Professor M.S. Swaminathan, a top Indian scientist considered the father of the green revolution in Asia, was invited by the government to study and report on Sri Lanka's agriculture policies. In a report to the government, he has suggested - among many other proposals - the creation of the Sri Lanka Council for Agricultural Research and Rural Technology (CART), a Small Farmers Agri-Business Consortium (SFAC) and pioneer projects in Mahaweli areas.

The farm economy, once the backbone of the country, has deteriorated because of lack of interest by the state, high cost of production and cheaper imports. This has led to a social upheaval with some farmers, heavily in debt, committing suicide and their children moving away from agriculture to work in the military, garment factories or in the Middle East. New government policies are aimed at making farms viable and attractive.

Interestingly however, Swaminathan says that Sri Lanka has one of the lowest rural to urban migration rates among developing countries suggesting that this may be due to additional employment opportunities created by irrigation projects. He recommended the development of the Mahaweli project area into a major centre for agricultural diversification and value addition through agro-industries, since paddy cultivation is unattractive.

"Sustainable farming systems and happy families should be the bottom line of any agricultural strategy," the Indian expert says, noting that with land being a shrinking resource there is a need to improve productivity without social harm or ecological damage.

CART will bridge the gap between academic know-how and field implementation and would have financial and functional autonomy. Swaminathan's report said CART could promote precision agriculture to ensure high productivity and low costs, harness biotechnology and strategic and participatory research with farming families.

The creation of rural knowledge centres has been recommended while agri-clinics and agri-business centres would enhance the cost and quality of farm produce. The SFAC should be organised in each of the nine provinces to have synergies with the programmes of the private, public and academic sectors.

Swaminathan has recommended a national food and water security system with food availability, food access and food absorption being the main components. To strengthen soil health management, a soil health card has been recommended for farmer families.

Scientific rice farming technologies including the cultivation of appropriate rice hybrids have been recommended to raise output to six tonnes per hectare from four tonnes currently.

Swaminathan says Sri Lanka has a unique opportunity of making the Mahaweli development area the flagship of an 'evergreen' revolution movement, noting that since the country has achieved a demographic transition to low birth and death rates, it will be easy for the country to produce the rice it needs for home consumption.

Recommendations also include adopting a crop-livestock-fish integrated rice farming system; establishing rice refineries to commercialise straw, bran and husk and developing speciality rice for export.

Some importers fail to comply with rules
Some 40 percent of Sri Lanka's importers and manufacturers of pharmaceuticals have in the past failed to comply with a request from the Fair Trading Commission (FTC) to provide information on imports, prices and the source of imports, officials said.

"Whenever we make a request for information, only 60 percent of importers and manufacturers comply," a FTC spokeswoman said adding that they now plan to take action against companies who fail to comply with the request. The FTC's latest letter to firms seeking such information was issued on June 6.

Under the FTC Act, violators are liable to fines or a jail term if found guilty.

The spokeswoman said the information is not published but sought to enable the FTC to track prices, imports and the countries from where drugs originate.

Officials also said Commerce Minister Ravi Karunanayake is keen to de-control drug prices and allow parallel imports to curb the sharply rising cost of pharmaceuticals.

SLPA, SAGT battle over tariff rebates
The two main transshipment terminals at Colombo port appear to be going their own ways in the container tariff rebate scheme.

South Asia Gateway Terminals has told the Sri Lanka Ports Authority that it intends to have its own rebate scheme for transshipment tariffs.

The move came after the SLPA announced a new rebate scheme last month to encourage shipping lines to call at the port and move more boxes.

The SLPA said at the time that it had given SAGT the required notice and implied that it expects SAGT to follow suit. But SAGT maintains it was not consulted about the new scheme and had not agreed to it.

Some officials feel only a common rebate scheme would work properly because many shipping lines use both terminals.

"We don't believe it is in the best interest of the port for them (SLPA) to have a rebate scheme and for us to have a different scheme," said John Buckley, CEO of SAGT.

Others, particularly shipping lines, believe there is no need for a common rebate and that competition between terminals is healthy.

"I don't see why there should be uniformity in rebates," said Rohan Abeywickrema of Sea Consortium, a big feeder operator. "Terminals can have different philosophies of doing business - the good thing is they are competing and competition is good for port users."

It is up to shipping lines to work out how best to benefit from the different rebates offered by the two terminal operators, he said.

