RJ. Gunawardena Athula Chandrasiri Research Study No.35 February 1980 A G R A R I A N R E S E A R C H AW& T R A I N I N G I N S T I T U T E C O L O M B O , - S R I L A ' H K A . . • . . FACTORS INFLUENCING VEGETABLE PRICES: A STUDY OF THE VEGETABLE ECONOMY IN SRI LANKA. P.J,GUNAWARDENA ATHULA CHANDRASIRI Research Study No: 35 February,1980 Agrarian Research And Training Institute 114, WJjerama Mawatha, P.O.Box - 1522 Colombo, Sri Lanka . F O R E W O R D VEGETABLES FORM A VERY IMPORTANT PART OF THE DAILY DIET OF THE PEOPLE IN SRI LANKA. IT IS ESTIMATED THAT ABOUT TEN PERCENT OF THE AVERAGE . HOUSEHOLD EXPENDITURE ON FOOD IS SPENT ON VEGETABLES. THEREFORE,EVEN A SMALL INCREASE IN THE PRICE OF VEGETABLES COULD LEAD TO AN INCREASE IN THE COST OF LIVING,THEREBY REDUCING THE LEVEL OF REAL INCOMES OF A LARGE SECTION OF THE POPULATION. A RAPID INCREASE IN VEGETABLE PRICES OFTEN BECOMES A PROBLEM OF NATIONAL INTEREST. AT THE REQUEST OF THE COMMISSIONER OF MARKETING DEVELOPMENT, THIS STUDY WAS UNDERTAKEN TO ASCERTAIN THE FACTORS INFLUENCING THE VEGETABLE PRICES IN SRI LANKA, IN PARTICULAR AN ATTEMPT WAS MADE TO DETERMINE WHETHER THE INCREASE IN THE PRICE OF VEGETABLES DURING THE RECENT PAST WAS THE RESULT OF ANY REDUCTION IN THE LAND AREA UNDER VEGETABLE CULTIVATION. IT WAS ALSO INTENDED TO FIND OUT WHETHER SOME OF THE VEGETABLE CULTI­ VATORS WERE SHIFTING THEIR LAND RESOURCES FOR THE CULTIVATION OF SUBSI­ DIARY FOOD-CROPS, BECAUSE OF THE MORE ATTRACTIVE PRICES THEY FETCH. THE FINDINGS AND POLICY IMPLICATIONS OF THE STUDY WITHIN ITS LIMITATIONS ARE EXPECTED TO SERVE AS A TIMELY AND USEFUL DATA BASK FOR THE POLICY MAKERS WHO ARE CONCERNED WITH THE DEVELOPMENT OF VEGETABLE CULTIVATION IN THIS COUNTRY. IT IS ALSO HOPED THAT THIS REPORT WILL BE OF INTEREST TO A WIDER SECTION OF THE POPULATION SINCE IT IS ONE OF THE MOST COMPRE­ HENSIVE STUDIES SO FAR DONE ON ASPECTS OF PRODUCTION, MARKETING AND THE CONSUMPTION OF VEGETABLES IN SRI LANKA. MR.P.J.GUNAWARDENA, RESEARCH AND TRAINING OFFICER WHO ACTED AS THE CO-ORDINATOR OF THE RESEARCH PROGRAMME WAS RESPONSIBLE FOR THE WRITING OF THIS REPORT. MR.L.R.A.CHANDRASIRI, R.& T.O, PARTICIPATED IN THE RECONNAISSANCE SURVEY IN THE KANDY AND BADULLA DISTRICTS AND IN THE TRAINING AND SUPERVISION OF INVESTIGATORS. HE ALSO CONTRIBUTED TO CHAPTER(7) OF THE REPORT. MR.S-M.P.SENANAYAKE, R.& T.O, FUNCTIONED AS A MEMBER OF THE RESEARCH TEAM IN THE INITIAL STAGES AND ASSISTED IN CONDUCTING RECONNAISSANCE SURVEYS IN THE ANURADHAPURA AND JAFFNA DISTRICTS AND TRAINING OP INVESTIGATORS. I THANK THE RESEARCHERS FOR THEIR VALUABLE EFFORT IN BRINGING OUT THIS PUBLICATION. (T.B.SUBASINGHE) DIRECTOR ACKNOWLEDGEMENTS The Authors wish to express their sincere thanks to the following, who helped in various ways for the successful completion of this study: Mr.Piyadasa Senanayake for his association with the study at its initial stages of planning, assistance in conducting reconnaissance surveys !n Jaffna and Anuradhapura districts and participating in training the research assistants; Mrs,J.D.Ranmuthugala for the assistance given in conducting the reconnai­ ssance survey in Jaffna; Miss.T.Sanmugam for helping in planning the surveys and in statistical computations; Messrs.M,P.Perera and C.M.Wijeratne for intellectual companionship; The District Agricultural Extension Officers, Grama-Sevaka Officers, Cultivation Officers, Agricultural Instructors and Ktushikarma Viyapthi Sevakas in the study localities for their help during the reconnaissance surveys; Officials of the Department of Census and Statistics, Marketing Department, the MARKFED and the Co-operatives, both in Colombo and outstations for furnishing necessary information; The vegetable cultivators and traders for providing much needed informat­ ion patiently, twice during the survey; Messrs. H.K.Gunasena, A.A,Kumarasinghe, W.G.Hemachandra, H.G.Tikiribanda, P.Piyaratne, R.Jayendran, M.U.M.Maharoof, P.S.Pathirathe, K.D.Dayananda, P.Vijithakumara and Miss. J.P.Liyanage, Miss.H.G.Sriyalatha and Miss.B.A. S.Abeywardena for efficient and hard work as field research assistants; Messrs.P.G.L.Kumarasinghe, A.G.Mithrananda, Mfss.K.l.de Silva and Mrs. M.S.D.Cooray for helping to extract data from various sources; Ill Messrs.H.K.Gunasena and R.Jayendran for tabulation of questionnaire data and late Mr.K.G.Mallikarachchi for the assistance in statistical computations; The Director and the Administrative and Programming Staff of the ARTI for the encouragement and assistance at all stages of this study; Professor,CIive.R.Harston of Texas A 6 M University, U.S.A., Messrs.J. Farrington (Colombo Plan Advisor) and R.Fieldson (VisitingResearcher)and Dr.H.D.Sumanasekera of ARTI, for constructive criticism on an earlier draft of this report. Mr.H.A.Siriwardena for an untiring job of editing this report and Mr .w. Ranasinghe for his assistance in the presentation of the Bibliography. Mr. S.Sylvester for drawing maps and graphs included in this report; and Miss.J.P.Ratnayake, Mrs.W.P.S.Wijewardena and Miss.Anne Fernando for doing a fine job of typing. Agricultural Economics and Extension Unit, Agrarian Research and Training Institute, February, 1980. P.J.G. A.C. IV C O N T E N T S PAGE FOREWORD j . - AC KNOWLEDG EME NTS II LIST OF TABLES V I XII LIST OF FIGURES • | - • • CHAPTER 1 . INTRODUCTION . . . . .' , . 1 1 . 1 . The Problem , . 1 1.2. Objectives . . . . . . . . 2 1.3- Methods of Study > . . . . . . . 2 ].k. Nature and Accuracy of Data . . . . 8 CHAPTER 2, TREND AND SEASONAL VARIATION IN VEGETABLES PRICES . . .. . . 9 CHAPTER 3. HYPOTHESES: IDENTIFICATION OF FACTORS INFLUENCING VEGETABLE PRICES 2k 3 . 1 . Factors Related to Farm Supply , . . 2k 3 - 2 . Factors Related to Marketing . . . 25 3 .3- Factors Related to Consumer Demand . . 2 6 CHAPTER 4 . FARM SUPPLY AND PRICE OF VEGETABLES . . 28 k.). Background 28 k.2. Trends in Acreage and Production of Vegetables . . . . . . 33 4 . 3 . Why the Acreage and Production of Vegetables Have Not Increased Significantly ? . . . . 36 k.k. Cost of Production and Producer-Price of Vegetables . . . . . . . 58 V PAGE CHAPTER CHAPTER CHAPTER 5- MARKETING AND PRICE OF VEGETABLES. . 66 5-1. Back ground - The Marketing System . 66 5.2. Traditional (Private) Marketing Mechanism and Price of Vegetables. 78 5.3- Institutional Marketing Reform and Its Effectiveness . . . . . . 119 6. CONSUMER DEMAND FOR VEGETABLES AND PRICES OF VEGETABLES . . . 136 6.1, Trends in Vegetable Consumption . 136 6.2, Effects of Population Increases on Demand for Vegetables . . . H O 6.3, Price and Availability of Substitutes and Demand for Vegetables . . . Ikk 6.h. Income and Purchasing Power of the Consumers and Demand for Vegetables \k5 1, CONCLUSIONS AND POLICY IMPLICATIONS 150 APPENDIX 1, Level of Education of the Vegetable Growers Selected for the Survey of Cost of Production , . . 175 2, Extent of Land Operated by the Vegetable Growers in the Sample at the time of Sruvey According to Tenurial Status . . . 176 3, Average Income of the Vegetable Growers' Households During 1978 According to Sources , . 177 BIBLIOGRAPHY 178 VI TABLE NO: U S T OF TABLES TITLE CHAPTER 1 CHAPTER 2, 1. Number of Persons Interviewed During Phase I of the Survey 2. Number of Cultivators Interviewed During Phase II of the Survey. 3. Annual Average Retail Prices of Selected Vegetables (1965-78) . (Rs.Cts.per lb. at Current Values) . . ;-s . h. Annual Average Retail Prices of Selected Vegetables (1965-78) , in Rs. Cts. per lb. (deflated by the Consumer Price Index). . 5. Monthly Average Retail Prices and Seasonal Price Indices of Selectee Exotic Vegetables: 1965-1978 (year average = 100.) . . . . ' . 6. Amplitude of Seasonal Variation in Prices of Selected Exotic Vegetables 7. Monthly Average Retail Prices and Seasonal Price Indices of Selected Indigenous Vegetables: 1965-1978 ( year average = 100) . 8. Amplitude of Seasonal Variation in Prices of Selected Indigenous Vegetables CHAPTER 1». 9. Estimated Linear Trend Equations for the Total Acreage of 10 Selected Vegetables (1962/63- 1976/77, No: of observations = 15) 10. Estimated Linear Trend Equations for the Total Production of 10 Selected Vegetables (1962/63- , 1976/77, No: of observations » 15) VTI TITLE Estimated Linear Trend Equations for the Total Acreage of 8 Selected Subsidiary Food Crops (1962/63-1976/77, No of observations . - 15). • • Estimated Linear Trend Equations for the Total Production of 8 Selected Subsidiary Food Crops (1962/63-1976/77, No : of observations' » 15). Loans Granted for Subsidiary Food Crops Under New Agricultural Credit Scheme; 1967/68-1976/77). ' ; . . . . Average Acreage Cultivated with Different Crops by the Sample Households.(Galnewa Region, Yala, 1978) . . . Problems in the Cultivation of Subsidiary Food Crops Including Vegetables, Reported by 72 Settlers in the Galnewa Region, Yala , 1978 . Average Land Area Under Different Vegetables Cultivated in Maha 1977/78 (extent ?n acres). Average Land Area Under Different Vegetables Cultivated In Yala 1978.( extent in acres.) . Average Land Area Under Different Vegetables Cultivated in Maha 1978/79.(extent in acres). Average Land Rents Reported by the Producers: (Rs. per Season). . . . . . . Number of Vegetable Cultivators,Reporting Problems About getting Hired Labour. Average Labour Charges Reported by the Producers (Rs. per Day). Number of Vegetable Cultivators Reporting Problems About Getting Seeds. . . . . . VIII TABLE NO: Tin.E PAGE 23. Average Seed Prices Reported by the Producers (Rs. per Unit) . . . . 50 24. Number of Vegetable Cultivators Report­ ing Problems About Getting Fertilizer. . 51 25. Average Fertilizer Prices Reported by the Producers (Rs. Per Unit) , 52 26. Price Increases in Selected Types of Fertilizer. 52 27. Number of Vegetable Cultivators Reporting Problems About Getting Agro-Chemicals . 53 28. Average Prices of Agro-Chemicals Reported by the Producers. . . . . . . 5*» 29. Average Prices of Other Materials Used in Vegetable Cultivation Reported by the Producers. . 56 30. Average Estimated Cost of Production Per Acre of Selected Vegetables with Imputed Cost of Family Labour (Rs.). . . . 59 3 1 . Average Estimated Cost of Production Per Acre of Selected Vegetables wi thout Imputed Cost of Family Labour(Rs.) . . 60 32. Estimated Average Cost of Production per Acre of Some Vegetables and Their Changes (from 1976 to Maha 1978/79.) '. • 62 33. Actual Average Cost of Productiori Per Acre 6f Some Vegetables Reported by the Producers (Rs.) . . . . . 63 3*». Comparison of Net Producer Price per lb, and Average Cost of Production per lb, of selected Vegetables, . . . . , Sk IX TABLE NO: TITLE PAGE CHAPTER 5. 35. Significance of each Marketing Outlet at Primary Level According to First Prefer­ ence by Farmers. . . . . . . 67 36. Average Transport Cost Reported by the Producers According to Marketing Outlet (Rs. for 100 lbs.) 80 37. Average Transport Cost Reported by Trucker*- Buyers (Rs. for 100 lbs,). . 81 38. Average Transport Cost Reported By Retailers (Rs. for 100 lbs,). . . . . . 82 39.' Average Cost of Containers to the Producers (Rs. for 100 lbs.) . . . . . 8k kO. Average Marketing Labour Charges Paid by the Producers ( Rs, for 100 lbs,). . 