"The country needs to replace at least part of the imports currently taking place. And it should not take time. That is why we decided to go for an aggressive food production drive."
Up to a billion rupees of imports could be replaced this year itself.
"It’s a relief because we can't reduce oil imports," he said.
Jayasundera said oil imports were a key reason for the rising trade deficit, but there was no choice but to import oil until Sri Lanka started to produce its own, perhaps in 2015.
In Sri Lanka oil imports are frequently blamed for balance of payments troubles, which started with creation of an unstable soft-pegged central bank in 1950, abolishing a hard peg which had kept the exchange rate fixed from 1884.
Jayasundera said Sri Lanka imported about 200 billion rupees or about two billion US dollars of agriculture related goods.
He said 49 million dollars of dried chillies, 74 million dollars of dried fish, tinned fish, dhall and 400 million dollars of sugar and 330 million US dollars worth milk was imported each year.Sri Lanka's economic nationalism, import substitution and state intervention reached its heights during the 1970s.
Cornered by trade and exchange controls, people drank tea without milk and sweetened it by licking a few rationed sugar grains off the palm. Others bit into a coarse sugar cube or jaggery branded 'ran kati' (gold nuggets), made by state enterprises.
But Sri Lankan citizens are now working in factories exporting apparel and other products earning foreign revenues. Members of the poorest people families are working abroad in the Middle Eastern desert and remitting billions of dollars by working hard.
Their children and wives are now eating better, including imported foods like dhall, dried fish which for the most part are cheaper than foods produced by the politically backed domestic farmers with subsidized fertilizer and import protection.
The state has to regularly increase taxes on imported basic foods to make them expensive to the poorer people in particular and force them to eat domestically produced goods.
Minister Basil Rajapaksa said Sri Lanka now produced its entire requirement of maize domestically and ulundu seeds were being produced in the Vanni region after the end of a 30-year war in the area.
Now there was a surplus in rice and it was gifted to Somalia. Jayasundera said the budget had offered incentives and the creation of rice export zones. Sri Lankan farmers do not produce export standard rice yet.
Sri Lanka was also planning to export chicken this year, minister Rajapaksa said.
But Sri Lanka should have a realistic exchange rate, he said.
Sri Lanka's foreign reserves which peaked at 8.1 billion US dollars in July fell to 6.2 billion US dollars by November 2011, and have fallen further since then.
An International Monetary Fund team is now in Sri Lanka. The IMF has called for a flexible exchange rate.