ECONOMYNEXT – Sri Lanka could encourage small farmers to get together in clusters and also set up a specialized food export promotion agency to promote value-added agricultural exports, a South Korean expert said.
This approach helped South Korea expand its export agriculture business, Myong-Keun Eor, Honorary Senior Fellow of the Korea Rural Economic Institute told the economic summit organized by the Ceylon Chamber of Commerce.
"I suggest organizing agricultural co-operation in production and in exports," he said.
"In Sri Lanka and South Korea there are many small scale farmers. So, to enjoy economies of scale you can organise small farmers into clusters in production and exports."
Such collaboration could make more effective use of market and consumer feedback and make research and development, education and training more affordable than if done by individual farmers.
"One of the most important elements to develop agriculture exports is human capital – to foster young human capital, education and training is necessary," Eor said.
He also suggested the setting up of an agriculture and food specialized export promotion institute, saying such a specialised institution is needed to support participation in international food exports.
It could also support R&D investment to develop new varieties and processing technologies.
Eor also suggested Sri Lanka build export support infrastructure like logistics centres and cold chain facilities to expand agricultural exports.
Government subsidies, especially in the early stages of an industry, could help as South Korea has found, Eor said. These subsidies, from tax-payers to farmers, which were mostly for transport, are now being phased out, he said.
Although global trade rules now ban subsidies for advanced countries, they are allowed for developing countries.
Such subsidies could reduce the cost of marketing and international transport and freight, Eor said, noting how the Korean government subsidized the logistics cost of agricultural exports. (Colombo/August 6, 2015)