85 41. Average Broker Charges Reported by the Producers (Rs. for 100 lbs,).. . . , 85 kl. Average Market Levies and Rents Reported by the Retailers (Rs. per day). . . , , 87 43. Average Wastage Incurred by the Producers (lbs. for 100 lbs. of Vegetables), , , 87 kk. Average Wastage incurred by the Retailers (lbs. for 100 lbs, of Vegetables). . . 88 45. Analysis of Marketing Costs and Margins for Selected Vegetables (Rs. for 100 lbs.) MARKETING CHANNEL:- Producer—Commission- Agent —Retailei—•"Consumer PRODUCER PRICE: Price received by the Producers at Vidurupola . . 91 k6. Prices Paid by the Consumers and Shares Accruing to the Producers and Others Cont: X TABLE NO: TITLE PAGE (For 100 lbs.) MARKETING CHANNEL: Producer—-Commission- Agent — Retailer—Consumer PRODUCERS: Producers at Vidurupola . . 93 1»7. Analysis of Marketing Costs and Margins for Selected Vegetables (Rs. for 100 lbs.) MARKETING CHANNEL: Producer-—Assembly- Agent-—Trucker - Buyer/ Re ta i 1 er—Consumer PRODUCER PRICE: Prices received by the Producers at Meeruppa, . . . . 96 48. Prices Paid by the Consumers and the shares Accruing to the Producers and others (for 100 lbs,) MARKETING CHANNEL: Producer—Assembly Agent —Trucker-Buyer/Retailer— —Consumer PRODUCERS: Proudcers at Meeruppa ... , . 98 1»9. Analysis of Marketing Costs and Margins for Selected Vegetables (Rs. for 100 lbs.) MARKETING CHANNEL : Producer—Assembly Agent —-Trucker-Buyer/Retailer —Consumer PRODUCER PRICE: Prices received by the Producers at Hewavissa . . 100 50. Prices Paid by the Consumers and the Shares Accruing to the Producers and others (for 100 lbs.) MARKETING CHANNEL: Producer Assembly Agent —-Trucker- Buyer/Retailer Consumer. PRODUCERS: Producers at Hewavissa. . . 101 XI TABLE NO: TITLE PAGE 51. Correlation Co-efficients of Producer, Wholesale and Retail Prices of Five Selected Vegetables at Vidurupola, Pettah and Nugegoda, Respectively . . . . . . . 106 52. Correlation Co-efficients of Producer, Wholesale and Retail Prices of Four Selected Vegetables at Meeruppa, Pettah and Nugegoda,1 Respectively. 107 CHAPTER 6. 53. Optimum Daily Requirements of Vegetables of a Person, Recommendations of the Medical Research Institute . . . . . • . . 137 54. Comparison Between Optimum Daily Requirements Per Capita and Daily Availability for per Capita Consumption of Vegetables (196>-!976)• . . . 138 55. Estimated Population and Requirements and Actual Availability of Vegetables in Sri Lanka (1970-76). , \k\ 56. Projections of Population and Requirements of Quantity and Acreage of Vegetables. . . . 142 57. Estimated Net Requirements of Vegetables According to Districts. 1 143 58. Colombo Market Average Prices of Major Commodities used as Substitutes for Vegetables,1973~78(in Rs.) 144 59. Price Ratios Between Major Substitutes and Vegetables, 1973-1978. . . . . . . 1 4 5 60. Per Capita Income in Sri Lanka, 1965-77* • • 146 61. Per Capita Consumption of Vegetables by Different Income Groups (grams per day), Consumer Finances Survey, 1973. . . . . • . .. '47 62. Per Capita Consumption of Selected Vegetables According to Household Income Groups (quantity In lbs.) Socio-Economic Survey 1969-70. . . . 149 XII FIGURE NO: u TITLE 1. Location of the Districts Selected for Field Surveys...... 2. Annual Average Retail Prices of Selected Vegetables at Current Values (1965-78) ............ r-.»«,.,...... 3. Annual Average Retail Prices of Selected Vegetables at. Real Values (1965-78) ............ 4. Seasonal Variation in Retail Prices of Selected Exotic Vegetables During 1965-1978 5. Seasonal Variation in Retail Prices: of Selected Indigenous Vegetables During 1965-1978 , , . 6. Sri Lanka; Major Vegetable Producing Zones.,,..,..,,«,. 7. The Flow Diagram of the Vegetable Marketing System in Sri Lanka (As identified during the survey) 8. Percentage Shares of the Consumers' Price Accruing to Producers and Others. MARKETING CHANNEL : Producer*-——Commission Agent — , Retailer—< -—Consumer PRODUCERS: Producers at Vidurupola. 9. Percentage Shares of the Consumers' Price Accruing to Producers and Others. MARKETING CHANNEL: Producer —Assembly Agent Trucker-Buyer/Retailer——Consumer PRODUCERS: Producers at Meeruppa, 10. Percentage Shares of the Consumers' Price Accruing to Producers and Others, MARKETING CHANNEL: Producer——Assembly Agent V — , Trucker-buyer/Retailer —Consumer PRODUCERS: Producers at Hewavissa , 11. Trend in Per Capita Daily Net Availability of Vegetables During 1967-76. . CHAPTER I IJSTJODĴ CTION 1 , 1 The_Problera Vegetables being an essential component in the daily diets of the people in Sri Lanka occupy a significant place in the domestic food production and consumption. On an average* about 10 percent of the monthly household food expenditure is on vegetables. Next to rice, vegetables account for the second largest category of food expenditure.1 Hence, even a small increase in the price of vegetables is reflected in the cost of living so far as the average consumer is concerned. Fluctuations of prices render the producers' income unstable. In the absence of reliable statistics on vegetable farmers it is safer to assume that a significant proportion of the farming population is dependent upon vegetable cultivation. It is estimated that the annual production of vegetables in Sri Lanka amounts roughly to about 600,000 tons. On an average about 300,000 acres of land is annually devoted to vegetable 2 cultivation in this country. The middlemen are often alleged to have exploited both the producers and the consumers of vegetables. This means that the middlemen absorb the major proportion of the price paid by the consumer. Studies carried out so far, have pointed out about the possibility of price manipulations by some traders, but these results are not substantiated with conclusive Central Bank of Ceylon (1953, 1963, 1973) Reports of the Consumer Finance Surveys of Sri Lanka, Colombo. See Chapter 6 for details. 2 2 A close look at the vegetable prices during the last fifteen years or so suggests a general Increasing trend, with a sudden and unprecedented ^increase, especially during the last 4-5 years. The prevailing high prices have become a question of national concern, even attracting the attention of the members of the legislature, during the 1977/78 budget debate. The causes of the observed upward trend in vegetable prices could be a- priori, related broadly to forces that influence farm supply, marketing and consumer demand. It becomes topical to identify and analyse the influence of each of these forces in a study of the factors affecting vegetable prices. Once the effects of these forces are identified, effective policies could be formulated, mainly with regard to the production and marketing aspects in order to keep the prices of vegetables within reasonable limits. 1.2. Objectives This study seeks to identify and to analyse the facters that influence the price of vegetables in Sri Lanka. The specific objectives of the study are :- (a) to identify the trends and the seasonal variations in vegetable prices, and to examine the factors leading to such trends; (b) to ascertain the factors influencing the farm supply, marketing and consumer demand and their effects on the determination of prices; and (c) to examine the effectiveness of the vegetable marketing system with special reference to the pricing efficiency. 1.3 Methods_of^Study This study is based on data and information obtained through three main approaches. 1 Abeysekera, Terrence and Piyadasa Senanayake (1974) Economics of Vegetable Production and Marketing, ARTI, Colombo, Research Study Series No: 2. evidence.1 It may therefore, be relevant here to test this hypothesis. 3 (A) A field survey was conducted in four important vegetable growing districts, i.e. Anuradhapura, Badulla, Kandy and Jaffna,to collect data and information bn economic aspects of production and market­ ing of vegetables, representing the Dry Zone, Upcountry Wet Zone, Midcountry Wet Zone and the Jaffna peninsula, respectively. (B) Time series data on production, acreage, prices, consumption, population, income etc., was collected from various sources i.e. The Central Bank of Ceylon, Department of Census and Statistics, and the Department of Marketing Development. (C) Available publications which deal mainly with the aspects of production, marketing and pricing of vegetables in Sri Lanka are used in reviewing the literature and will be refered to at the appropriate places. The_Field Survev A reconnaissance survey was undertaken in Anuradhapura, Badulla and Kandy districts during August, 1978 and in Jaffna during December 1978* The objectives of this reconnaissance survey were three fold i.e. (a) collection of preliminary information on vegetable production and marketing, (b) selection of suitable localities for conducting the survey proper in each of the districts, and (c) pretesting the quest­ ionnaire designed for the sample survey of vegetable producers. In the selection of localities to collect data on production and farm level marketing, priority was given to the areas where vegetable cultiv­ ation predominates. The number of localities selected in each of the districts varied according to the adequacy of the number of vegetable cultivators to be interviewed in each locality. Except in Jaffna, 2 villages in each of the other districts were selected for this purpose. The villages so selected were as follows:- Though the researchers intended to conduct the survey in Jaffna district alongwith that in other districts, this had to be postponed due to factors beyond their control. LOCATION OF THE DISTRICTS SELECTED FOR FIELD SURVEYS. o/am/CT *" Districts selected /or surveys o/ Production and primary and wholesale level marketing. Ol Strict selected for surveys 0/ wholesale and retail levet marketing • 5 District Anuradhapura Badulla Kandy AGA Division Talawa Welimada Patha-Hewaheta Village Lunuwewa Ikiriwewa Vidurupola Kovilpathana-i ( B o } Gorakapathana) Meeruppa Hewavissa In Jaffna district, the growers who supply vegetables to Chunnakam and Chavakachcheri markets are fairly scattered over a wide areas so that one or two villages were considered inadequate. Hence, the following villages were selected to represent the Jaffna district;- District Jaffna AGA Division Uduvil, Valinorth, Valisouth, Valieast, Tellipalai Chavakachcheri, Villages Mallakam, Mailiddy) Udvil Vasavilan, Kopay, ) Keeri- ChunkuvellijPuttur) malai. Kaithady.Maruthady )Kaith- Kodikamam, Meesalai)ady Sarasalai,Madduvil.)Maddu- vil Apart from the vegetable producing areas, the following market centres were also selected to gather information on various aspects of vegetable marketing: (a) Producer^airs ^ W e l l f f l a d a ( B a d u l l a ) 2. Talawa (Anuradhapura) 3. Tambuttegama (Anuradhapura) 4. Chunnakam (Jaffna) (b) WholesaleMarkets ^ P e t t a h ( C o l o f f l b o ) 2. Kandy "'' 3. Chunnakam (Jaffna) (c) Retail_Markets 1. Borella 2. Nugegoda 3. Dematagoda 4. Maharagama 5. Kandy 6. Chunnakam 6 Category Anuradh­ Badu- Colombo Jaffna Kandy Total of Personnel apura lla_ 1. Vegetable cultivators 50 46 —' 51 69 216 2. Assembly Agents 12 — — — 08 20 3, Brokers — 04 05 16 —- 25 4. Trucker-buyers -- 03 — — 12 15 5. Transport Agents — — 09 02 05 16 6. Wholesalers — 09 11 18 20 58 7. Retailers 13 07 91 52 03 166 8. Marketing Dept. Officials — 04 12 06 07 29 9, Co-operative Officials — 04 03 — 07 10. Other Officials 03 10 04 07 09 33 11. Market Labourers — — 45 06 02 53 12, Consumers 08 . — 48 61 01 118 Total 86 87 228 219 136 756 During the Phase II of the survey, specific data on costs of production of vegetables were gathered from a selected sample of vegetable cultivators. In the selection, the rigorous statistical sampling methods could not be followed due to the absence of a complete list of vegetable growers. The sample of cultivators for the final survey was drawn from a list compiled by the research assistants with the help of another list provided by the Cultivation Officers, The number of cultivators in the sample in each locality is given in table 2-. The survey proper in all the localities was carried out in two phases. The phase 1 of the survey in all villages and market cnetres, except those in Jaffna district, was conducted from 3rd October, to 18th November, 1978. During the phase 1 of the survey primary emphasis was on various aspects of vegetable production and marketing at farm, wholesale and retail levels except specific data on costs of production. Details of the respondents involved in phase 1 of the sruvey are given in table 1-. Table 1- Number of Persons lnterviewjed_puringj^ Table 2-. Number of Cul tiv̂ ô ,Int££vlgw^̂ n"£inB_gl?