Abstract
At present, the expenditure on fertilizer subsidy has become a heavy burden on the budget in Sri Lanka. The studies which attempted to analyze the impact of fertilizer subsidy on the productivity of paddy farming also provide rather mixed results. Thus, the present study aims to identify the effects of government fertilizer subsidy policy on the productivity of small-scale paddy farming in Sri Lanka by employing the econometric model developed by Hu and Antle (1993). The primary data for the study were drawn from a field survey conducted in the Hinguraggoda Divisinal Secretariat division in Polonnaruwa district. The results revealed that fertilizer subsidy has a positive impact on the productivity of paddy farming, but with decidedly less responsiveness (highly inelastic) indicating the need for agricultural policy priorities to enhance the positive responsiveness of fertilizer subsidy on farm productivity. The results further revealed a positive relationship between the level of farmer education and the productivity of a paddy farm. The study suggests the need of farm-level experiments (soil analysis, technological adaptations, water management techniques, type of adaptable paddy varieties, and extension inputs) to enhance the positive responsiveness of fertilizer subsidy policy on small-scale paddy farm productivity in Sri Lanka.
Highlights
After regaining independence, every successive government in Sri Lanka acknowledged the role of agriculture in the economic development and prioritized the development of agricultural sector by implementing various agriculture development programs such as land reforms and settlement programs, irrigation development projects, guaranteed price schemes, free extension services, and agricultural subsidy schemes
The results reveal the nominal protection cost, which was measured using the cost of fertilizer subsidy, and farmers’ educational level, have statistically significant and positive impacts on total factor productivity of paddy farming reflected from farm productivity, though coefficients are highly inelastic
The present study aimed to identify the effects of government fertilizer subsidy policy on the productivity of small-scale paddy farming in Sri Lanka by considering the paddy farming in the Hinguraggoda DS division in Polonnaruwa district as a case
Summary
Every successive government in Sri Lanka acknowledged the role of agriculture in the economic development and prioritized the development of agricultural sector by implementing various agriculture development programs such as land reforms and settlement programs, irrigation development projects, guaranteed price schemes, free extension services, and agricultural subsidy schemes. In Sri Lankan domestic agriculture, paddy is the main crop grown by the farmers. The paddy sector occupies 34% of the cultivated area of domestic agriculture and provides a livelihood for approximately 1.8 million farmers (Prasanna & Ranathilake, 2018). About 75% of paddy cultivated area is irrigated, and a majority of the farmers (approximately 70%) are smallholders owning less than 1 ha land area (Weerahewa, 2004). Since a majority of farmers are resource-poor smallholders, the government of Sri Lanka provides fertilizer at subsidized rates over many decades to promote paddy farmers applying modern fertilizers through reducing the input cost, to increase per acre paddy yield and enhance marketable paddy production at the farm level. In 2005, providing the three types of fertilizers at Rs. 350 (US$ 3.07) per 50 kg bag of fertilizer was restored (Weerahewa et al, 2010)
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