Potato Production and Marketing in Sri Lanka

Potato Production and Marketing in Sri Lanka Potato which conventionally grown through seed tubers, is an important crop in Sri Lanka for its high consumer preference and for high net profit. However, potato demands a heavy investment of about Rs.300, 000 per Hectare (Ha) during the cropping period in which seed material alone accounts for about 50-60% of the cost of production. Potato originated in Andes highlands in Peru and Europeans  [1]  and it was introduced to Sri Lanka in 1850s. At present potato is extensively cultivated in the district of Nuwara Eliya in two major seasons, Yala (Feb July) and Maha (Aug Dec.). It is also widely grown in Badulla District in paddy fields and high lands during Yala and Maha seasons respectively.. Jaffna and Puttlam are the other two districts where the potato is grown in lesser extent. Potato is the most popular crop of upcountry farmers due to its high net return.  [2]   Potato popularly known as The king of vegetables, has emerged as one of the most important food crop in Sri Lanka after rice, and few other crops like chilies, onion, maize etc.. Therefore, Potato production in Sri Lanka is largely for the local food market and vegetable basket in the country is incomplete without Potato. Because, the dry matter, edible energy and protein content of potato makes it nutritionally superior vegetable as well as staple food in our country. Hence, potato may prove to be a useful tool to achieve the nutritional security of the nations in the any country.  [3]   The production of particularly high value cash crops such as potatoes, chilies, and big onion, has been decreasing over the past decade. In addition, the cost of production of these crops is relatively high when compared to the other countries in the region. Local producers have had difficulty competing with imports of these commodities. This can be mainly attributed to the relaxation of import restrictions by the government in 1996. Farmers are now confronted with severe difficulties in marketing their products due to the availability of cheaper imports. Potato production has decreased from 88,709 MT in 2002 to 60,848 MT in 2009. Potato imports in 2009 were estimated at 99622 MT, which accounts for 80 per cent of the local requirement. More than 80 per cent of total imports are from India, China and Pakistan. Until 1996, potato remained a highly protected crop.  [4]  However, in recent years, the cost of production, estimated at around Rs 35.00 45.00 per kg, has remained extrem ely high and poor yield has eroded the profitability of this crop. Based on these economic scenarios of the potato production and marketing, this paper is trying to review and analysis of major characteristics, recent developments and changes of the potato production and marketing system in Sri Lanka. CHAPTER TWO METHODLOGY AIM This paper is trying to review and analysis of major characteristics, recent developments and changes (Opportunities and Challenges) of the potato production and marketing system in Sri Lanka. STATEMENT OF THE PROBLEM Potatoes become leading and lagging sub farming sector of the economy. In recent years, Potato Crisis confront to the agricultural development scenario in Sri Lanka, are attributing the high incidence of farmers agitation, hunger strikes and many other forms of farmers demonstrations. A sharp decline of producer prices of potatoes, imports of potatoes and import liberalization, increased of cost of production and high prices of farm inputs, crop loss and market failures are the leading issues that encourage them to protest. Therefore, these empirical evidence reveals that there are some extents of the ailing features of crisis on the potato farming sector in Sri Lanka, and it can be concluded that the process of production and marketing of potato in farming sector is in wrong track. At presently, potato farming is struggling to rural adjust on economic, social and political reality. In the changing global economic scenario, they are now facing new challenges of improving the producti on of potatoes and finding new technologies at the farm level. The incidence of poverty and income inequalities in these communities has considerably widespread due to these reasons. RESEARCH HYPOTHESIS Since the imported potato is cheaper than the domestic potato, the local farmers are facing many difficulties when they try to market their products. GENERAL OBJECTIVE This research paper reviews and analysis of the major characteristics of the potato production and marketing system in Sri Lanka and, since the imported potato is cheaper than the domestic potato, its effects and impacts on local production. SPECIFIC OBJECTIVES Specific Objectives of the research are as follows. a. To review and analyze the major characteristics of production and marketing of potatoes in Sri Lanka. b. To identify and examine the contributing