£gg_H-gL.JftjLlifŷ YfE District Anuradhapura Badulla Kandy Jaffna Villages No? of Cultiva­ tors in the sample Period of survey • Lunuwewa 18 Ikiriwewa 20 Vidurupola 20 Kovilpathana/Gorakapathana(Borag-18 Meeruppa as) 20 Hewavissa 20 Mallakam, Mailiddy Vasavllan, Kopay Chunkuwelli, Puttur (Uduvil-Keerimalai) 26 Kaithady, Maruthady, Kodikamam, Meesalai, Sarasalai, Madduvil (Kaithady-Madduvil) 18/1/79-01/2/79 03/2/79-17/2/79 16/1/79-30/1/79 - do - 17/1/79-31/1/79 - do - 15/2/79-28/2/79 Total 35 177 S S 9 S 3 - do - Apart form collecting cost of production data from these localities, a re-survey of vegetable marketing was conducted in the market centres (primary,wholesale and retail) involved in phase 1 to collect supplementary data and information. The re-sruvey helped cover both peak and slack periods of marketing activities in all the localities selected. The periods of survey in this regard in various localities except in the case of markets in Colombo, are the same as given in table 2. The market centres in and around Colombo were re-surveyed during the period 15/1/79 to 31/1/79. Thus, the reference periods of data collected through field surveys are as follows:- (a) Marketing aspects - October,1978 - February, 1979 (b) Aspects of production includ­ ing Cost of Production data. - i. Maha 1977/78 ii. Yala 1978 iii. Maha 1978/79 The methods of data collection varied from informal and guided interviews and prestructured questionnaires to direct participant observation. During both phases of the field surveys, the data was collected by 13 research assistants, stationed in the localities throughout the period 8 of the survey under the continuous supervision of thi researchers, ^'t> Nature_and Accuracy of Data Time series data on production and acreage, collected from the Depart­ ment of Census and Statistics, are not perfect in themselves, They are not measured levels of actual production and acreage, but rather rough estimates based on the official's rule of thumb techniques. Therefore, due consideration has to be given to possible under and over estimation. Price data collected by the Marketing Department could be regarded as fairly accurate since the officials themselves visit the markets " and record prices. But these data for the most part are inconsistent. Only the wholesale and retail prices are available in the Department. This prevents a meaningful historical comparison between prices received by the producers and prices prevailing at subsequent levels of hthe marketing chain. The accuracy of the data and information collected through;the current field surveys is assumed to be high, since the research assistants made individual observations and kept records. However, some data, especially the cost of production, past prices , etc., are subject to memory lapses of the respondents. Time series data are lacking mainly in respect of vegetable production and marketing and these aspects are analysed mainly on cross-sectional data and information. However, the consumption aspect, as it relates to vegetable prices, will be analysed on the basis of time series data. 9 CHAPTER 2 TREND AND SEASONAL VARIATION IN VEGETABLE PRICES1 This chapter attempts to identify the trend and seasonal variation in retail prices of selected vegetables. In an exercise of this nature it is not possible to deal with all the vegetable variaties grown in Sri Lanka and only 10 vegetables are selected for the analysis. These are, beans, beetroot, cabbage, carrot, leeks brinjal, cucumber, lady fingers, red pumpkin and snake grourd. The first five vegetables represent the exotic vegetables while the balance repres­ ent the indigenous varieties. These ten vegetables are regarded as fairly representative of the important vegetables that are produced and consumed in the domestic markets. Furthermore, the retail prices prevailing at the Colombo central market are used in this analysis as proxy of prices at all the retail markets in Sri Lanka. This is necessitated by the difficulty of examining price data for all the retail markets. On the other hand, even if retail price data are available in respect of each principal town in the country, they are rather scanty. Thus Colombo prices are used on the basis of two 2 assumptions. First , it is assumed that the Colombo market price deter­ mines the prices elsewhere in the country. Second and corollary to this, it is assumed that outstations' retail prices are somewhat highly correlated to Colombo prices. Price of same vegetable varies depending on quality differences. It is difficult to consider prices of different grades of vegetables. There­ fore, price of "Fair Average Quality" produce is used in the analyses throughout this report. "These simplifying assumptions are made on the basis of findings of some of the earlier studies. An example.of such a study is.; " The Report to the Minister of Foreign and Internal Trade on the Role of the Marketing Department and the All Ceylon Producers' Union. (1971) 10 Moreover, the retail prices of vegetables at the Colombo central market are assumed to be higher than those prevailing at vegetable producing areas and lower than those at market centres in suburban areas around Colombo and at other principal towns outside Colombo. (a) Trend in Vegetable_Prices:- Table 3-. Annual Average Retailor ices of SeJected_Vege tables^ (1965-78) (Rs. cts, per lb. at current values) (a) (a) (a) Year * 1965 1966 1967 1968 1969 1972 1974 1975 1976 1977 1978 change ove the 2£Ei2~ Vegetable Exotic Vegetables 1. Beans ( b ) .55 .54 .54 .58 .58 .74 .86 1.05 1.30 1.28 1.24 + 127 2. Beetroot .39 .42 .47 .49 .46 .46 .76 1.03 .85 1.07 .94 + 137 3. Cabbage .38 .34 .34 .35 .36 .38 ,55 .66 .67 .85 .70 + 84 4. Carrot .38 .42 .45 .46 .47 .52 ^66 .78 ,79 1.21 1.47 + 300 5. Leeks .30 .31 .31 .38 .37 .53 .65 .71 ,81 1.08 1.29 + 300 Indigenous Vegetables 6. Brinjal .33 .26 .32 7. Cucumber .20 .21 .23 8. Lady fin­ gers 9. Red pum­ pkin 10. Snake gourd .37 .34 .40 .16 .17 .21 .26 .27 .30 .39 .34 .42 N.A. N.A. ,71 ,68 ,71 + 111 .23 .24 .26 .27 .30 .38 .36 .36 + 80 .44 .38 .44 .49 .55 .68 .67 .84 + 140 .25 .15 .31 .41 .41 .67 .69 .67 + 32 .31 .27 .33 .42 .46 .57 .62 .52 +100 Source: Department of Marketing Development Notes : * Prices for years 1970, 1971 and 1973 are not available. (a) Average prices from January to September only. (b) Average prices of green, butter and kidney beans. N.A. = Not available ANNUAL AVERAGE RETAIL BIANS PRICES OF SELECTED VEGETABLES AT CURRENT VALl C196S- 1978) BEETROOT IMS 66 C7 66 69 ' 72 CABBAGE 77 76 Vearr ISO «3 «a £ no /to 90 so 70 £0 So 4o 30 go 16 BR IN JAL __ T.„ " T ' l —i~ figure- Q 12 13 Year* Vegeta­ b l e " (a) (a) (a) 1965 1966 1967 1968 .1969 1972 1974 1975 1976 1977 1978 % change over the period Exotic Vegeta­ bles 1. Blahs .49 .48 .47 .48 .44 .49 ,52 ,53 .65 .63 ,56 + 14 2. Beet­ root .35 .37 .41 .41 .35 .32 .46 .52 .42 ,53 .42 + 14 3. Cabb­ age .34 .30 .30 .29 ,28 .25 .33 ,33 .33 .42 .32 - 6 4. Carrot.34 .37 .39 .38 .36 ,34 .40 .39 .39 .60 .66 •f 94 5, Leeks ,27 ,28 ,27 ,31 ,36 .35 ,39 ,36 ,40 ,53 .58 + 111 Contd: Table 3 and figure 2 show an upward trend in price of all the selected vegetables from January 1965 to September 1978, with its fluctuations in the middle years. The relative increase in price within this period varies from 75% for red-pumpkin to 300 percent for leeks and carrot.. In general, the price increases are more pronounced with exotic vegetables : than with indigenous vegetables. Another notable feature is that the price of all vegetables have increased at a sharper rate from about 1974 onwards than in the previous years. This may be due to the inflationary trends in the economy during the period under consideration . This trend of prices has to be viewed taking into account not only the current prices but the real prices as well. Table 4 presents the prices of vegetables after making adjustments for increases in the general Consumer Price Index, Table 4-: Annual Average Retail Prices of Selected Vegetables (1965-78) in Rs. cts. per lb. (deflated by the Consumer Price Index) Figaro - o 1 4 ANNUAL AVERAGE J?E7AIL PRICES OF SELECTED VEGETABLES AT REAL VALUES BEANS <*7*) BEETROOT CABBAGE i9ns ee L EEKS y ers ,33 ,30 ,35 .36 ,29 .29 ,30 .28 .34 ,33 .38 + 15 . 9. Red Pumpkin .14 .15 .18 .21 .11 .21 ,25 .21 ,33 .34 .30 +114 10. Snakegourd .23 .24 .26 .26 .21 .22 .25 .23 .28 .31 .23 0 SSUS&S • Department of Marketing Development Notes : * Prices for years 1970, 1971 and 1973 are riot available (a) Average prices from January, to September only (b) Average Prices of green, butter and kidney beans N.A. ~ Not available Table 4 and figure 3 suggest a general increase in the prices of the majority of vegetables even after disentangling the effect of inflation. The prices of carrot, leeks, and red pumpkin show a sharper increase. But it is clear that the increase in prices is not as greater as in the case of current prices. Some vegetables-cabbage and cucumber - have sho-m a declining trend in real price. It Is also evident from table 4 that vegetable prices have increased due to factors other than the increases in the general price level in the economy of Sri Lanka. Our main objective is to identify and analyse these other factors. (b) Seasonal Variation in_Vegetable Prices This section deals with the pattern of monthly1 price variation of select­ ed vegetables. The price of agricultural produce tends to fluctuate according to the seasons in which such produce enter the market. This fluctuation or inst- ^Vegetable prices also vary weekly, daily and even within a day. But the analysis of weekly or daily prices is a difficult process when one consi­ ders a series of data for 14 years from 1965 to 1978. 