In the current context of food insecurity, building a resilient agri-food supply chain is crucial for Sri Lanka. Agri-food supply chains are a set of activities involved in a ‘farm to fork’ sequence including farming, processing, testing, packaging, warehousing, transportation, distribution, and marketing. 

So far, supply chains have been providing mass quantities of food for the country’s growing population. However, the supply chains are plagued by a number of issues stemming from within and outside the supply chain. Hence, this article sheds light on various inefficiencies prevalent in the agri-food supply chain and the way forward to establish a more resilient supply chain.

The agri-food sector plays a major role in the Sri Lankan economy. It is a key source of food supply, which comprises a complex system of supply chains involving farmers, distributors, processing firms, wholesalers, retailers, and consumers [1].

Issues in the agri-food supply chain sector

Sri Lanka has been experiencing inefficiencies within its agriculture sector due to various issues stemming from within the supply chain. For instance, Sri Lanka annually loses 270,000 MT of fruits and vegetables along the supply chain, which is estimated to cost around Rs. 20 billion [2]. 

This accounts for 30-40% of the total agri-food production in the country. One of the key causes of this is the lack of integration between supply and demand. For instance, farmers cultivate their lands without a scientific understanding of future needs and in the absence of a national level cultivation strategy to fulfil local demand. This leads to an overproduction of certain crops, which ultimately results in considerable losses for farmers.

Nevertheless, high food miles along the supply chain also cause a high degree of inefficiency. For instance, when commodities from different parts of the country reach the main economic centres only to be redistributed, it can cause high costs and further damage to the produce. Moreover, maladaptation of post harvest handling practices at various stages of the supply chain further lead to high wastage and inefficiencies [3]. 

Apart from this, a number of additional factors (eg.: information asymmetry, limited supply of inputs, lack of infrastructure and support facilities, poor agricultural policies, import restrictions, and price controls, etc.) also hinder the smooth operation of supply chains. Finally, these can lead to significant pricing disparities of commodities across the island. 

As seen in the table included, in order to analyse the pricing disparities of raw rice (white) across the island, average weekly prices of 10 districts were obtained from the Hector Kobbekaduwa Agrarian Research and Training Institute for four weeks from 6 January to 2 February. Colombo was taken as the base district and the percentage changes were calculated to identify whether there is a significant difference in the prices of each district against Colombo.

Due to lower average retail pricing than Colombo’s average retail price, it can be seen from the calculations that certain paddy production areas like Ampara, Hambantota, and Matara have greater percentage changes of 13.2%, 10.2%, and 9.97% respectively against Colombo. 

In comparison to Colombo, Anuradhapura, Polonnaruwa, and Kurunegala also have relatively lower average retail prices. The common reason behind this is that food supply to Colombo varies between types of commodities and does not depend on the closest production areas [4]. 

The variations in distance and transport costs are reflected in the price disparities in Colombo. Apart from that, some other reasons for the price disparities across the island are likely due to complex interactions between supply and demand, income variation, uneven population distribution, price controls, and the price of close substitutes.

Way forward

In light of the aforementioned issues, continuous development and tailor-made policies should be introduced to establish a more resilient agri-food supply chain. Below are a few recommendations that can be introduced to the system:

• Establish post harvest handling hubs across main cities of the island to improve the efficiency of the sector
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• Farmers/supply chain actors to be more vigilant on proper post harvest handling techniques to minimise losses
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• Utilise railway system as a cost-effective source of transportation
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• Promote the use of digital marketing platforms to connect different actors across the supply chain
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• Integrate these platforms with financial services such as online payments, credit-based transactions, and loan facilities through banks 
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• Enhance collaboration among different actors across the supply chain to reduce cost and increase efficiency (eg.: promote forward and backward integration via business partnerships)
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• Encourage private sector participants to invest in modern technologies along the supply chain to reduce losses
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• Encourage innovations/processes that can improve the efficiency and reduce losses along the supply chain

References:

1. Challenges of agri-food supply in city region food systems: An emerging economy perspective, Journal of Agribusiness in Developing and Emerging Economies 
2. Towards a Sustainable Agri-Food Supply Chain, Bolgoda Plains 
3. Sri Lanka’s Food Systems and Climate Risk: Building Resilience Across Supply and Value Chains, SLYCAN Trust
4. Policy Brief on Food Security and Nutrition in City Region Food System Planning, RUAF Foundation 

(Thilini Bandara is a Research Analyst at Advocata Institute and can be contacted via thilini@advocata.org. Niumi Amarasekara is a Researcher at Advocata Institute and can be contacted via niumi.advocata@gmail.com)

The opinions expressed are the authors’ own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.