factors of the process of production and marketing sector. c. To review the problems and constrains on the process of production and marketing. d. To make some suggestions for future development of the potato production in Sri Lanka. JUSTIFICATION OF THE STUDY Potato has been one of the leading cash crops grown in Sri Lanka and the annual production is average 76,000 metric tons. The land utilization of the potato cultivation is nearly 4500 hectare  [5]  . Further a crop of potato has high income capability and during the last decade it was identified that thousands of farmers became rich. Study on the review and analysis of the major characteristics, recent developments and changes of the potato production and marketing in Sri Lanka will be important for formulation and implementation of the policies and making decisions to up lift the dying potato cultivation in Sri Lanka. RESEARCH METHODOLOGY Basically this research is based on the Case Study Approach. METHOD OF DATA COLLECTION Data has been collected through two sources as primary and secondary datas. Primary Data. The primary data has been collected by administering a questionnaire among the identified sample of 25 potato farmers and also by interviewing the potato farmers and distributors. Secondary Data. Secondary Data has been collected by examining documents and reports available at the Agricultural Department and Agricultural Library at Hector Kobbekaduwa Agrarian Research and Training Institute. LIMITATIONS OF THE STUDY Time allocation for the research was limited. Therefore, it has not been able to research all the subject areas as well as go into detailed study. The collection of data for the research was limited as the time duration for the research was limited. No field visits or other experiences carried out. CHAPTER THREE LITERATURE REVIEW HISTORY AND PRODUCTION TRENDS The successful cultivation of potatoes was first recorded in Sri Lanka in 1812, when it was introduced in Morawak Korale. Others like Abeyaratna (1985) contend that the potatoes were, probably, introduced by the Dutch who ruled the coastal areas from 1656 to 1792. Attempts at growing potatoes in the center of the present potato producing area were done by Samuel Baker around in 1850. However, it was only in 1909 that the local potatoes of Uruguay origin were grown at Hakgala Gardens. Later some British planters in the country at the time cultivated potatoes in their home gardens for their own use. Meanwhile the Department of Agriculture was concerned with potato cultivation for a considerable period (Mahakumbura, 1980).  [6]   In 1948, the Department of Agriculture began working on potatoes, devoting the first few years to investigating the cultivars suitable for growing, cultural practices, fertilizer applications and control of pests and diseases. The cultivation of potatoes on a large scale was started in 1951/52, but it failed due to various reasons. Cultivation was again attempted in 1957 in Badulla and Nuwara Eliya districts, but the farmers were not able to get a reasonable income because imported table stock potatoes were available in the local market at a very low price. When the government stopped the import of table stock potatoes in 1967 to encourage local production, the farmers once again started to cultivate this crop. This strategy was immediately successful and there was a rapid expansion of the acreage of potatoes. Production. The total extent of potato in Sri Lanka is 4,039Ha. In the central highland of Sri Lanka, potato is grown mainly in Nuwara Eliya and Badulla districts. The total extent cultivated under this crop in Nuwara Eliya and Badulla districts accounted for 725Ha and 3345Ha respectively (Department of Census and Statistics, 2009). The total potato production in 2009 amounted to 61705 Mt. Nuwara Eliya potato production was 12212 Mt and Badulla was 48,982 Mt and other districts recorded 511Mt to the total production  [7]  . Potato cultivation is an integral part of the up country vegetable farming system. It was continued as the most popular farming system in the up country area because of its high income generating potential. In general the potato production in up lands beings from the cultivation of imported seeds in up lands in the Maha season. The large part of the up land harvest is stored for 2.5-3 months and then planted in low lands followed by the rice crop. The most par t of the Yala harvest comes to the market at the early part of the next year. Seasons. In Nuwara Eliya, planting is done twice, once in the months of February to March which is harvested in June-July, and again in August to September to harvest in the months of January or February. In Badulla also potatoes are grown twice a year. The seeding is done in November-December is harvested in March-April, while the June-July planting is harvested in the month of October-November. In Jaffna and Puttalam, only one