17 ability in price is more pronounced in the case of perishables and crops which, do not have a stable supply situation throughout the year. Almost every variety of vegetables has its seasonal supply whereas the demand remains relatively stable throughout the year compared to supply. Thus In months when the supply is low the price moves up and in peak periods price moves down. Being perishable in nature large supplies of vegeta­ bles come into the market in peak months, leading to severe price fluctuations in different months of the year- This causes great inconven­ ience to the consumers in turn resulting in undersirable variations in the income of the producers. Therefore, it is useful to identify seasonal variations in the price of each individual vegetable, so that steps could be taken to stabilize the year-round production patterns for those vegetables which have greater price fluctuations. and Tables 5 to 8/figures 4 and 5 show the monthly variation in retail prices seperately for the selected exotic and indigenous vegetables for 11 years from 1965 to 1978. (Price, data for the years 1970, 1971 and 1973 were not available). All the selected exotic vegetables roughly exhibit a general pattern of monthly price variation. In general, the prices of these vegetables are relatively higher in the months of May, June, July, December, and January and are lower in the other months. However, the seasonal indices ( constructed according to percentage variation from the mean price of the year) are different from one vegetable to another. The retail price index for beans reaches its peak in June (128.1) while it reaches its slack in October (81,9). The same for beetroot occur in December (135,8) and April (81.3), for cabbage in July(127.2) and February (74.8), for carrot in June (135,3) and September(74.6) and for leeks in June (127.8) and March (83.9). As shown in table 6, the amplitude of seasonal price variation within the year is considerable. Among the selected exotic vegetables, carrot has the highest seasonal price difference which shows its greater insta­ bility with regard to supply. Beetroot also shows relatively higher amplitude of price variation compared to other vegetables. These two vegetables and leeks are grown only in a few selected areas of the country and their prices go up considerably in certain months when the supply is limited. In c o n t r a s b e a n s and cabbage are grown in many areas and have a fairly stable supply throughout the year. Hence, the moderate amplitude of seasonal price variation. Table 5: Monthly Average Retail Prices* and Seasonal Price Indices of Selected Exotic Vegetables ; 1965-1978_^ear_average_=_100)^ Vegetable B£2ns BeStr22E Cabbage Leeks Price & Index Price Seaso­•Price Seaso-•Price Seaso- Price Seaso- Price Seaso­ (Cts,) nal (Cts.) nal (Cts.) nal (Cts,) nal (Cts.) nal Month Index Index Index Index Index January 85.2 102,4 86.2 132,0 45,4 88.2 74,3 108.3 61.5 101.3 Febryary 78,1 93.9 69.2 105.9 38.5 74,8 60.2 87.8 54.4 89.6 March 78.5 94.4 50.5 75.3 41.9 81,4 59.9 87.3 50,9 83.9 April 75.1 90.3 53.1 81.3 47.8 92.8 70.8 103.2 56.0 92.3 May 101.5 122.0 63.1 96.6 49,2 95.5 85.6 124.8 61.3 100.9 June 106,6 128.1 69.2 105.9 60.6 1.17.7 92,8 135.3 77,6 127.8 July 96.3 115.7 68.5 104,9 65.5 127.2 72,4 105.5 69.5 114.5 August 88.2 106.0 56,9 87.1 51.5 100.0 61.7 89.9 57.4 94.fr September 71,0 85.3 57.5 88,1 52 . 3 101.6 51.2 74.6 53.6 88.3 October 68.1 81.9 . 51.7 79 . 2 58 . 2 113.0 52 . 3 76.2 51.6 «5.0 November 7 2 , 6 87.3 68.4 104.4 5 3 . 6 104.1 59.6 86.9 64.3 105.9 December 83.0 99.8 88.7 135.8 53.6 104.11 82.9 120.8 70.3 115.8 Year Average 83.2 100.0 65.3 100.0 51.5 100.0 68.6 100.0 60.7 100.0 S X B S s s s s s s s s s s s s a s sassstas sotsrsss C5SSS.lt.SSS * Source : Department of Marketing Development Table 6: Amplitude of Seasonal Variation in Prices of Selected Exotic Vegetables ^ Vegetable •.H3SS„2C§£2S°2 Difference Low High Beans 81.9 128.1 46.2 Beetroot n 81.3 135.8 54.5 Cabbage 74.8 127.2 52.4 Carrot 74.6 135.3 60.7 Leeks 83.9 127,8 43.9 See also, Abeysekera and Senanayake (1974) op. cit. http://94.fr http://C5SSS.lt.SSS 19 Table 7~; Monthly Average 5^W_frl£esj* and_Seasonal P ^ I L 1 — ^ ™ ^ - ^ ! ^ ^ ^ - ! " ^ ! 6 ^ - - ^ 3 ^ ^ H 6 8 ! 1?65r'1978 (jear Average * 100} ^egetable^ j*rice^ Cucumber Lady fingers Red_pumgkin S n a k e _ | O u r d Month Price Seasonal Price Seasonal Price Seasonal Price Seasonal Price Seasons (Cts.) Index (Cts.) Index (Cts.) Index (Cts.) Index (Cts.) Indgx_ January 47.0 99.4 21.9 78.8 41.8 82.1 26.9 71.2 41.5 105.1 February 39.3 83.1 24.5 88.1 46.1 90.6 27.5 72.8 35.0 88.6 March 43.4 91.8 27.2 97.8 52.7 103.5 30.7 81.2 37.3 94.4 April 44.2 93.4 26.8 96,4 50.1 98.4 32.9 87.0 36.0 91.1 May 34.8 73.6 . 27.8 100.0 53.4 104.9 34.9 92.3 42.7 108.1 June 47.3 100.0 29,9 107.6 58.6 115.1 36,5 96.6 49.0 124.1 July 51,7 109.3 30.9 111.2 59.4 116.7 41.5 109.8 37.0 93.7 August 57.2 120.9 27.4 98.6 49.5 97,2 43.8 115.9 33.8 85.6 September 51.3 108,5 30.4 109.4 49.8 97.8 47.0 124.3 33.0 83.5 October 51.3 108.5 32.3 116.2 46.3 90.9 50.8 134.4 40.1 101.5 November 44.5 94.1 30.0 107.9 54.1 106.3 44.6 117,9 47.8 1.21.0 December 49.3 104.2 24.9 89.6 48.4 95.1 35.9 94.9 40.9 103.5 Year Average 47.3 100,0 27.8 100.0 50.9 100.0 37.8 100.0 39.5 100.0 * Source: Department of Marketing Development 20 Figure • 5 i SEASONAL WtltAjriOti 7A/| RETAIL] P8tfES Seasonal pELQCTFp INDIGENOUS ^EGEJABLfQ \ AYEkATErilol^r Tanuary February March April May Tun« July Augasi September Ot+obe* Hovember December There is no common pattern of seasonal price variation with regard to the selected indigenous vegetables. For example, the price of brinjal is relatively higher during the four months from July to October while it is lover during the other months whereas the price of cucumber is relatively higher during the seven months from May to November. The price of red pumpkin rises progressively from January to November. The price peaks and slacks for these vegetables are as follows:- Brlnjal : August (120.9) and May (73.6) Cucumber: October(116.2) and January (78,8) Lady fingers: July (116.7) and January (82.1) Red pumpkin: November (134.4) and January (71,2) Snake gourd: June (124.1) and September (83.5). It is interesting to note that cucumber, lady fingers and redpumpkin have their price slacks in January which shows that the availability of these varieties in large quantities in the market at the same time contribute to the very low prices they fetch.- Table 8- Amplitude of Seasonal Variation in Prices of Selected Indigenous Vegetables. Vegetable Index of Season Difference , Low High Brinjal 73.6 120.0 47.3 Cucumber 78.8 116,2 37.4 Lady fingers 82.1 116,7 34.6 Red pumpkin 71,2 134.4 63.2 Snake gourd 83.5 ,124.1 40.6 The amplitude of seasonal price variation of cucumber, snake gourd and lady fingers is not of a very high nature when compared with that of exotic varieties. These indigenous vegetables are grown in almost every part of the country except in the up country wet zone and have a more regular supply throughout the year. Brinjal is also grown in almost every part of the country but in certain months, the supply is very limited, All these four vegetables are long-term crops in the sense that once cultivated harvesting can be done over 6-8 months. Red pumpkin, however, exhibits a higher amplitude of seasonal price variation because of its limited supply mainly from chenas in the dry-zone and Jaffna peninsula. The peak harvesting season of this crop is limited to 5 months from December to April. 23 The seasonal price variations discussed above are generally consistent with the major seasons in which the supplies of each vegetable enters in the market. This pattern is of course disturbed in times when bad weather conditions or other random disturbances affect the crops. Our main concern here is not the seasonal behaviour of prices because it is more related to ecological and climatic factors which govern the production pattern of individual vegetable varieties. This study primarily deals with economic reasons behind the upward trend In prices, recurrent high prices and price structure of vegetables. 24 CHAPTER 3 HYPOTHESES: > The recurrent high prices and their upward trend over recent years are hypothesized, ̂a priori to be due broaaly to factors related to farm supply, marketing and consumer demand. The components of each of these factors will be briefly outlined below. These hypotheses will be tested in depth in the later chapters. 3.1 FactorsJRelated to Farm Supply:- The upward trend nad recurrent high prices may be a result of lower supply of vegetables and constant demand over the period under consider­ ation. It could also be due to the fact that the total supply of vegeta­ bles remained almost static, while the demand increased at a faster rate . However, there seems to be either a shortfall or a stagnation of produ­ ction of vegetables over the last decade. This could again be due to several reasons. The major reasons are indicated below. (a) It is possible that a part of the total acreage hitherto devoted to vegetable cultivation may have been transferred for cultivation of other food crops which yield higher profits than vegetables. High Prices fetched in the market for such crops as potatoes, cowpea, chillies, green-gram, onions, maize, groundnuts etc., might have encouraged the earlier vegetable growers to shift over to these crops. Sometimes, It is probable that Chena lands in the dry-zone, where the major part of the indigenous vegetables came from, are being converted to permanent highland crop farming and paddy cultivation under irrigation development projects. (b) The supply price of vegetables at the farm-rgate may have gone up due to increases in the cost of production. The price of inputs used in vegetable cultivation such as land, labour, seed, ferti­ lizer, chemicals, etc.. has increased over the last 4-5 years leading to a hike in the cost of production. 25 (c) Problems connected with the availability of inputs used in vegetable production might also have acted as a disincen­ tive for the producers to increase the farm supply of vegetables. 3.2 Factors Related to Marketing; The high prices of vegetables may also be due to the imperfections and inefficiencies of the vegetable marketing system. Increases in marketing costs, which are exogenous to the marketing system, might also have contributed to the upward movements, of vegetable prices. These explanat­ ions need further analysis. In this context, the following considerations are relevant. (a) ' The vegetable marketing system, the process of price determination and pricing efficiency will be reviewed in order to ascertain whether the demand and supply process is the sole determinant of the price or there are other forces operating. (b) There may be genuine reasons to increase the cost of marketing services such as handling, transport, packing, etc. In fact fuel prices, labour charges, prices of containers, market levies, etc., have gone up in recent years, having their effects on the retail prices of vegetables. The magnitude of the effect of each of these factors on vegetable prices, is examined (c) The possible Imperfections in primary* wholesale are retail markets wholeh limit competition leading to abnormal profiteering by a few traders and firms, will also be examined. This study seeks to ascertain the causes underlying the imperfections which facilitate the price manipulation by traders. (d) The nature, extent and effectiveness of the government intervention In vegetable marketing and their influence in pricing of vegetables will also be analysed. (e) Of the total production of vegetables, the proportion that is used for processing and canning is negligible when compared with the quantity that enters the fresh market. These industries may be having their own effect on prices of certain varieties like tomatoes, red pumpkin" and ash pumpkin, especially during periods of short-supply. The marginal nature of the effect of such industries have on market 26 prices of fresh vegetables precludes us from a discussion on this issue, 3.3 Factors_Related To.Consumer^Demand: Consumer demand for vegetables might have increased over the last decade or so, due to several reasons, In a situation of lower or static annual supply and increasing demand, the prices invariably show an upward trend over the years. The major possible factors influencing the increasing demand are listed below. 