Agriculture - the best investment

by Lalin Fernandopulle

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The time is ideal for Sri Lanka to gain maximum benefits by investing in agriculture since global food prices are surging due to the severe shortage of production of grains, said Managing Director CIC Agribusinesses, Keerthi Kotagama.

He said the country is blessed with fertile soil, sufficient rainfall and the expertise in traditional farming which will be of immense use to develop the agriculture sector.

“The company will invest Rs. 250 million shortly on a project to produce around 5,000 litres of milk per day on a 1,200 acre farm in the Eastern province”, Kotagama said.

He said the company invested Rs. 30 million on a project to produce 15,000 MT of maize with over 7,500 outgrower farmers in Thalawa. CIC Agribusiness invested on a rice mill in Maho to produce 6,000mt of paddy with 2,000 farmers in the North Central province.

The global food crisis is posing a potential threat to poorer countries in the South East Asian region and the African regions. The consumption boom in India and China together with the transition from grain production to bio-fuel in many countries and the food shortage will aggravate putting an end to the cheap food era in 20-30 years.

Many countries have realised that ethanol is economically feasible when world crude oil prices have shot above US$ 124 per barrel. Brazil, Argentina and USA have turned vast extents of grain cultivation land to manufacture ethanol.

Global bio fuel production tripled from 18 billion litres in 2000 to 60 billion litres last year.The EU targets 5 per cent replacement of crude oil with ethanol by 2010.

Kotagama said there is no problem in marketing paddy today as the demand has increased. Investments in grain cultivation will be a saving for the country which depends heavily on wheat and other grain imports.

The country produces 3.3 million mt of paddy per annum while the requirement of rice is 2.3 million mt which is equal to 3.8 million mt of paddy. The country’s per capita consumption of rice per annum is 115 kilograms.

“The shortfall in paddy can be met by increasing the yield and the land extent. If the paddy yield is increased by 20 per cent per annum the country could produce around 4.4 million mt which is above the national requirement”, he said.

The agriculture and milk industry will reap benefits within a year if the land in the East is used to cultivate paddy and graze cattle. The current production of milk is around 200 million litres a year while the requirement is 900 million litres.