WASHINGTON June 28, 2016 — The World Bank has approved a $125 million credit from the International Development Association (IDA) to assist Sri Lanka in modernizing its agriculture sector to become more efficient and attractive as a modern business, more responsive to consumer demand, and more environmentally sustainable and resilient to climate change. The project will be implemented through the Ministry of Primary Industries, the Ministry of Agriculture, and five participating provinces, including the Northern, Eastern, Central, North-Central and Uva Provinces.
Sri Lanka’s agricultural sector is at a strategic cross-road. A major milestone has been the achievement of rice self-sufficiency – a long sought-after goal of successive agriculture strategies since independence. At the same time, however, the share of population employed in agriculture has remained at about 30 percent over the past 10 years, even as the share of the sector in national GDP has continued to decline to 10 percent. This implied and persistent inequality adds to the urgency to rethink the strategic direction of future agricultural development – how to sustainably increase rural incomes and promote the development of a modern agriculture sector that meets the needs of an upper-middle-income country that Sri Lanka aspires to be.
“Sri Lanka’s rich social, cultural and economic history is deeply rooted in agriculture and its paddy cultivation tradition. While preserving and building on Sri Lanka’s farming traditions, there is now also space to shift focus to diversification and the promotion of high-value and export oriented food crops” said Françoise Clottes, World Bank Country Director for Sri Lanka and the Maldives. “Moving into the future, this shift in approach is crucial for income growth, poverty reduction and reversing the trend in increasing inequality, as well as better nutritional outcomes in the country. This approach corresponds directly with World Bank Group’s twin goals.”
The project will support agricultural value chain development to promote commercial and export oriented agriculture, with particular focus on higher value fruits and vegetables. It provides investments to improve productivity and diversification of current production patterns through modern agriculture technology demonstrations in the project areas, and supports new institutional arrangements in form of farmer organizations and farmer-agribusiness partnerships. It will also support agricultural policy development to enable the Government to determine the future direction of the sector.
“This project is designed to demonstrate new agricultural practices and institutional arrangements in the project areas to link smallholder farmers into modern agriculture value chains and to create attractive jobs, including new employment opportunities for women and young people” said Ulrich Schmitt, Program Leader and Task Team Leader of the World Bank. “Innovation and new technology will help improve not only the economic efficiency in the sector, but also enhance resilience to natural disasters and climate change”. He further underscored the significance of a supportive policy and regulatory environment with due recognition to evidence based decision making procedures to drive the sector modernization process.
Project beneficiaries include an estimated 30,000 smallholder farm households in the project areas that will benefit directly from the project’s small matching grants program and the agriculture technology demonstrations. An additional 20,000 farm households will be supported through technical and business training and through the establishment of professional farmer organizations that will allow them to become more effective and business-oriented enterprises in rural areas.