Jan 07, 2008 (LBO) – Sri Lanka’s government should divert funds from agriculture subsidies to improving market linkages of rural farmers on the lines of successful models built by firms like Hayleys and MAS Tropical Food Processors, a new study said. The island has much potential to develop its spices sector mainly consisting of over 200,000 small farmers using pro-poor agribusiness models to revive smallholder spice cultivation, the Institute of Policy Studies said.
Some 70 percent of production of spices like cinnamon, pepper, cloves, cardamoms, nutmeg and mace comes from smallholder farms of less than one hectare of land.
“Increasing competitiveness and strengthening their linkages with agri-business firms which ultimately improve the capacity for participating in modern supply mechanisms will be useful in creating a conducive production environment for small farmers,” the IPS report on the state of the economy said.
Given the government’s limited resources and competing demands, the best use funds allocated for agriculture development was “to improve technology, rural infrastructure and build market linkages rather than using them for economically insignificant subsidies which have no long-term development impact.”