crop is grown which is sown in November-December and harvested in the month of March (Angammana, 1983). Seed Sources And Varieties. Annually, the Department of Agriculture of Sri Lanka imports 300-3500 tons of certified seed from European countries  [8]  . The certified seed has come from Holland, Germany, Denmark and Scotland in recent years. Normally the seed material is imported once a year. The varieties Desiree and Arka have been the most popular varieties of Nuwara Eliya, Badulla, and Jaffna farmers for the last few years. Because these varieties have generally provided good yields. Recently the variety Ishna was introduced in the Nuwara Eliya and Budulla districts where it has produced higher yields than Desiree and Arka. Production. During the last decade, the production of potato crop followed a volatile and declined trend in late 1990s. Period of 1980s to early 1990, potato production significantly increased. Post 1996, however, the domestic production of this crop began to decline as restrictions on imports were liberalized. A dramatic shift in area out of this crop primarily contributed to the production decline. Weather, poor storage conditions, diseases and availability of good seed are the major problems in potato production in Sri Lanka. Most of the growers in the up country depend on natural precipitation while growers in the coastal districts (Puttalam and Jaffna) use irrigation. If the rainfall in the up country fails, potato production in the other areas is affected because of the short supply of seed potatoes. The next major limitation is the poor storage facility on most farms where seed potatoes are kept in boxes in the farmers home. Storage. Many types of storage are used to store potatoes. The locally produced seed potatoes in Nuwara Eliya are stored in seed potato stores in Nuwara Eliya and Rahangala.. The stores in Nuwara Eliya can keep seed for a longer period of time compared with Rahangala because of climatic conditions. The seed purchased in June and July is stored in trays up to November-December and sent to the major potato producing areas such as Jaffna and. In Rahangala stores, seed potatoes are stored in bulk to a height of one meter but no forced ventilation is provided. Normally farmers store their seed potatoes in boxes and keep them in their homes where ventilation is very low, causing high temperatures and heavy loss in storage. POTATO CULTIVATION IN SRI LANKA Potatoes in Sri Lanka are mainly grown in three districts, namely Nuwara Eliya, Badulla, and Jaffna. However, there are namely areas that potato can be cultivated. Such as Puttalam, Kalpitiya, Rathnapura, Kandy etc. However, Due to many reasons cultivation are strictly limited to the above areas. Nuwara Eliya. The climate of Nuwara Eliya district is ideally suited for seed potato production. The peak periods of planting are during the months of August-September (Yala planting) and February-March (Maha planting). Planting cannot be done in May, June and July because of the heavy winds and rain. Similarly production in December and January is restricted because of the night frost in these two months. Badulla. In Badulla there are two planting seasons, one in the uplands in November-December (Maha planting) and the other in June-July (Yala planting) in the paddy fields of lowlands after the rice harvest. A large area is planted in the June-July planting. The farmers use only imported seed for the November-December planting and their own seed for June-July planting. Jaffna. In the existing climatic conditions in Jaffna, only one crop a year is possible. Potatoes are planted in November after heavy rains in October. Cool night temperature during December and January help in tuber initiation and formation, resulting in fairly high yields. The Jaffna farmers obtain their seed from the government farms and contract growers in Nuwara Eliya. Puttalam is another district having a similar climatic condition as Jaffna where the cultivation of potatoes has started recently. PRODUCTIONS AND ITS MAJOR CHARACTERISTICS The potato is an important commodity in the countries of South Asia. Because of the crops short vegetative cycle, the potato plays an important role in the regions food security. The potato in Asia and especially in the South Asia region has experienced the worlds highest annual growth rate in production over the past three decades.  [9]   Within global scenarios, the position on production and marketing of potato in Sri Lanka is somewhat different. During the last decade, the production of potato crop followed a volatile and declined trend in late 1990s. Period of 1980s to early 1990, potato production significantly increased. Post 1996, however, the domestic production of this crop began to decline as restrictions on imports were liberalized. A dramatic shift in area out of this crop primarily contributed to the production decline. The Figure: 1 has sufficiently explained the changes and fluctuations of land extent of potato from 1970 to year 2009 in Sri Lanka.  [10]   About 99 percent of the total land of potato cultivation are concentrated in two districts of Nuwara Eliya and Badulla . The highest amount of land of potato cultivation and lager number of farmers were in Budulla, while, more commercial oriented and lesser number of potato farmers were in Nuwara Eliya district. The distribution of land extent for potato crop growing in each district as shown in Figure: 3.It is obvious to note that the Potato cultivation in other areas in the country has strictly limited due to many reasons. However, there are many possibilities and potentialities for extended to this crop in other districts of the country. Production of potatoes is mainly depending on the extent of lands. Production trend of potato, during the last 39 years are evidently shown in the Figure: 2. Increase trend of production has commenced in 1978 and it had continued up to year in 1996. After that, production has widely fluctuated. Declined of land extent, changes of government policies, removing of import restrictions and imports of large quantities of potatoes, low farm gate prices are the key contribution factors for the stagnation and declining trend of production in recent pasts. Figure: 4. has provided the detail distribution of production quantities in each district of Nuwara Eliya and Badulla. According to Figure.4, in early 1990s, both districts were produced in similar amount of quantities of potatoes. After 1997, quantity produced in Badulla district had remarkably improved. Badulla is more than double that the potato produced in Nuwara Eliya distict, where production trend has declined in recent years. MARKETING SYSTEMS AND PRACTICES Assembling is the first step in marketing of farm products. It involves collection of small surpluses from number of small farms scattered over large areas and bulking the same for subsequent distribution in volume. The agencies engaged in the assembling of potato are as below: a. Producers b. Village Merchants c. Itinerant Merchants d. Wholesale Merchants e. Commission Agent f. Producers Co-operative Societies Major Assembling Markets. The major assembling markets are located in city of Nuwera Eliya, Badulla, Welimada and other few rural and urban centers of Kandapola, Ragala, Maturata, Kappetipola, Walapane and Mandaramnuwara. These key assembling markets in major producing areas send their collections to terminal wholesale markets of Colombo, Dambulla and Kandy while sending some stocks to other small regional markets. Distribution, Consumption and Marketing. After keeping their requirement of seed, the farmers sell the balance of the harvest immediately, either to the Marketing Department of Sri Lanka or to private dealers. Most farmers prefer to sell their produce to the private dealers as they pay a higher price. The price of potatoes fluctuates widely throughout the year. Because of the coincidence of harvest in Jaffna, Puttalam and Badulla in January, February and March, there is a drop in the price during these months. Marketing Costs and Margins. Marketing costs are the actual expenses required for bringing potato from farm gate to the consumers. It includes the following: Handling charges at local points Assembling charges Transportation costs Handling charges by wholesalers and retailer to consumers Expenses on secondary services like financing, risk taking and market Intelligence Profit margins taken out by different agencies. The marketing margins of potato are the difference between the actual price paid by the consumer and the price received by farmer for an equivalent quantity and quality of potato. Imports of Potatoes. It is leading question for the farmers, while it is leading solution for the consumers. The Table 1 has shown the potato imports in Sri Lanka, from 1994 to year 2009. The quantity of imports, during the last 30 years had increased considerably. However, imports have rapidly increased the period of last ten years in 1997 to 2007  [11]  . This was mainly due to the removing of import restriction of potatoes, under the liberalization of agricultural markets. Further, the value of the imports and unit prices of potatoes (CIF) has significantly increased, while, the rising trend of quantities, CIF prices and total vales are continued in past few years. Therefore, an increasing trend of all these import variables is key dilemma of the local potato production and marketing system. Prices, Price trends and Developments. The prices of potato are the key issue in the system of production and marketing. The three levels in producer prices, wholesale prices and retail prices are most influential matter for the farmers, traders and consumers. The general trend of prices has shown that the prices have gone up, with extensively fluctuations by weekly, monthly and