1 (a) Overall population increase and changes in it's structure may be one of the major factors that lead to a higher demand for vegetables. (b) The demand for vegetables among the average consumers, might also have increased due to the fact that vegetables have been still cheaper compared with the price and the availablity of substitutes (fish , meat, dry-fish, eggs, green-gram, cowpea, dhall, etc.,) (c) Demand also goes up with the increases in the real incomes of the consumers. Some of the earlier studies have pointed out that real income per capita has a more significant impact on the demand than price of vegetables. ' Moreover, it has been shown that with the increases in real per capita income, the consumers attach a higher preference to exotic- vegetables over indigenous vegetable varieties. • , • (d) With the expansion of the tourist industry in Sri Lanka, a certain proportion of such vegetables as tomatoes, cucumber, and carrot is absorbed by the tourist hotels at a higher price. But this has very little impact on the prices of vegetables as a whole. (e) In the recent past some firms have started exporting fresh vegetables, especially to Middle East countries in quantities not large enough to make a substantial impact on Vegetable prices, prevailing at local markets. This may contribute to price increases 1 Gunawardena, P.J. (1977) Towards the Estimation of Supply and Demand Functions for Vegetables in Sri Lanka, Unpublished MA Thesis, ANU Canberra. 27 in months of short supply. But again, as In the case of vegetable processing and tourist industry, it too makes only a little Impact on the price of vegetables as a whole. Chapter 4 will discuss the effect of the factors related to farm supply of vegetables on their prices. 28 CHAPTER 4 FARM SUPPLY AND PRICE OF VEGETABLE 4.1 Background3- (i) Vegetable Cultivation in Sri Lanka Sri Lanka's economy is primarily based on agriculture. The agricultural economy of the country is traditionally devided into two sectors, i.e. the plantation sector and the domestic or small farm sector. The plantation sector is concerned with the product­ ion of tea, rubber, coconut and other minor perennials for export while the domestic sector concentrates on the production of a number of food crops and livestock products mainly for consump­ tion within the country. Rice is the major crop, while vegetables occupy the next place in the domestic food production sector. Generally, vegetables are grown in almost every part of Sri Lanka. However, certain types of vegetables are area specific. Thus, four broad vegetable producing zones can be identified on the basis of regional variations in agro-climatic conditions. These zones are:- (a) the up-country wet zone, (b) the Jaffna peninsula, and (c> the dry zone and (d) the low-country wet zone.(See figure 6.) It had been customary to group vegetables that are grown in Sri Lanka into two main categories, namely} (a) up-country or exotic vegetables, and (b) low-country or indigenous vegetables. Cabbage, carrot, beetroot, beans, leeks, tomatoes and raddish are exotic and brinjal, ash plantain, okra (lady fingers) cucumber and various kinds of gourds and pumpkins are indigenous. Although there was a marked difference between the areas in which these two categories of vegetables are cultivated about 10 years back, almost all vegetables are grown in all localities today. Clearly, the categorization in terms of up-country and low-country has therefore, little meaning In the present context. However, the categorization in terms of their origin (exotic and indigenous) is useful and will 29 Figure: 6. SRI LANKA'. MAJOR VEGETABLE PRODUCING ZQNEQ. 30 be maintained throughout this repot. The exotic vegetables are mainly grown in the temperate and hilly areas such as Nuwara-Ellya, Badulla, Kandy and Matale districts. Certain varieties of them are also grown in the Jaffna Peninsula and even in some dry zone districts where the soil and weather conditions are favourable. Although the exotic vegetables are grown throughout the year irrespective of Yala and Maha , a glut of production is normally experienced in the months of March, April, May, September and October (during Yala), These vegetables need intensive care and improved seeds, chemical fertilizers, agro-chemicals and even irrigat­ ion. Mostly' , the indigenous fruit vegetables are produced in the •*chena"s (where shifting or slash-and-burn cultivation is practiced) in low- country dry zone, in low-country wet zone' areas and in the Jaffna penin­ sula. These vegetables are grown for the most part in Maha which nor­ mally extends from July-August to February-March. The peak months of production are January and February. In the low-country wet zone areas the major production season is Yala which usually extends from April to August, but the quantity Jo produced is far smaller than that produced in chenas in the dry zone during the Maha season . Yala is the main season in Jaffna also. The season there extends from January to August. In all the zones except the dry 2one, vegetables are grown in paddy fields as well as on highlands during Yala when adequate water is not available for paddy cultivation. In contrast, paddy is cultivated in paddy fields during Maha and vegetables on highlands. The Yala vegetable crop in the dry zone comes from the colonies where irrigated water supply is assured . The chena type of vegetable cultivation has special characteristics. Several varieties of vegetables are grown toge­ ther with a number of cereals and millets. Land preparation is minimal and crop care such as weeding, fertilizing, etc., is almost non-existent. This is primarily because of the unpredictable nature of rainfall. Although the indigenous leafy vegetables have a comparatively high nutri­ tional value, only a smaller proportion of their production enters the market compared to other types of vegetables. The cultivation of these vegetables on a commercial.basis is done in and around Colombo city. 31 However, the extent of land devoted to this cultivation is in a declining phase due to the expansion of the city. Indigenous root vegetables consist of manioc, sweet potatoes and a number of other local yam varieties. These are mostly grown in the dry zone and in the low country wet zone areas. There are no seasonal differences in the cultivation of these vegetables. In the present contest, these are consumed only as a secondary food item with rice while in the recent past these were consumed (mainly by rural people) as a major substitute for rice, (ii) TJ}e Goyernment_Policv_Regarding V In the annual crop production programmes (Agricultural Implementat­ ion Programmes) of the government of Sri Lanka considerable emphasis is placed on raising the production levels of vegetables for realising the ultimate objective of Increasing the consumption levels of vegetables. Many policy measures have been recommended in the Agricultural plans and Development Proposals prepared by the Ministry of Agricul­ ture and Food as far back as 1958. In 1958, the government had recognised the significance of zoning of vegetable cultivation as follows:- In the course of investigation, it was considered whether the cultivation of vegetables should be zoned in different parts of the country on the basis of suitability of the soil and the particular climatic conditions of the area....It would be worthwhile if a scientific survey is carried out on the soil and climatic conditions for different varieties of vegetables....to ascertain the best possible vari­ ety that could be grown in a particular zone... The 1958 Agricultural Plan also proposed planing production through the establishment of state-owned farms and collective and co­ operative organisations, encouraging orderly marketing and stabilization of prices. The significance of the provision of finance, Improved inputs, transport and storage facilities, better Sfinietry of Agriculture and Food, 1958, Agricultural Plan, First Report of the Ministry Planning Committee, pp 229-242, 32 methods of grading and packing, market information and , research has also been recdgnised in this plan. In subsequent years, the successive governments concentrated more on the policies designed to increase the total' production of vegetables^ without increasing the area under cultivation. This has been recorded as follows:- "....The problem of development of production is not to increase the area under cultivation, but to stabilize the existing areas of production, to change the pattern of production to ensure a better balance in the supply of different types of vegetables through the year.,,.improvements in levels of production to meet increasing demand can be affected on these existing areas by the introduction of modern techniques of vegetable production and by improving the facilities now available to the vegetable cultivators " The views expressed above are justifiable as there is less hope for the expansion of area under cultivation due to the worsening land/man ratio in the country. The Draft Agricultural Development Plan of 1971 r 77 of the Ministry of Agriculture (Vol. A) has also made proposals to develop vegetable production. The major ̂ proposals are:- (a), not to expand the acreage under vegetable cultivation; (b) to prevent on farm wastage of produce; (c); to improve the quality of the produce by introducting better methods of cultivation and providing quality seed; and encouraging the producers to harvest the crop at correct time, and; (d) to take steps to encourage off-season cultivation of vegetables. All the Agricultural Plans mentioned above and the Agricultural Sector 1 Ministry of Agriculture and Food, Agricultural Development Proposals, 1966-70, pp. 243-259 33 Plan prepared in 1977 emphasize the significance not only of planning the production but also of. the improvement of input and product marketing* extension and research-services. Marketing and distribution of inputs in vegetable cultivation is handled by the government through the Department of Agriculture, the Department of Agrarian Services and the co-operatives. The government's intervention in the marketing of vegetables is through its Department of Marketing Development.1 Extension services for vegetable cultivation are handled mainly by the officials of the Department of Agriculture. Technical research into vegeta­ ble production has been mainly undertaken by the following government sponsored research stations:- 1) Up country wet zone - Sitha-eliya 2) Mid country wet zone - Peradeniya, Katugastota 3) Low country wet zone - Walpita 4) Dry zone - Mahailluppailama In sum, it is apparent that the government policy regarding vegetable pro- cudtion has been designed towards increasing the volume and quality of the produce by introducing new methods of cultivation and the provision of improved seeds and other related inputs while encouraging the acreage under cultivation to be kept stable as far as possible. In the achievement of this objective, the role of the government can be defined as providing better and adequate marketing, extension and research facilities. 