SAGT's scheme has a higher base than the SLPA's, offering the first rebate for volumes between 25,001 and 50,000 boxes. The SLPA's new scheme lowered the minimum container volume threshold under which lines can get rebates to 10,000 boxes a year from 25,000 boxes previously.

Buckley said that having two rebate schemes will cost shipping lines more because lines handle boxes at both terminals and the volumes they would have to move to qualify for rebates at one terminal would be effectively higher.

"There's a raft of costs that lines pay such as tariffs, bunkering, shipping agents' fees,length of port stay, other marine services that a port provides and customs charges," said Buckley. "By just manipulating the port tariff in isolation of all other components is not going to achieve much at all."

SAGT maintains that the port should look at "the whole picture" including raising efficiency, Buckley said.

"Things are certainly better but we've a long, long way to go," he added.

SPMC in Rs. 250 mln expansion
By Hiran Senewiratne
The State Pharmaceutical Manufacturing Corporation (SPMC) intends to modernise its factory at Ratmalana with an investment of Rs. 250 million to expand production capacity, its chairman, K.M.S.B. Rekogama, said.

Once the proposed modernisation and extension projects are completed SPMC plans to enter into strategic alliances and joint ventures with international pharmaceutical companies with the aim of bringing new technology and capital into the industry, he sad. There were many inquiries from pharmaceutical firms to form strategic alliances, he added.

SPMC has an annual installed capacity of 550 million units of tablets and capsules and 60,000 litres of dry syrup. It is Sri Lanka's biggest producer of drugs and markets its products under the SPC label.

"Our policy is to supply the best quality drugs at an affordable price to local people," Rekogama said.

Rekogama also said that apart from the proposed projects they have invested Rs. 20 million to upgrade the packaging and storage section.

SPMC manufactures 52 generic drugs, which accounts for less than 25 percent of the country's drug requirements.

SMPC last year exported 70 million anti-filaria tablets worth of Rs. 5.5 million to more than 10 countries including Egypt, Philippines, Myanmar, and the United States. Rekogama said that the corporation is a self-funded, autonomous entity with an annual turnover of Rs. 400 million.

Does the LTTE want us?
By John Breusch
A seminar exploring the business community's role in the peace process last week heard a lot about the opportunities and social benefits of conducting business in the north and east, but there was one question to which nobody seemed to have an answer.

"Is there a need for the LTTE to welcome business?" asked Julian Davis, a garment exporter. "Because I won't go if I'm not welcome."

Davis's question arose after debate about how businesses commencing operations in the north and east should respond to the LTTE's demands for tax payments.

Dr. Muthukrishna Saravanathan, research fellow at the International Centre for Ethnic Studies, said the LTTE's "arbitrary taxation" of goods and vehicles entering the Wanni and Jaffna created "a moral hazard and an ethical dilemma for entrepreneurs planning to establish manufacturing, trading or service-oriented business [in the region]."

While refusing to pay the tax was the most ethically correct option, it may not be the most practical, he said.

For other companies, there are further complications.

Jagath Fernando, the deputy chairman of John Keells Holdings (JKH) and the president of the SriLankaFirst pro-peace business lobby, said JKH could not pay the LTTE tax because it is a public company.

He said JKH has investments in Jaffna that have been losing money for years, but the group is now looking to grow its presence in the northern city through the construction of a 100-room hotel.

In fact, there was broad agreement at the seminar as to the opportunities and economic and social benefits of businesses from the south making inroads into he conflict-affected areas.

But while Davis agreed that he would like to conduct business anywhere there was demand, this was not a policy without limits. "We don't go to places where we are not welcome," he said.

"We go to places where they say 'come.'"

Renton de Alwis, Secretary-General of the Ceylon Chamber of Commerce and former chairman of the Ceylon Tourist Board, replied that the business community should focus on the benefits of business and not be automatically deterred by the taxes.

"I don't think there are [LTTE] terms that are non-negotiable in any sense," he said.
"I feel we ought to be pro-active and reach out as well."

But Jeevan Thiagarajah from the Consortium of Human Rights, provided a more sober response.

"We are developing plans for the north-east. But we have not thought it fit to ask them [what their plans are.]" The seminar was hosted by the Centre for Policy Alternatives and the Ceylon Chamber of Commerce.

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