Saturday, October 31, 2015

The protection of domestic agriculture

President Sirisena has recently called for the protection of domestic agriculture and for import substitution policies to help local cultivation.

Highlighting on the agriculture sector development, Sirisena said it was “a shame” that the country was importing agricultural products which could be cultivated in the country, adding that the Government was spending over Rs. 6,000 million annually on imports of essential foods. Import substitution has been a point repeatedly highlighted by the President, who has insisted Sri Lanka has the capacity to expand its production to competitively meet domestic needs. 

He pointed that high imports had negatively impacted the local farming industry and by extension the entire economy. Thus, implementing new policies to encourage local agricultural products was essential for the country to regain its status of self-sufficiency, he stressed.

Such policy is not new, it has been followed before in various forms in Sri Lanka since the 1960's. President Sirisena is a decent man and I am sure he genuinely believes that helping farmers will alleviate poverty. Unfortunately he is wrong.

Protecting local farmers will help raise prices of agricultural produce and the farmers will undoubtedly be better off. But what of the consumers? The people who must pay higher prices for food, because cheaper imported food is either taxed or its import is banned?

It is easy to assume that townsfolk are richer than rural villagers and paying higher prices for food will leave them unaffected. This is to ignore the large number of urban and rural workers including casual labourers who are amongst the poorer section of the population and who will suffer in consequence.

The Sri Lanka Labour Force Survey for 2014 identifies that just 26.4% of the workforce (or 2.2m people) are employed in agriculture.  The vast majority (73.6%) are employed elsewhere. The statistics do not reveal sectoral break ups but the number employed in agriculture would certainly include the tea plantation workers (several hundred thousand of them); leaving these out means that the beneficiaries of agricultural protection would be an even smaller proportion of the population.

The classic debate for agricultural protection took place in England in the 1840's in the case of the Corn Laws. The laws, which protected rich landlords at the expense of the poor labourers were repealed in 1846.

Sri Lanka already suffers from high food prices thanks to duties imposed on essentials from canned fish to dhal, simply because the Government sees this as the best way to raise revenue.

The Government needs to work on lightening this burden consumers, not increasing it.


sbarrkum said...

I have an answer/critique.

For Domestic Agriculture Protection

I think you are probably unaware of the history prior to the creation and repeal of Corn Laws, i.e the Enclosure Acts of around 1750 and ongoing.

Jack Point said...

I have heard of the enclosure of the commons although only vaguely. Must look it up some time.