4,2 Trenda_4n Acreage_and_Production of_Vegetables; The difficultyin getting complete time series data on the overall acreage and production aspects of all the vegetables has confined our analysis to 1 0 vegetables selected to represent the important varieties grown and consumed in the country. In analysing the trends in acreage and production, both simple linear and quadratic regressions were tried but the latter was found to be * Aspects of government intervention in vegetable marketing will be discussed In, .detail In Chapter 5. . 34 unsuitable in terms of statistical performance. Thus, the mathematical model used in analysis is as follows;- Y » a + bt + e where, Y m Acreage or Production t » time trend e » error term a a constant b • coefficient to be estimated 4.2.1 Trend in^ Acreage^ The estimated acreage trend equations are given in table 9. Oi the the ten vegetables, beans, carrot, leeks and brinjal show a marked increase In acreage. Although beetroot and red pumpkin have positive trend coeff­ icients they are not statistically significant. Cabbage, cucumber, lady fingers, and snake gourd have negative but non-signiflcent trend coeff­ icients, It can be said that the acreage devoted to these vegetables have stagnated throughout the period under consideration. It is interest­ ing to note that only one of the indigenous vegetables shows a marked increase in Its acreage. The change In quantity produced is more important here because the aim of government policy had been to keep the acreage as stable as possible with Increased production through higher productivity. Table 9-: Estimated Linear Trend Equations for the Total Acreage of 10 selected vegetables (1962/63-1976/77, No: of observations - 15) Vegetable Constant Annual trend R2 coefficient _b — Exotic 1. Beans 7441.07 276.94* 0.50 (3.621) 2. Beetroot 1926.43 83.99 0.13 (1.407) 3. Cabbage 7366.35 -122,02 0.10 (1494) 4. Carrot 899.67 43.2 * 0.46 (3.317) 5, Leeks 622.12 44.98 ** 0.34 (2.6) 35 Indigenous; 6. Brinjal 7. Cucumber 8. Lady finger8 9. Red pumpkin 10. Snake gourd 22318.06 7174.09 19544,75 15562.56 9180.01 640.64*** 0,26 (2.158) -81,004 0.08 (1.079) 154.91 0.05 (0.853) 190.08 0.03 (0.682) -89.82 0.06 (0.884) Notes:Source of data : Department of Census and Statistics — — - Figures in parantheses are absolute t values.; •? * Significant at 0.5 percent level ** Significant at 1 percent level *** Significant at 2.5 percent level. Table 10-: Estimated Linear Trend Equations for the Total Production of 10 Selected vegetables (i962/63-1976/77No: of obser­ vations - 15) Vegetable Constant Annual Trend Coefficient R Exotic_ 1. Beans 15162514.62 514968.41 15162514.62 (1.71) 2. Beetroot 5626790.52 266867.22 (1.205) 3. Cabbage 35423101.32 -557580.21 3. Cabbage (0.461) 4, Carrot .4395504.22 -12779.14 (0.091) 5. Leeks -123904.44 971752.37* (3.556) Indigenous: 6. Brinjal 7. Cucumber 8. Lady fingers 9. Red pumpkin 10, Snake gourd 42577830.51 23992546,31 55370094.27 36812272,41 3829689.11 1035027.46 (0.507) -658011.49 (0.376) 3955805.11 (1.124) 1459167.56 (0.849) -1616978.45 (0.858) 0.18 0.10 0.02 0.006 0.49 0.019 0.01 0.09 0.05 m 0 0 5 Continued, 36 Source of data; Department of Census and Statistics. Figures in parantheses are absolute t values. Significant at 0.5 percent level 4.2.2 Trend in Production; As shown in table 10, total production of selected vegetables does not; show a significant trend in any direction, except in the cases of leeks. The production of leeks shows a significant increasing trend oyer the period under consideration. This may be due to the shortage and high price of red-onions in the recent past which gave the opportunity for the vegetable cultivators to grow more leeks, a near substitute for red-onions, especially in up-country wet zone districts. This itself might have affected adversely the production of other up country exotic vegetables such as cabbage and beetroot, 4,3 Why the Acreage and the Production of Vegetables Have Not Increased Significantly? , Trends in acreage and production are in fact dependent upon the price responsiveness of the vegetable growers. It has been found in earlier studies that the vegetable cultivators in Sri Lanka respond positively to increases in prices . But, despite increasing demand and retail prices of vegetables, the acreage and the production of most of them have not increased significantly. This suggests the effect of several factors other than the nature of producer's supply response itself. We identified four broad factors affecting this situation. These are (a), competition from subsidiary food crops and certain other crops, (b) effects of dryzone irrigation settlement projects, (e) problems of the expansion of vegetable production and (d) inability of farmers to get their fair share of the retail price. The rest of this chapter is devoted to a discussion of the first three aspects while the fourth aspect in analysed in chapter 5. For example, see ; Gunawardena (1977), op.cit. Notes: 37 4,3,1 Competition From_Qther_Cro2g1 The Import substitution policy of the government as related to subsi­ diary food items such as potatoes', dhal, chillies and onions has been in force from about 1968. These items fetched higher prices being price responsive, started cultivating these crops locally, (except masoor dhal) and found them much more profitable than hitherto grown vegetables or other crops. There were several other traditional crops which were also fetching good prices, such maize, groundnuts etc. Many of these crops had guaranteed prices but often the market prices were very much higher. Due to these factors, until about 1978 when some of the import rest­ rictions were relaxed, the acreage and production of almost all these subsidiary food crops expanded rapidly. The estimated trend equations show that the acreage of potatoes, cowpea, greengram, chillies, red onions, groundnuts, kurakkan and maize exhibit a highly significant positive trend. The total quantities produced of these crops also, except in the case of kurakkan and maize which are traditional chena crops, have shown a significantly increasing trend over the period under consideration .(See table 11 and 12) Table 11-: Estimated Linear Trend Equations for the Total Acreage > of 8 selected subsidiary Food Crops,(1962/63-1976/77 No: of observations » 15) 2 Crop Constant Annual Trend Coefficient R • < _m | b 1. Potatoes 2. Cowpea 3. Green gram 4. Chillies 5. Red onions 6. Groundnuts 7. Kurakkan 8. Maize 1468,46 59.7.41+ 0,79 (7.079) 5714.28 1190.72+ 0,61 (4.521) 6589.98 1391,12* 0.48 (3,439) 20909.3 7359,39+ 0,82 (7.786) 12192.9 838.34+ 0,89 (10,096) 3793,48 . 1580.38+ 0,91 3793,48 . (11,566) 46652,44 • 2777.40** 0.35 46652,44 • (2.658) 18847.58 4942.49+ 0.82 data; Dept; of Census (7.603) + Significant at 0.1 percent level * Significant at 0.5 percent level ** Significant at 1 percent level 1Paddy is deluded 38 Table 12: Estimated Linear Trend Equations for the Total Production o£ 8 S elected Subsidiary Food Crops (1962/6$ - 1976/77; No. of observations = ,15JL . — - — - Crop Constant Annual Trend R 2 . Coefficient — 1. Potaotes 91668.66 V 42145.15+ 0.73 (5.953) 2. Cowpea 40169.89 11593.48* 0.41 Cowpea (3.017) 3. Green gram 38204.87 15734.34* 0.46 Green gram (3.335) 4. Chillies 332634*28 33042.66+ 0.59 (4.362) 5. Red-onions 530516.69 42110.03+ 0.84 Red-onions (8.116) 6. Ground nuts 95861.8 19559.06+ 0.83 (8.017) 7. Kurakkan 598730.83 13833.61 0.21 (1.859) - 8. Maize - 503905.21 48585.82 0.05 (0.816) Eates. : Source of data : Department of Census and Statistics . Figures in parantheses are absolute t values. + Significant at 0.1 percent level * Significant at 0.5 percent level Apart from incentives given to the subsidiary food crops mentioned above in terms of guaranteed price e t c , government credit facilities have also been extended largely to this sector. In the process, the vegetable subsector has received low priority. As shown in table 13, chillies red-onions and potatoes have received more than 90 percent of credit granted to the subsidiary food crop sector under the New Agricultural Credit scheme. .Even when these three crops were getting increasing amounts of credit up td 1973/74 crop year, vegetables have received decreasing creidt facilities. After that year, total amount granted decrea­ sed for all crops and vegetables received less than 1 percent of the total amount of credit granted. The low priority accorded to the vegetable sector in the governemnt credit schemes paves the way for the private lending sources to dominate with low prices accuring to the producers and less accent on the part of the government in marketing of vegetables. Low producer prices inturn act as a barrier to the expansion of vegetable production. 39 Table 13-:' Loans Granted for Subsidiary Food Crops Under New Agricultural credit scheme; 1967/68 - 1976/77. Amount granted Rupees Hundred. Crop Year Chillies Red-onions Potaotes Vegetables Other Total % of Amount total 1967/68 19483 19798 11452 4138 8.8 54871 1968/69 20596 24679 15066 4347 6.7 - 64688 1969/70 23592 30120 18360 3422 4.5 56 75550 1970/71 12025 16038 22428 1370 2.6 74 51935 1971/72 20179 29350 42339 2508 2.7 30 94406 1972/73 36546 19073 44062 1407 1.4 110 101198 1973/74 61818 30703 28228 1122 0.9 1288 123159 1974/75 6570 5920 5951 325 1.7 154 18920 1975/76 2681 2686. 5310 89 0.8 — 19766 1976/77* 1212 715 1320 29 0.9 53 3329 (1) Include : Groundnuts, maize, B-onions etc., * Incomplete data Source. Central Bank of Ceylon, Annual Report - 1978 At the national level, we saw the expansion of other food crops which compete with the acreage devoted to vegetable cultivation in Sri Lanka. Available evidence at local level proves that the expansion of these crops has led to the acreage devoted to vegetable cultivation being decreased. Amoung the other crops mentioned above, potatoes are now cultivated in up country wet zone districts and in the Jaffna Peninsula. For example, in Badulla district, there were only paddy and traditional up-country vegetables before potatoes were introduced around 1968. Potaotes were cultivated on new lands and it did not affect the acreage devoted to vegetables . Vegetable growers, nevertheless, prefer potatoes because they are more convenient than vegetables in view of minimal crop care and also more profitable although the total cost of pro­ duction per acre is relatively high. Potatoes are a relatively short- term crop whose harvest yields a/moneysa? once, unlike vegetables. There­ fore, farmers have increased the acreage of potatoes while keeping the acreage devoted to traditional vegetables as stable as possible. 