COMPARATIVE ANALYSIS OF RICE MARKETING SYSTEM IN SRI LANKA - PRE AND POST LIBERALIZATION PERIOD
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Date
2007-08-29
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University of Agricultural Sciences GKVK, Banglore
Abstract
Present study is an attempt to examine eind compare the structural changes in rice
marketing between pre liberalization and post liberalization periods in Sri Lanka. The
study covered the period 1960-2004 and it was divided into two sub periods to represent
before and after liberalization periods. Various analytical techniques viz., exponential
ftmction, linear and multiple regression technique, time series technique, Cobb-Douglas
and frontier production function, coefficient of variation, nominal protection coefficient
and B-C ratio were employed for analyzing the relevant data. Since marketing links with
the production, efficiency in rice cultivation and profitability via competing crops were
also studied during post liberalization era. Major policy changes on marketing under
taken during post liberalization period were closing down of Paddy Marketing Board
along with guaranteed price scheme, replacement of rice rationing scheme into the food
stamp scheme, liberalization of rice imports, price stabilization through variable tariff and
establishment of a food supply monitoring system. The growth analysis of area under rice
showed a positive growth before liberalization and no growth after liberalization.
Nevertheless, yield registered a positive growth in both periods but the growth rate
lowered in the post liberalization period. Production function analysis depicted that rice
faming was technically and allocatively inefficient in post period; labour and fertilizer
were excessively used and seed was under utilized. The B-C ratios were less than one for
rice in all the districts studied indicating un-profitability in production but more than
unity for all alternative crops studied. Producer price and retail price of rice increased in
real terms during the pre liberalization era and declined in the post liberalization period.
Seasonal price fluctuation reduced during the post liberalization regime over the pre
liberalization regime due to deregulation of rice trade. Rice wholesale markets were well
integrated during the post liberalization period indicating a positive role played by market
liberalization policies. The value of Nominal Protection Coefficient suggests that Sri
Lankan rice is uncompetitive in the international trade. The study stressed the need for a
paradise shift towards increasing farm income rather than increasing production to
sustain rice farming in the open economy. The policies governing rice economy should
focus on developing forward and backward linkages with private sector.
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