zone in an attempt to increase rice production and reduce land pressure and unemployment in the more densely settled wet zone. The lack of infrastructure and the prevalence of malaria hampered these programs in the early years. After the near eradication of malaria, increased government investment in infrastructure and enhanced financial support for migrants made the new lands more desirable. Between 1946 and 1971, the proportion of the population living in the dry zone increased from 12 to 19 percent.

At the end of 1968, about 352,000 hectares were under irrigation for rice cultivation; some 178,000 hectares under major storage reservoirs and barrages, and approximately 174,000 hectares in minor irrigation projects. In the 1970s and 1980s, governments pursued major irrigation programs, most notably the Mahaweli Ganga Program, which was lent added impetus and became the Accelerated Mahaweli Program in 1978. The increasing size of the Mahaweli project dwarfed its earlier endeavors. According to the plan, approximately 593,000 hectares of previously arid land would be brought under irrigation by 1992. In 1986 some 76,000 hectares of new land were under cultivation as a result of this project.

Other long-standing government policies designed to help farmers included subsidies for fertilizer, seed paddy, and other inputs. Government efforts also partly contributed to the adoption of improved cultivation practices and high-yielding seed varieties in paddy farming in the 1960s.

Land Tenure

Modern land tenure policy dates from the Land Development Ordinance of 1935, which forbade the transfer of crown lands for purposes of cultivation except to enlarge the landholdings of near-landless or landless peasants. The intent of this ordinance was to help small farmers whose livelihood was seen to be at risk from the exploitation of rich peasants and urban landowners.

In 1958 the Paddy Lands Bill was enacted, mainly to benefit the tenant farmers of some 160,000 hectares of paddy land. The bill purported to assist tenants to purchase the land they worked, to protect them against eviction, and to establish a rent ceiling at around 25 percent of the crop. It also established cultivation committees, composed of rice farmers, to assume general responsibility for rice cultivation in their respective areas, including the direction and control of minor irrigation projects. Shortcomings in the law and official indifference in enforcing the act hampered its effectiveness, and many observers termed it a failure. In some regions tenants who tried to pay the lower, official rents were successfully evicted by landlords, and the old rents, often about 50 percent of the produce, remained in force. In the 1980s, however, the rent ceiling of 25 percent was effective in most districts.

The Land Reform Law of 1972 imposed a ceiling of twenty hectares on privately owned land and sought to distribute lands in excess of the ceiling for the benefit of landless peasants. Because both land owned by public companies and paddy lands under ten hectares in extent were exempted from the ceiling, a considerable area that would otherwise have been available for distribution did not come under the purview of the legislation. Between 1972 and 1974, the Land Reform Commission took over nearly 228,000 hectares, one-third of which was forest and most of the rest planted with tea, rubber, or coconut. Few rice paddies were affected because nearly 95 percent of them were below the ceiling limit. Very little of the land acquired by the government was transferred to individuals. Most was turned over to various government agencies or to cooperative organizations, such as the Up-Country Co-operative Estates Development Board.

The Land Reform Law of 1972 applied only to holdings of individuals. It left untouched the plantations owned by joint-stock companies, many of them British. In 1975 the Land Reform (Amendment) Law brought these estates under state control. Over 169,000 hectares comprising 395 estates were taken over under this legislation. Most of this land was planted with tea and rubber. As a result, about two-thirds of land cultivated with tea was placed in the state sector. The respective proportions for rubber and coconut were 32 and 10 percent. The government paid some compensation to the owners of land taken over under both the 1972 and 1975 laws. In early 1988, the state-owned plantations were managed by one of two types of entities, the Janatha Estates Development Board, or the Sri Lanka State Plantation Corporation.

Cropping Pattern

Rice cultivation has increased markedly since Independence, although in the late 1980s yields remained well below those of the major rice-producing countries. Much of the improvement came in the late 1970s and 1980s. Rice remained a smallholder's crop, and production techniques varied according to region. In some villages, it was still sown by hand, with harvesting and threshing often engaging the entire family, plus all available friends and relatives.

Because no completely perennial sources of water exist, there was uncertainty regarding the adequacy of the supply each year. In the wet zone, flooding and waterlogging was experienced in the 1980s, whereas in the dry zone even the irrigated areas were subject to the possibility of insufficient water. In the mid- and up-country wet zone areas, most fields were sown twice a year in the 1980s; in the dry zone most holdings were sown only once; and in the low-country wet zone the amount of flooding or waterlogging determined whether to plant once or twice. The maha (greater monsoon) crops are sown between August and October and harvested five or six months later; the yala (lesser monsoon) crops sown between April and May and harvested about four or five months later.

Despite some increases in productivity, rice output was disappointing in the 1960s and early 1970s. Greater incentives to farmers after 1977 contributed to increases in production. Both the area under cultivation and the yield increased steadily between 1980 and 1985, when annual output reached 2.7 million tons, compared to an annual output of around 1.4 million tons in the early 1970s. In 1986 unfavorable weather and security difficulties led to a slight decline in production. A severe drought affected the crop in 1987, when output was estimated at only 2.1 million tons.

