Agriculture

Sector Overview

The contribution from Sri Lanka’s agriculture sector to the country’s GDP is approximately 7.5% with 30% of the population reportedly employed by the sector.

GDP from agriculture in Sri Lanka decreased to LKR 156,419 million in the first quarter of 2017 from LKR 162,824 million in the fourth quarter of 2016. GDP from agriculture in Sri Lanka averaged LKR 153,130.72 million from 2010 until 2017, reaching an all-time high of LKR 177,718 million in the fourth quarter of 2015 and a record low of LKR 124,301 million in the first quarter of 2011.¹

The country enjoys a temperate tropical climate which coupled with the island’s fertile soil makes it an ideal environment for the cultivation of a vast variety of fruits, vegetables and other crops.

The country’s most popularly farmed crop is rice which is farmed in two seasons, the “Yala” (minor) cultivation season and “Maha” (main) cultivation season, with majority of Sri Lanka’s farm land being allocated for its cultivation and roughly around 70% of total water set-aside for food cultivation being used in its cultivation. However, despite this vast allocation for rice farming, Sri Lanka still imports rice, with the UN’s Food and Agriculture Organisation (FAO) estimating 2017’s rice import requirement at 700,000 tonnes²

Among the countries main cash crops is tea which is cultivated in the central and southern regions of the island but with “upcountry” tea grown in Sri Lanka’s central highlands considered the premium variety. Tea accounts for a major source of the country’s exports accounting for 17% of the country’s exports.³

The other two major cash crops are coconut and rubber, with coconut mainly being cultivated in the country’s “coconut triangle” region and rubber harvested in the more temperate south. However, both these crops are no longer major export contributors unless some value addition takes place.

One of President Maithripala Sirisena’s foremost priorities has been to encourage Sri Lanka’s agricultural sector efficiency and to promote the cultivation of export-demand crops like fruits, flowers etc. But with small farm holdings and the lack of modernised farming techniques and equipment being used in the farming industry, Sri Lanka has been slow to optimise its agricultural productivity.

Large agricultural companies such as CIC Agri Businesses and Hayleys Agriculture Holdings Limited have embarked on encouraging collective farming methods and initiated the introduction of innovations and value additions to the industry. Also, the American agricultural multinational, Dole Food Company, Inc. owns and operates large banana plantations under the name Dole Lanka (Pvt) Ltd. Banana cultivation is one of the main fruit harvests in the country and both Dole and CIC are leading banana exporters.

However, most of Sri Lanka’s agriculture exports involve some form of value addition (tea, coconut, rubber etc.).

Sri Lanka is also a major exporter of spices, with cinnamon being indigenous and endemic to the island. “Ceylon Cinnamon” is the only “pure” cinnamon in the world and is cultivated exclusively in the island. In 2016, Sri Lanka supplied 32.9% of the world’s total cinnamon exportsamounting to USD 159.1 million.⁴

However, despite being an fertile country with a rich agricultural tradition, Sri Lanka relies heavily on food imports to sustain the country’s food requirements. Crops such as rice, wheat, corn, lentils, soy beans, fruits etc. and products like sugar, salt, milk and milk products etc. are all imported in high volumes.

Sri Lanka imports approximately USD 208 million worth of raw cotton, cotton yarn and cotton fabric annually for its export-orientated apparel sector. Hong Kong, India, Indonesia, and South Korea are the current major cotton suppliers to Sri Lanka.⁵

¹https://tradingeconomics.com/sri-lanka/gdp-from-agriculture?continent=america
²http://www.fao.org/giews/countrybrief/country.jsp?code=LKA
³https://tradingeconomics.com/sri-lanka/exports
⁴http://www.worldstopexports.com/cinnamon-exporters/
⁵https://www.export.gov/article?id=Sri-Lanka-Agricultural-Sector

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