annually. The rising tendency of wholesale and retail prices is the most common features of the marketing system. The Figure: 6 and 7 adequately gives details on the behavior and patterns of the average wholesale and retail prices of potato in Colombo and suburbs markets in last 12 years. CHAPTER FOUR results and Analysis This chapter includes presentation and analysis of research data in an empirical way in order to enhance the quality of the research report. Both primary and secondary data were used for the analysis and presentation. ANALYSIS OF THE QUESTIONNAIRE Question 01 Figure 5.1 As per the Figure 5.1, 52% of the respondents are strongly disagree with the statement that the government support is satisfactory for the potato cultivation while 40% are disagree with the statement. Question 02 Figure 5.2 72% of the participants do not believe that the potato will become one of the main crops in Sri Lanka in near future. Question 03 Figure 5.3 As per Figure 5.3, most of the respondents do not like importing potatoes from other countries. Question 04 Figure 5.4 According to the graph above, 24 respondents out of 25 are not satisfied with the support given by the whole sellers and the intermediates. Question 05 Figure 5.5 88 % of the respondents say that the research and development facilities should be improved for the development of potato production in Sri Lanka. Question 06 Figure 5.6 60 % of the respondents have strongly stated that they are not satisfied with the profit they gain by the potato cultivation, while another 36 % of the respondents are also disagree with the statement. Only 04 % of the respondents are satisfied with the income they gain. Question 07 Figure 5.7 All respondents say that they face many difficulties at the marketing stage (17 respondents out of 25 are strongly agree with the statement while other 08 are also agree with the statement.) Question 08 Figure 5.8 As per the above Figure, 96 % of the respondents do not agree with the statement that quality of the imported potatoes is better than Sri Lankan potatoes. Question 09 Figure 5.9 22 respondents out of 25 do not believe that the customers are willing to buy imported potatoes rather than buying Sri Lankan potatoes and only 03 respondents are agree with the statement. Question 10 Figure 5.10 All 25 respondents are strongly agreed that the high cost of cultivation is the main reason for decreasing the potato production in Sri Lanka. SWOT ANALYSIS FOR THE PRODUCTION AND MARKETING SYSTEM IN SRI LANKA In addition to the analyzing of both primary and secondary data as mentioned in above, a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis was carried out to address the weaknesses and to arrest the treats in view of eliminating the stagnation in potato production and marketing in Sri Lanka and following are found. Strengths at Glance on Potato Production and Marketing System. Production possibilities and potentialities are tremendous in the country. Production directly effects on the increase of farmers incomes Reduction of imports on potato leads to favorable situation on balance of payments and may increasing the trend of production. An increase of production has reduces the level of malnutrition. Potential benefits and advantageous are very huge in many. Existing institutions mechanisms can be used for improvements. Potato farmers are organized, targets oriented and group specifics. Low dependency of international markets increased the food security. Small farmers income may increase and the marketing system may also improve. Weaknesses at Glance on Potato Production And Marketing System. There are no comparative advantages for potato production Low production and productivity are discouraged the farming system. Lands and soil degradation are leading factors for the decisions. Substantial importations of potato are reducing the farm incomes. Government has not clear policy for the imports of potatoes High Cost of Production are discouraged the farmers. There are wide gap between potential level and farmer yields Unavailability of quality seeds is major troubles. Lack of allocation for research and extension services Post-harvest loss is high and no proper storage facilities. Higher marketing cost has reduced the share of farmers incomes. Fluctuation of production and prices collapse the marketing system Farmers infrastructure facilities are need to be improved, farms roads etc. Threats at Glance on Potato Production And Marketing System. Inadequate availability of high yielding varieties is major threats. Inadequate technology transfer at village level farms. Poor soil fertility management has reduced the productivity. A high incidence of pest diseases has increase the risk of crop. Insufficient farm mechanization has reduced farming efficiency. Lacks of farmer group activities have reduced strengthen of farming communities. Due to the Poor and lack of processing