Supply Chain Support for Production, Processing & Marketing of Organic Export Agriculture Crops in Sri Lanka

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1 Supply Chain Support for Production, Processing & Marketing of Organic Export Agriculture Crops in Sri Lanka N K Anura Rupasinghe Deputy Director Dept. of Export Agriculture Sri Lanka

2 Background Population million Rural population - 70% Economic growth rate % Agric. contribution to GDP (2006) 16.8% Agric. Sector growth rate % Share of employment in Agric Sector in % Annual expenditure on food imports Rs. 100 billion (32% of the requirement)

3 Agriculture Sector Export Agriculture- Tea, Rubber, Coconut, Minor Export Crops,, Cashew Domestic Agriculture- Paddy, Other Field Crops, Horticulture crops, Sugar cane etc.

4 Organic Agriculture-present situation Extent 17,000 ha (0.75% of total agric land) In year 2005 turn over US$ 15 million Expected annual growth rate 5 to 10% Crops- tea, spices, coffee, coconut, fruits, cashew (50 crops) Private sector(>32), NGO(>34), Govt Organizations

5 Identified as a leading country in exporting organic produce to US, EU, Japan, Australia and to other countries Certification done by foreign certification bodies

6 Organic agriculture policy frame work Expenditure on fertilizer imports in 2006 Rs. 18,000 Million Cut down fertilizer imports by 25% in 3 years Promotion of sustainable agricultural production systems Introducing IPM and IPNM (allocated 500mn Rs) Since 2004 govt. identified the promotion of organic agriculture sector as a thrust area for development

7 Current developments Private sector Own plantations Out grower systems Mainly for export market Certified by foreign certification bodies Value added products

8 NGO Smallholdings sector Training and awareness programmes Mainly for domestic market

9 Government agencies Research and development activities Training and awareness Organizing production base Financial assistance for production & processing Cash incentives Market promotion

10 Research Activities Since 2004 Gov. agencies, Departments and Research Institutes Bio-efficacy of Garlic (Allium sativum L) extract on insect pest management of black pepper (Piper nigram L) i. On black pepper thrips (Gynacothrips bagnall) ii. On black pepper lace bug ( Diconocoris distanti drake)

11 Export Agriculture Crops Sector Perennial Spices - cinnamon, cloves, pepper, cardamom, nutmeg Beverage crops Cocoa, coffee Industrial crops Citronella, Lemon grass

12 EACs sector Predominantly in small holders Could be grown in wide range of cropping systems Little or no chemical are applied Low productivity


14 What should be the role of the Dept.? Organized a workshop in 1999 All stake holder groups participated Discussed following issues What should be the production stds? How should organic farming be promoted? How can cooperation be fostered among the stakeholders?

15 How should record keeping and internal control system be organized? How should inspection be organized? How should organized marketing linkages?

16 Actions taken to support the industry Identified as a key area for development Educate and trained extension and research staff of the Dept. Organized farmers in selected areas to convert to organic farming Introduced an assistance package to encourage the growers to convert to OF

17 Assistance package a. productivity improvement programme (Free planting material, technical know- how, training, cash incentives for organic manure production) b. Post harvest assistance- to maintain the quality Introduced group / central processing Technical know how, machineries & equipments, processing sheds, cash incentives

18 Productivity improvement of existing cultivations


20 Cash incentives for organic manure production

21 Supply of Free planting material

22 Assistance for Post Harvest Processing group processing


24 Establishing market linkages with local and overseas buyers JFTC Japan for Arabica Coffee ICEI Italy for Cocoa

25 Challenges Predominantly small-holders Produce small quantities Investments are low & irregular Difficulty in organizing the production base Poor record keeping

26 High certification cost Premium price? Inadequate collective effort among the stakeholders Fertilizer assistance sche of the govt. Limited domestic market

27 Market prospects Tropical products-fruits, vegetables, spices, tea, coconut, cashew ect. Superior intrinsic quality Growing demand in developed countries Government support Local & overseas buyers (Foreign investments) Establishment of a apex body (seeking 3 rd country registration)

28 Private sector / NGO involvement Growing demand in domestic market, rice, vegetables, fruits Emergence of local certification bodies