40 In Keeppctipola area, about 80 percent of the paddy fields in Yala are cultivated with potatoes. Almost every farmer cultivates potatoes at least once in three seasons in this area. At present* tobacco also competes with vegetables for land in this area. However, some individual farmers in the Vidurupola village of the same area have already shifted over to potatoes exclusively, due to the unremunerative prices they get for other vegetables. Some intend to grow sugar-beets instead of vegeta­ bles in the future. In fact all the farmers Interviewed for the cost of production survey had cultivated potatoes as their major crop in Yala 1973. This evidence substantiates the fact that farmers in this area would grow vegetables only if the prices are remunerative. If not, they would understandably shift ever to more profitable crops. In Karassana area, though oaize had been a popular crop which once competed tvith vegetables, now it is almost non-existent due to the non-availability of marketing outlets. Now, the major competitor for vegetables in this area is the expanding tobacco cultivation. The Ceylon Tobacco Company provides the growers with facilities to buy necessary inputs and for the processing of tobacco. This crop has been a threat, especially to the Maha vegetable crop on highlands. Some indivi^aal farmers in Meeruppa, however, expressed fears that a low price of tobacco again will lead every farmer to cultivate vegetables resulting in a glut and poor prices. In the dry zone areas, farmers' preference to such crops as chillies, red onions, maize, groundnuts, cowpea, blackgram, tobacco etc., had cgt|ta- inly led to a reduction of the vegetable acreage in chenas during Maha seasons,^ especially in the years from about 1974, Chena type of vegetables collected by the Marketing Department in the last 4 - 5 years show a dramatic decrease . This partly explains the fact that the acreage of such vegetables as red pumpkin and cucumber have not been expa- anded. 1 This has been further supported by a recent study of the ARTI(1979)which states that " the shift towards cash crops such as chillies, cowpea, tobacco, and black gram in chena had replaced the conventional chena crops, pumpkin, cucumber, okra, etc.',' p.38 41 Competition for land devoted to vegetables from other crops such as chillies, red-onions, potatoes, banana and tobacco is higher in the Jaffna district than any where else in the country, 4,3,2, Effects_of_Dry_Zone Irrigation Settlement_Projects: The dry zone irrigation settlement projects aim at stabilized farming systems, and a considerable part of chena land would come under these settlement schemes. In both inunediate pre-settlement and post-settlement stages, a shortage of chena type of vegetables has to be anticipated. For example, in the Tambuttegama area, the Mahaweli officials have discour­ aged the farmers from growing vegetables in the chena lands anticipating a take over of such lands for redistribution. But the land had not been taken over even at the end of February, 1979. Some farmers had cultivated vegetables on the lands neglecting the orders of the officials while the majority obeyed the orders and let the lands lie fallow. After the Mahaweli project is implemented, each settler will be given h acre of highland to be used as homesteads, in addition to 2% acres of irrigable land. Clearly* H acre is not sufficient to grow highland crops and the farmers would invariably grow paddy on lands which are under assured water supply. The farmers, who are used to extensive cultivation under chena conditions would not like to grow vegetables intensively on these 3 acres of land. Irrigated vegetable farming would be unprofitable compared to paddy or chillies. Moreover, unless and untill many other problems related to production and marketing of vegetables, not only in irrigation settlement schemes but generally in all area? of the country are solved, it is doubtful whether a substantial number of farmers would resort to vegetable cultivation even as a minor occupation. This aspect needs thorough investigation since the Mahaweli project intends to encourage the settlers to grow vege­ tables, pulses and other subsidiary food crops during Yala season because the reddish brown earth is unsuitable for growing paddy during that season In view of the higher cost of irrigation, The project is still under way and we are unable to make a complete evaluation of this aspect. However, the Agrarian Research and Training Institute recently undertook a survey in Galnewa region (H^ and part of H2) where the project had already been implemented, to investigate why the settlers did not substantially cultivate vegetables and other subsidiary 42 Wijeratne, C M . and Wanasinghe, A., Factors Influencing the Cultivation of Subsidiary Food Crops in the Mahaweli Area, ARTI. (Forthcoming) food crops 1. Some of the major findings of this survey are worth mentioning here to understand the issues related to tne expansion of vegetable cultivation in the dry zone irrigation settlements. • i •• There were 3996 allotments in the Galnewa region of which 929 consisted i of reddish brown earth which were meant to be cultivated with subsidiary food crops. But during Yala 1978, only 11 allotments were used to cultivate exclusively subsidiary food crops Including vegetables. 689 allotments had been left fallow due to difficulties in cultivation. Some cultivator-settlers on these allotments came from surrounding purana villages and were not used to intensive cultivation of subsidiary crops. The above mentioned survey later selected a sample of 129 settlers to investigate the pronlem in detail. Table 14-: Average Acreages Cultivated With Different Crops by the Sample_Households. (Galnewa Region, Yala„-,1978) Crc£ ^Y£ H 2 i ? _ J ^ £ £ ~ l ? Paddy 1.92 Chillies 1.2 Perennials .15 Unclassified crops ,25 Cowpea .09 Vegetables .06 Source : Wijeratne and Wanasinghe; Preliminary data Table 14 shows the low priority given to vegetables by the settlers in the Galnewa region for reasons given below. Only 46 percent of the sample settlers were of the view that vegetables grew well on there allotments while 24 percent state that the allot­ ments were not suitable for vegetable cultivation at all. 43 72out of 129 sample settlers reported various problems which they presently encounter in the cultivation of subsidiary food crops including vegetables (Table 15)* Table 15-: Problems in the Cultivation of Subsidiary Food Crops Including Vegetables. Reported by 72 Settlers in the Galnewa Region, Yala, 1978. . problem No; reported % of the reported 1. Lack of marketing outlets 17 23.6 2. Uncertainty with regard to price 6 8.3 3. Lack of water 13 18,1 4. Lack of finance 7 9.7 5. Difficulties in buying agro-chemicals and fertilizer 8 11,1 6. Shortage of labour 9 12.5 7. Non availability of tractors and sparyers at the required time 4 5.6 8. Losses due to theft 8 11,1 Total 72 100 Source:- Wijeratne and Wanasinghe, preliminary data. As shown in table 15, the uncertainty with regard to marketing facil!« ties was the most important constraint for settlers to hesltiate in growing subsidiary food crops. Even if the marketing facilities are available, farmers would resort to these crops only if the other related problems are solved. These findings are useful in designing future policies with regard to the programmes for the expansion of subsidiary food crops in the dry zone irrigation settlements. 4.3.3 Problems in the Expansion of Vegetable Production The most important problems encountered by the vegetable growers are the small size of land holdings, high land rent, high labour charges shortage of labour, high prices and the non-availability of material inputs such as seed, fertilizer, agro-chemicals and equipment at the correct time, lack of finance, lack of marketing outlets in main harvest- 44 ing seasons, severe fluctuations ij price and low producer prices. High prices of land, labour and material inputs have resulted in higher production costs. The cost of production is analysed in more detail in section 4.4. Problems relating to marketing and price are discussed in chapter 5 in detail. The following sections are devoted to a discussion of the problems connected with the major factors' of production, i.e. land, labour, material inputs and other equipments. (1) Size of Land Holdings and I ^ d ^ e n t The market-oriented vegetable production in Sri Lanka is carried out mostly on small land holdings. However, there are a few exceptions where it is undertaken on relatively large farms. But the quantity of vegetables produced on such large farms is small compared to that produ­ ced on the scattered small holdings throughout the country. According to a survey conducted by the Department of Agrarian Services in 1964 in Nuwara-eliya district, the average size of a vegetable farm varied form 1 to 10 acres. 1 Department of Census and Statistics (1968) found that the average size of 2 a vegetable farm was less than an acre in Kandy and Badulla districts. Abeysekera and Senanayake (1974) discovered that the average size of a vegetable farm varied from 1.4 to 3.6 acres, in 4 villages in the 3 Welimada area in Badulla district. ' The present survey revealed that the average land area under different vegetable^shows a wide variation in different localities and in different seasons (Table -16, 17, 18). The total average extent cultivated with all 1 Department of Agrarian Services (1964) Proceedings of A Ceylon National Training Centre on Agricultural Marketing, Colombo. Department of Census and Statistice (1968) Suwey of Vegetable Product­ ion , Kandy and Badulla Districts; Yala 1966 and Maha 1966/67. Abeysekera and Senanayake (1974), op, cit. 45 vegetables varied trom 0.23 acres in Madduvil-Kaithady and Uduvil- Keerimalai (Jaffna) to 0.92 acres in Lunuwewa (Anuradhapura) - Table 16-,: Average Land Area Under Different Vegetables Cultivated in Maha 1977/78 (extent in .acres) _ Locality Vidurupola Boragas Uduvil-Keerimalai _ (Jaffna) _ Vegetable Beans ; 0.41 0.53 0.33 Cabbage 0.22 0.52 0.21 Knolkhol , 0.19 - ~ Raddish 0.17 - - Carrot - - 0.45 0.13 Leeks - 0.25 Beetroot - - 0.32 Capsicum chillies - - 0.25 Tomatoes - — 0.23 Brinjal - - • 0.27 Lady fingers - - 0.38 Long beans - - 0.13 Bitter gourd - - 0'03 Snake gourd - - 0.06 Red pumpkin - - 0.37 Total average extent for all vegetables (acres) 0.25 0.44 0.23 In no locality of our survey the total average land extent (for all vegetables) exceeded 1 acre. However, there were a few exceptions with regard to individual vegetables such as brinjal and tomatoes in the villages of Ikiriwewa and Lunuwewa (Anuradhapura). In all the wat zone areas and in the Jaffna peninsuala small parcels of land are intensively cultivated. In Anuradhapura on the other hand, chena land was still available for cultivation even during Maha 1978/79. This will no longer be possible with the implementation of the Mahaweli Project. t In the wet zone areas the population pressure on land is very high and the cultivation of vegetables had been carried out on minute land holdings since early times. It is certain that further fragmentation is already shrinking the average farm size. 46 Table -17 Average Land Area under Different vegetables Cultivated in Yala 1978 (extent in acres) Locality Viduru- pola • Boragas Hewavi- ssa Meeru-> ppa Ikiri- wewa Lunu- wewa Uduvil- Keeri- malal Maddu' vil-K thady Vegetable Beans 0.59 0.28 0.43 0.57 _ Cabbage 0.21 0.38 - 0.62 — - - 0.13 Knolkhol 0.13 - - 0.25 - — - -• Raddish 0.19 0.50 - - - - - - Carrot - 0.65 - — - — — - Leeks •a* 0.13 — - — - - Beetroot - - - — - - 0.26 0.42 Capsicum chillies - - - 0.75 - - ** Tomatoes - 0,42 0.58 — . 