facilities and agro- based industries, farmers have no alternative choices to sales. Land extent is highly responsive for quantity of imports. Liberalization trade has reduced the speed of growth. Potato production would be disappear, due to the economic globalizations Changes of tariff (duty) rates decrease the stability of production Inconsistency of the government policies reduces the efficiency of production marketing, while increasing risk of investment. Opportunities At Glance on Potato Production And Marketing System. Potentiality of the use of modern crop technology (Research and Development) is high for potatoes and there are more possibilities to minimize post-harvest losses There are more possibilities to increase of value added products Potato is an instrument for the transformation of the farmers from subsistence to commercial level farming. Abilities of poverty alleviation and capability of the earring higher incomes of the potato production is very high. Potato is an essential food items in normal Sri Lankan diets and the demand and per capita consumption can be improved. Being a short duration crop, it produces more quantity of dry matter, edible energy and edible protein in lesser duration of time than cereals like rice/ wheat Potato may prove to be a useful tool to achieve the nutritional security with the food security of the nations. Production can be self-sufficient in terms of local requirements. 6. As per the data analyzed above, the hypothesis which is stated in Chapter Two is proven and acceptable. It is now proven that since the imported potatoes are cheaper than the domestic potato, the local farmers are facing many difficulties when they try to market their products. CHAPTER FIVE CONCLUSION This chapter is the most important part of the research since this chapter consists with the conclusion on research findings and recommendations for future researches. The main objective of this chapter is to present the results based on research finding. In conclusion, it is better to look back the objectives stated in the first chapter and determine whether this research has met its objectives. At the final stage of this research study, I would like to sum up my conclusion stating that the research has met all its objectives to a greater extent. In general, the conclusion of this paper is neither particularly optimistic nor particularly pessimistic. During the research, it was found that there are many obstacles and problems, but also many opportunities and potentialities in improving the production and marketing of potatoes in Sri Lanka. The key problem is that the imported potatoes are cheaper than the domestic potatoes and local consumers reportedly prefer the potatoes grown in upcountry areas. Since quantities of local production and prices of potatoes; specially, farm gate, wholesale and retail prices, are highly fluctuating within a year frequently and it is highly depend on these cheaper import prices and the import quantities. Hence there is a huge impact on the local production and marketing system by the imported potatoes. In the process of interviewing potato farmers during the research study, it was highlighted that there are some economic and political impacts also for the potato production and marketing of Sri Lanka. During the research, it was found that the quality of the imported potatoes is lesser than the domestic production. Hence most of the consumers are not willing to buy imported potatoes and they have the preference on the local production. But due to lesser supply of local production consumers are compelled to buy imported potatoes. This has been proved in figure 4.8 and figure 4.9. Further it could be seen that the research development facilities should be improved for the development of potato production in Sri Lanka and it is proved in figure 4.5 in chapter 04. As per the figure 4.10, high cost of cultivation is the main reason for decreasing the potato production in Sri Lanka. MARKETING CONSTRAINTS It was highlighted that the local farmers face many difficulties at the marketing stage and it is stated in figure 4.7 in Chapter Four. Following are the main marketing constraints faced by the local farmers. High Marketing Costs Margins. Transaction cost of marketing is high. There is a need for promoting producers cooperativeness and some other trader organizations in potato growing areas to reduce the price gap between growers and consumers. As per the figure 4.4, a minimum support is given to farmers by the whole sellers and the intermediates. Wide Price Fluctuations. The major potato growing areas should arrange advance forecasting of area under potato and plan to divert the potatoes to the deficient areas or consumers areas by sending to avoid glut situations and price crashes in the markets. Bottlenecks in Storage Facilities. There are no cold storages facilities in the country used for potato storage and