A Broken Industry*

The Large and the Small

Smallholder farmers, living all over the country, greatly outnumber the farmers with bigger landholdings who are able to make a comfortable living in the top five paddy growing districts.

The acreage of paddy lands under smallholder cultivation rivals the acreage under more efficient holdings under high potential conditions.

Smallholder producers cannot compete with larger industrial producers. This is simple economics, and it is as true for agriculture as it is for any other industry. Industrial producers can achieve scale efficiencies when producing commodity goods that are simply unachievable for smaller-scale producers.

A Straw Cage

Unfortunately, due to myriad, and sometimes perverse, combinations of social preferences, land-ownership and land-use regulations, and food security concerns, owners of paddy land find it extremely challenging to sell, convert to a perennial crop, or build on, their paddy fields. Each season, they have to justify, usually citing lack of water, if they wish to grow a seasonal crop other than paddy. And if they leave their fields completely fallow, they stand a chance of losing those fields - local officials can assign those fields to others citing danger to national food security.

Why? Some of it, arguably, stems from good reasons, though they may have got distorted over time. Growing paddy is often the last thing you can do with many lands, that are depleted, marshy by nature, or prone to heavy flooding each season or each year. In the worst of seasons - maybe once or twice a generation - and agriculture is always a very risky activity - every available patch of paddy land, under terribly under-performing conditions, may be needed to meet annual food security needs; international borders close to the food trade at the first sign of poor yields.

High-potential - and Not

The conditions on a typical smallholding outside the high-potential district differ significantly enough from conditions in the top five high-potential districts to make it even less viable to try and compete at the same game. To begin with, a smaller landholding (in Sri Lanka, 5 acres or less) can be tilled, planted, maintained and harvested by "family labour" - the adults of the household, occasionally helped out by the older children. Labour is one of the biggest components in any production cost in Sri Lanka, simply because there isn't enough of it - and very few people want to run around muddy paddy fields any more. Small holdings are usually hard to mechanize because they're scattered among other plots making it hard to coordinate with neighbours whose fields you may need to drive over, and are often on hillsides or on fields otherwise simply inaccessible to machines. However you cna usually avoid a lot of the costs of mechanization again because your field if small enough to manage with your secret - and free - weapon - "family labour."

Apart from all this, the fundamental agricultural aspects of weather patterns and water supply are quite different outside the high-potential conditions. Days may be shorter, temperatures cooler, etc than the "ideal" conditions that breeders maximised for over countless generations of cultivation candidates. As soon as you are dependent on the rain for the water to manage the major transitions in the cultivation cycle, you take away the certainty that major irrigation provides - all the water you need (or planned for), at the right time, to get you your maximum yield.

Finally, smallholder farmers are often poorer than large landowners. They have much less access to capital. They struggle to finance themselves and the escalating costs of high-input cultivation as various chemical, mechanical and labour inputs are needed to maintain modern cultivars through a three-month season (not counting land preparation times ahead of cultivation).

But smaller-scale producers need not be producing commodities. Small-scale farmers need not be competing in a losing game with the efficient commodity producers, in the process destroying their profits as well.