Tea is Sri Lanka's largest export crop. Only China and India produce more tea. The plants, originally imported from Assam in India, are grown in the wet zone at low, middle, and high altitudes, and produce a high-grade black tea. The higher altitudes produce the best tea, and terracing is used to eke out the limited area of upper altitude land. Tea cultivation is meticulous and time consuming, requiring the constant and skilled attention of two or three workers per hectare. Because of this requirement, tea is most efficiently grown on estates, based on large capital investment and having a highly organized and disciplined management and labor supply.

Because working and living on estates was not attractive to Sinhalese peasants, the labor supply for the tea industry from its inception was provided by Indian Tamil immigrants who lived on the estates. Since independence the number of Sinhalese workers has increased, but in the late 1980s Tamils still dominated this sector.

The performance of the tea industry was disappointing in the 1970s and early 1980s, because of poor producer prices and low productivity. Tea production was 211 million kilograms in 1986, down from 220 million kilograms in 1969. The fundamental problem of the tea estates was the advanced age of the tea bushes. In 1987 their average age was around sixty years and only 15 percent of the total area under tea had been replanted with high-yielding varieties. Replanting had been neglected in the 1960s and 1970s partly because low tea prices and high export duties meant that profit margins were not high enough to make it a profitable enterprise. Between 1972 and 1974, the growing risk of nationalization also discouraged investment.

Rubber continues to be an important export crop in the late 1980s. It thrives under plantation conditions in the wet zone, although a significant proportion of the crop is produced by smallholders. Although rubber yields improved greatly in the first twenty years after independence, both the output and area planted with rubber declined in the 1980s. Output fell from 156 million kilograms in 1978 to 125 million kilograms in 1982. Improved prices caused production levels to recover to about 138 million kilograms in 1986.

Despite the importance of rubber, a large number of rubber plantations suffer from old age and neglect. The government offered incentives to encourage replanting and improve maintenance procedures. Nevertheless, the area replanted in 1986 was 12 percent less than in 1985. This drop in replanting resulted from a shortage of seeds and the reluctance of farmers to retire land from production at a time of relatively attractive prices. In early 1988, however, the short- and medium-term outlook for world rubber prices was considered good.

Most of the coconut production was sold in the domestic market, which consumed about 1.4 billion nuts in the mid-1980s. Most of the rest of the crop, usually between 2 billion and 3 billion nuts, was exported as copra, coconut oil, and desiccated coconut. Local uses for coconut include timber for construction, leaves for thatch and siding, coir for rope and rough textiles, and toddy and arrack for alcoholic beverages.

Coconut output fluctuates depending on weather conditions, fertilizer application, and producer prices. In the 1980s, smallholders dominated its production, which was concentrated in Colombo and Kurunegala districts and around the city of Chilaw in Puttalam District. Because of a drought in 1983, production suffered a setback during 1984 and fell to 1.9 billion nuts, its lowest level since 1977. The recovery during 1985 was impressive, leading to the record production of almost 3 billion nuts. This level was itself surpassed in 1986, when production rose a further 3 percent. But the average export price fell by 45 percent in 1985 and by 56 percent in 1986. In 1986 the farm gate price probably fell below the cost of production, and in early 1988 it appeared that fluctuations in the world price of coconut products would remain a problem for the foreseeable future. The 1987 drought was expected to reduce coconut production by at least 20 percent in both 1987 and 1988. Like tea and rubber, the coconut sector suffered from inadequate replanting. Consequently, a large proportion of the trees were old and past optimum productivity levels.

The importance of crops other than tea, rubber, and coconut increased after 1970, and in 1986 they accounted for around 51 percent of agricultural output. There was a substantial increase in of minor food crops, including soybeans, chilies, and onions, all of which are grown as subsidiary crops on land irrigated by the Mahaweli project. In the 1960s and earlier, vegetables were imported from India in large quantities, but in the 1980s the island's import requirements were much smaller. Spices, including cloves, nutmeg, cardamom, and pepper, also registered large gains in the 1970s and 1980s. A large proportion of the spice output was being exported in the 1980s. Other crops of importance included corn, millet, sweet potatoes, cassava, dry beans, sesame seed, and tobacco. A wide variety of tropical fruits, including mangoes, pineapples, plantains, and papayas, also were grown; most were consumed in the domestic market. Sugar output increased in the early 1980s, although in 1986 it still accounted for only 11 percent of the domestic consumption. The expansion in sugar took place despite the problems of the state-run sugar mills and their associated sugar lands in Eastern Province, which have been disrupted by civil strife. Two new mills in Western Province accounted for the increase in production, and in early 1988 the outlook for further expansion was good.

More about the Economy of Sri Lanka.

Custom Search

Source: U.S. Library of Congress