FOOD SECURITY IN SRI LANKA: A "GROWING" PROBLEM

UNCLAS SECTION 01 OF 02 COLOMBO 001056

SENSITIVE
SIPDIS

DEPARTMENT FOR ANN RYAN, EEB/TPP/MTAA/ABT; MARISA PLOWDEN,
OFFICE OF THE COUNSELOR; ROBERT HAGEN AND JOHN TUMINARO, IO.

E.O. 12958: N/A
TAGS: EAGR ECON IO AID CE
SUBJECT: FOOD SECURITY IN SRI LANKA: A "GROWING" PROBLEM

REF: A. STATE 107298

B. GROUT - RENZULLI EMAIL 11/10/09

C. COLOMBO 878


1. (SBU) SUMMARY: Sri Lanka continues to focus attention on
food security and is taking some actions to increase
production on the island. Post-harvest losses remain a
particular problem. The government is encouraging farmers to
modernize production and transport techniques, but is
hindered by poor communication networks, a lack of
coordination, corruption, and other issues. Despite some
improvements, the overall agricultural policy in the country
remains counter-productive and protectionist, something
unlikely to change in the near-term. END SUMMARY.


2. (U) ECONOFF met with Ms. Janaki Kuruppu, who is Director
of the President's Office and the Chair of Sri Lanka's
inter-ministerial working group on food security, to deliver
Ref A points and discuss the government's thoughts on food
security. Kuruppu expressed her disappointment with not
being informed of the location change for the food security
meeting held at UNGA since she had changed her return flight
to Sri Lanka in order to participate. She did offer to share
the Secretary's food security goals with other members of the
working group and to request that members consider food
security meetings during official travel to Washington (Ref
B). The country was hard-hit by the global food crisis in
summer 2008 when a number of its important trading partners
for basic foodstuffs cut off their exports to the island.
Food shortages and price inflation were rampant, and the GSL
is looking at ways to ensure its people are better insulated
against such swings.


3. (SBU) Kuruppu mentioned that she had just met with Mr. Ken
Marsh of the Woodstock Institute for Science in Service to
Humanity (www.wissh.org),an NGO trying to gain support for
an international initiative to focus on post-harvest losses.
According to Marsh, post-harvest agricultural losses range
from 10 to 60 percent globally and Kuruppu noted that Sri
Lanka loses roughly 40 percent of its post-harvest produce
due to poor transportation and storage methods. Kuruppu
emphasized that Sri Lanka actually produces enough to feed
itself but is doing poorly at protecting it produce from
spoilage and loss, costing the country $120 million annually.
Efforts are underway to encourage farmers and transporters
to utilize new storage and transport techniques to limit
loss, but Kuruppu noted that many are slow to adapt. She
also complained that "corrupt middle men" are hindering
progress. She gave an example where police closed a store
selling new containers at the bidding of their competitors,
traditional packaging interests.


4. (U) Kuruppu noted that the working group plans to include
funds in the 2010 budget for the development of a system to
share information on all aspects of agriculture including
production, pricing, available stocks and pest/disease
eradication for farmers. (NOTE: The budget will not be
presented before the parliamentary elections in Sri Lanka,
expected in April 2010. The GSL is planning to operate under
a continuing resolution-type funding program until then. END
NOTE.) President Rajapaksa, currently the Chairman of the
South Asian Association for Regional Cooperation (SAARC)
recently urged SAARC countries to create a "buffer stock"
that could be distributed among its members. His proposal
was accepted, however the modalities of such a program remain
vague.


5. (U) Many government agencies handle food security issues
in Sri Lanka (Ref C) making coordination and cooperation
difficult and causing additional problems. For example,
Kuruppu complained about a recent Agriculture Ministry
decision to ban cows from drinking water "reserved" for

COLOMBO 00001056 002.3 OF 002


irrigation which led to a drop in milk production. (NOTE:
Increasing milk production is a key GSL food security goal.
END NOTE.) During last year's crisis, consumers faced a
severe shortage of milk powder imported from Australia (which
was enjoying nearly a 90 percent market share at the time,
according to Kuruppu). Prices increased as much as 500
percent and consumers could no longer afford milk powder,
affecting the nutritional needs of especially vulnerable
populations like nursing mothers and young children. There
are, Kuruppu noted, many similar examples of rampant price
jumps and is the reason for the GSL's attempts at addressing
the problem.


6. (SBU) Unfortunately, in its quest to increase domestic
food production, Sri Lanka is protecting uncompetitive
domestic markets from foreign imports, causing consumers to
pay more for less. Kuruppu argued that the country is not a
prohibitive or closed economy for agricultural imports --
despite the often 100 plus percent tariffs imposed on certain
imported food items and the burdensome regulatory scheme
regulating food imports -- but rather that it is attempting
to strike a balance between imports and domestic production
incentives. She then pointed to a recent government decision
to reduce taxes on 13 essential items such as lentils, dhal,
onions and other commodities which is expected to save the
average Sri Lankan consumer "2000 Rupees (roughly $18) a
month." (NOTE: This is widely considered to be an election
year ploy rather than having any relation to the food
security issue. END NOTE.)


7. (SBU) COMMENT: Food production in Sri Lanka has increased
marginally, and is expected to continue with the
post-conflict North and East reopening. However, Sri Lanka's
restrictive land policy does not permit free transfer of
lands, and no serious effort is under consideration to open
up arable lands for large-scale farming. Clear policies,
land issues, and a framework to attract greater private
sector participation in agriculture is lacking and private
companies are reluctant to invest in R&D in the absence of
such an environment. Without fundamental changes to its
overall agricultural policies, Sri Lanka's food security is
unlikely to dramatically improve. END COMMENT.
FOWLER