1,5 - 0.25 Brinjal 0,13 - 1.39 1.0 0.37 0.30 Lady fingers - - - 0.50 0.13 - - 0.13 Long beans - - - 0.50 0.50 0.25 0.13 Bitter gourd - - 0.46 0.57 - - - 0.25 Snake gourd - - 0.51 0.63 - 0.25 0.13 Red pum­ pkin - - - - 0.13 - 0.30 Luffa - - - - 0.13 - -Mixed vegetables — - 0.47 - — — — Total average extent for all vegetab­ les, (acres)0.25 0.J9 0^46 0.55 csssrass 0A& 0.92 Ojj i 0.23 .353SBS3 Almost all the farmers interviewed were prepared to expand vegetable cultivation but they were constrained by non-availability and high price of land in the first place. Many vegetable growers in Vidurupola, Boragas, Hewavissa and Meeruppa villages had rented-in or leased-in land for vegetable cultivation under various terms. Some had to pay h of the harvest while others pay a considerable amount of money per acre of land. Still some others, especially in Boragas^Ikiriwewa and Lunuwewa had encroached on crown lands. 47 Table -18: Average Land Area under Different Vegetables Cultivated in Maha_1978/79_ (extent in_acres)__ > Locality Hewavissa UlrSE^lS- Lunuwewa Vegetable Beans 0.65 0.36 Tomatoes 0.80 0,6b !± 0.b3 Raddish 0.25 ~ ' Capsicum chillies 0.19 0,46 Brinjal - 0,50 1.95 Snake gourd 0.27 0.75 Bitter gourd 0,31 0,55 " Long beans - - 0,13 Mixed vegetables 0^80 Oj.33 Total average extent for all vegetables 0.47 0.55 0.76 (acres) Table -19: Average Land Rent Reported by the Producers:^(Rs.per season) Locality Paddy High _ land_ land l.Vidurupola (yala 1978) - 125.00 2.Hewavissa (Maha 1978/79) 500.00 750.00 3.Meeruppa (Maha 1978/79) 400.00 500,00 4.Jaffna (Yala 1978) - 1200.00 Under the share cropping system, the crop share that goes to the land* lord is substantial. The remaining share with the real cultivator has to be priced to cover all costs including a reasonable profit margin. Thus, the share cropping system also contributes to Increased production costs . The majority of share croppers cannot compete with owner culti­ vators as far as average cost is concerned. The encroachers have difficulties in getting cultivation loans from the banks or co-operatives and other inputs from institutional sources. Thus, adverse land tenure conditions also impede the expansion of vegetable cultivation, (11) Ava ilaMl i ty_a^d _Pr ic e _of _Labou r Almost all the vegetable cultivators interviewed had employed hired labour during Maha 1977/78, Yala 1978 and Maha 1978/79, Irrespective of the size of their land holdings. Most of them reported problems with regard to finding the labourers at required times and high wage rates- 48 Table 20: Number of Vegetable Cultivators Reporting Problems About Getting Hired Labour Locality Vlduru- Boragas Hewa- Meeru-* Lunu- Uduvil- £ola vissa gpa wewa_ Keerimalai Nck Nor No^ %_ _No:_%_ J3o:_% _No: _%_ Problem 1. Difficult * ? ° b * * * n o 19 95.0 11 61.1 15 75.0 17 85.0 5 27.8 7 26.9 when neces­sary 2. High wage rates 13 65,0^ 0 0,0 7 35.0 0 0 , 0 4 22.2 23 88.5 Total * No: reported 32 11 22 17 9 30 problems wares = = = = = s » a _ a e a a o n * Total number reported does not add up to the number in the sample because the cultivators gave multiple responses. Percentages refer to those of the total number of cultivatlors interviewed. Table 21-: Average Labour Charges Reported by the Producers (Rs. per day) . ,.,,.,„,.,., Maha 77/78 Yala 78 Maha 78/79 Males Females Males Females Males Females Locality 1. Vidurupola 7.00 4.00 10.00 5.00 2, Boragas 8.00 4.00 10,00 5.00 .3. Hevavissa - - 7.00 4.00 8.00 6.00 4. Meeruppa - - 6,00 4.00 8.00 6.00 5. llciriwewa - - - - 12.00 10.00 6. Lunuwewa - - - ' - - 12.00 10.00 7. Jaffna - - 10.00 5.00 - 49 As shown in table 2l, wages payable to the hired labourers have risen considerably, even from Maha 1977/78 to Maha 1978/79 in ail. the localities concerned. Table 21 shows only the wages with meals. In providing food and victuals to the labourers, a considerable amount of money is involved .When the farmers complained that wages were high, it implied that the expenses on food provided to the labourers were also high. (iii) Availability_ajad_Frice^of_V Although many vegetable cultivators produce their own seed requirements of many indigenous vegetable varieties, they have to purchase exotic vegetable seeds. Certain farmers, buy even the indigenous vegetable seeds , A common complaint was that the cultivators have to purchase seeds from private traders at higher prices since the seed requirements are not tiscely met by the institutional sources such as the co-operative and Agricultural Service Centre. Another major complaint was that seeds supplied by the institutional sources as well as by the private traders are of poor germinating quality, The number of farmers reporting seed problems is given in table 22, Table 22-; Number of Vegetable Cultivators Reporting Problems About Getting Seeds; _^ Locality Vidurup^ola Hgwayisga Meerugna Uduyil-Keerlmalai JProblems No: _No: _%_ No£ _%_ _No: 1. Difficult to obtain when necessary 15 75.0 13 65.0 0 0.0 14 53.8 2. High price 4 20.0 2 10.0 13 65.0 0 0.0 3. Poor germinating capacity 10 50.0 3 15.0 5 25.0 16 61.5 Total* No: reported 29 18 18 30 problems ===== =~~ = = =«== * Total number does not add up to the number in the sample because the cltivators gave multiple responses. Percentages refer to those of the total nunber of cultivators inter­ viewed . 50 An examination of the price or seed prevailing in the study localities shows that prices have gone up considerably even from Maha 1977/78 to Maha 1978/79 (within one year). Table 23 presents data on price of seeds prevailing in study localities in three cultivation seasons. Table 23-: Average Seed Prices Reported by the Producers (R£_P£_____£2 Locality Crop Unit Maha Yala Maha 1977/78 1978 1978/79 1. Vidurupola Cabbage 1 oz. 38.00 42.50 - Beans 1 measure 30.00 35.00 — Raddish 1. lb. 48.00 85.00 Knolkhol 1 oz. 2.25 4.50 2. Boragas Beans 1 measure , 30.00 35.00 - Cabbage 1 oz. - 37.50 — Carrot 1 lb. 66.50 72.00 — Beeroot 1 lb. 72.00 — 3. Hewavissa Snake&rard I measure — 30.00 50.00 Bitter- gourd 1 measure - 40.00 40.00 Beans 1 measure 30.00 30,00 Tomatoes 1 measure - 100.00 100.00 4. Meeruppa Tomatoes 1 lb. — 80.00 100.00 Snake- grourd 1 lb. 10.00 . 10,00 Beans 1 measure - 30.00 — (iv) Availability and Price of Fertilizer As in the case of seeds, even fretilizer is not available at the required times from the institutional sources. Therefore, cultivators have to rely on private traders for their requirements, who supply fertilizer at higher prices. Co-operatives are unable to make correct estimates of the input requirements of the cultivators in the area. Often co-operatives give high priority to consumer items from which they can make higher profits. They also claim that they do not have enough funds to stock various agricultural Inputs. Farmers in Boragas area claimed of profiteering in fertilizer by some co­ operatives whose officials connive with private traders to create artifi­ cial shortages of fertilizer. 51 Vegetable cultivators in Marassana area accepted that the fertilizer application was necessary in view of the infertile nature of the soil but they could not afford it because the fertilizer prices at private sources had gone up over 100 percent compared with the prices of the previous year. Table 24-: Number of Vegetable Cultivators Reporting Problems About Getting Fertilizer. Locality Viduru- Boragas Hewavissa Meeruppa Uduvil-Keeri pola malai _ No: % No: % Noj % No: % No: %_ Problem 1.Difficult to obtain when necessary 18 90.0 10 55.6 12 60.0 8 40.0 0 0.0 2.Hlgh price 12 60.0 10 55.6 10 50.0 18 90.0 26 100.0 3.Transport difficulties 15 75.0 0 0.0 0 0.0 0 0.0 2 7.7 45 20 22 26 28 Total * No: reportng problems * Total number does not add up to the number in the sample because the cultivators gave multiple responses. Percentages refer to those of the total number of cultivators inter­ viewed . Increased price of fertilizer was the major problem reported by the cultivators in Meeruppa (Kandy) and Uduvil-Keerimalai (Jaffna) while it was also an important problem in the other areas. With the increasing price of petroleum products, fertilizer price increases are inevitable unless the government subsidizes the fertilizer prices.1 ^ince the draft of this report was prepared, the government in fact annuounced price reductions in all types of fertilizer on 20th September, 1979. 52 Table 25-: Average Fertilizer Prices Reported by the Producers (Rs.per unit) Locality Type Unit Maha Yala Maha . • 1977/78 _1978_ 1978/79 1. Vidurupola mixed 1 cwt 48.00 /0.00 lime 1 cwt 18.00 22.00 -Cowdung 1 bag 20.00 22.00 - 2. Boragas Green manure 1 cwt 36.00 66.00 - Urea 1 cwt 90.00 112.00 - Special potato mixture 1 cwt 36.00 77.00 - Cowdung 100 120.00 200.00 - baskets Lime 1 bag - 15.00 - 3. Hewavissa Lanka 1 cwt 29.50 52.50 Urea 1 cwt - 57.00 85.00 Cowdung 1 cwt - 60.00 60.00 4. Meeruppa Lanka 1 cwt - 30.00 70.00 Urea 1 cwt - 60.00 90.00 5. Ikiriwewa Urea 1 cwt - - 100.00 6. Lunuwewa Urea 1 cwt - - 100.00 7. Jaffna *1 1 cwt -- 75.00 — Urea 1 cwt - 105.00 - In the future too, this will affect adversely not only the cultivation of vegetables but also other crops. Though we do not have complete data on price increases in specific vegetable fertilizer mixtures, it can be said that the price of widely used types of fertilizer in vegetable cultivation has doubled in the year of 1978 as shown in table 26. Table -26: Price lncYea2^B-l^J&^^l-^lZ^--.-t^Z^.^^hl^21 Type Price per ton (Rs.) Price per ton (Rs.) before 18.7.78 after 18.7.78 Urea 1044 NPK 1080 V x with SA 1186 Source : Fertilizer Corporation 2088 2160 2372 53 (v) Availability and Price of Agro-chemicals In every locality we studied, almost every farmer had used chemical weed killers, Insecticides and fungicides to protect his vegetable cultivat­ ions from the seed-bed stage to the end of harvesting. Institutional sources have failed in the proper supply of agro-chemicals to the vegetable growers. The cultivators suspect that the agro-chemicals supplied by the private traders are not only arbitrarily priced but also adulterated. They are also of the view that the chemicals issued to co-operatives and Agricultural Service Centres go either to a few influen­ tial cultivators or to the black-market. A major problem with regard to agro-chemicals is the non-availability of the correct variety at the correct time. Farmers in Boragas area complained of a general scarcity of popular brands, such as Anthrocol, Tataarpn, 2ndr