Thursday, December 30, 2010

The case against agriculture, in an era of better opportunities- surely not!

It was an extremely difficult year in my agricultural endeavors, and if not for supplementing my income from additional work in Colombo, I could not have made it. It was another year of disappointing harvests, with a fresh round of crises. Upon analysis of this year’s problems, the key was one of lack of discipline and not following specific instructions. This coupled with a severe labor shortage when the need arose, meant a fall in output. It is an eye opener that I was unable to get the required results from the one area I could control. This inability to get to grips with the labor/human resource issue is one that convinces me of the desperate need to elevate agriculture to a different plain with educated, motivated and well remunerated managers who are dedicated to this field. In order to make such a task viable, it is essential to run a much larger establishment with maximum use of mechanization, and use of new capital intensive techniques.

The frustrating part for me is to see how relatively inefficient my neighboring CIC Hingurakgoda Farm of over 1300 acres is, as I cannot use it as a working example to make my point, as the profit per acre from agricultural activities on that property is arguably below mine. In my opinion, one should get a net profit of Rs50K per acre in agriculture in SL after paying for all the costs, (excluding land). So this figure can be compared with the rental for the use of the land. We must use this as a starting point when doing the business plan of agricultural activities, as otherwise the opportunity costs of going into other fields is preferable to working the land.

I can market everything I produce if the quality is consistent and superior, and have failed to get the output directly from my land, and from the outgrowers to supply my customer demand. We must therefore shift away from the perennial problem of the farmer in marketing his produce, but concentrate instead on growing quality as the increasing demand for quality will capture every item of production. The problems that are highlighted of farmers disposing of their produce for lack of a market, can be solved with a little bit of common sense, once storage, transport and logistics are sorted. The greater problem of the shortage of quality is what needs to be urgently addressed before prices go through the roof. Free marketers will say, let the market take its course, when price increases, more of the product will be grown, which will result in a drop, sometimes too much to make it a total loss.

The bottom line on all of this is efficient production at low cost will enable the farmer to wither all price fluctuations which are only temporary. A larger enterprise can be intelligently managed and current risks mitigated by planning. One should not resort to knee jerk moves such as imports to distort the market.

1 comment:

Jenna Duffy said...

Hello! I would love for you to meet my co-worker who is in Sri Lanka this week exploring sources for coconut water! We are a sustainable organic beverage company in the US and are interested in learning the difference between young green coconut water and king coconut water aside. In would be such an honor to meet you and learn about your experiences! Hope to hear from you soon! Jenna