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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2423

Current Jaffna economy is no longer a market oriented

Sunil C. Perera in Colombo

The Income Recovery Technical Assistance Programme (IRTAP) project of the International Labor Organization says the current economy of Jaffna can no longer be characterized as a market oriented economy, but rather represents a crisis economy with very substantial subsistence characteristics supported by coping mechanisms, with barter having resurfaced in many instances. Few import and export links are maintained to other parts of the island, especially the neighboring Vanni region and the main economic hub of greater Colombo.

Issuing its latest livelihood development report the IRTAP said that all 600,000 inhabitants of the Jaffna district are in one way or the other directly or indirectly affected in their livelihoods. This figure includes 17,640 fishing families (representing some 78,000 people), and 85,411 farming families (including 2,000 farm labor families) depending on agriculture and 42,500 families active in micro small and medium enterprises characterized by activities in industries and services. Effects find their expression in significantly contracted productivity levels.

Their main constraints are the suspension of all land transport between Jaffna and the rest of Sri Lanka, significant limitations on fishing and to a lesser extent on farming activities, and the limited mobility of workers of small and medium enterprises.

Given the established integrated economy of Sri Lanka, suppliers of input and finished products to Jaffna and traders of products originating from the other parts of Sri Lanka are negatively affected by the current situation.

The local administration is proactive in coordinating relief activities and instrumental in drawing up plans for livelihood relief and recovery together with central government ministries.

However, the major obstacles for a sustainable recovery of the people’s livelihoods persist and can not be overcome without appropriate market oriented, socio-economic and socio-political measures allowing easier and freer access to input materials, transport facilities and natural resources (e.g. farm and grazing land, fishing grounds and markets).

A list of about 30 livelihood recovery projects have been identified by local stakeholders , the IRTAP Head Doekle Vielinga said.

According to local authorities, regular supplies of basic staples seem to be sufficient to cater for the entire population of the district and improved recently with supplies arriving by sea. It should be noted in this regard, that the recent harvest of local rice just entered the district market and contributed to ease demand.

However, the overall economic situation in Jaffna continues to be critical due to prolonged under supplies of consumer goods, fuel and energy supplies and input materials for the local agriculture, fisheries and livestock sectors, for the agro processing industry and Micro, Small and Medium Enterprises [MSMEs].

At the end of March 2007, open market prices for basic consumer goods were on average 70% above prices in Colombo, significantly down from over 400% at the beginning of February. Prices at cooperative shops were slightly above those in Colombo, but a significant number of products were not available here. This relaxation is largely attributed to increased imports into Jaffna by ship.

However, given that the majority of inhabitants have a significantly smaller disposable income now than before the closure of land connections and that private savings are expected to be largely exhausted by now, it is sound to estimate that significant groups in Jaffna live below the poverty line and will not be able to provide for sufficient nourishment without outside support, he said.

The fishery sector in Jaffna employs close to 18,000 fishermen, directly catering for about 80,000 citizens, or close to 15% of the districts population.

Adding the sector’s indirect employment features (e.g. fish drying, other processing, wholesale and retail trade, ice production, boat building and maintenance), conservative estimates put the district’s population directly and indirectly connected to fishing at above 25%.Traditionally most of the catch is either consumed locally or exported to other areas of Sri Lanka (e.g. Kurunegala, Kandy and Colombo) as fresh fish and ice factories as well as cooling facilities are available after their post Tsunami rehabilitation but remain largely inoperative. Currently these rehabilitated facilities are closed due to lack of fish commodities to process and due to lack of sources of supply in fish and energy restrictions. Only a fraction of the pre-tsunami fish catch is being landed and is processed or marketed locally at often unaffordable prices.

While the potential for rehabilitating the sector is present, currently local fish production and processing is reduced to a subsistence cottage industry and remains confined to fish drying and the production of Maldive Fish. Access restrictions to more distant productive fishing grounds (outside the 2.5 km limit from the shoreline), restrictions on the use of outboard engines and fishing ban limitations and limitations of fishing times have a detrimental impact of the supply of cheap affordable fish proteins for the general public, on the livelihoods of fishermen communities and on the Jaffna population as a whole.

The security limitations for fisheries vary in time, distance, area and the number and type of crafts allowed. Restrictions are regulated by army / navy commanders, responsible for their particular stretch of coastline and vary significantly from Fishery Division to Fishery Division. Consequently, unemployment and underemployment in the fishery sector is high and fish production has nearly collapsed after July 2006. In addition, fishermen’s assets such as fishing nets, fishing engines and fishing craft are deteriorating rapidly for not being put to productive use.

However, given the current security-imposed limitations on access to fishing grounds, income losses vary between different GN Divisions and are currently being assessed in detail.

The average loss of income per fisherman since the beginning of fishing restrictions in August 2006 and February 2007 is about LKR 6,000 /month, representing more than one third of the average per capita income of a fisherman in Jaffna.

Better incomes of fishermen between November 2006 and February 2007 are largely related to excessive retail prices due to under supplies and are directly related to fishery restrictions. Average market prices per kilogram of fish rose by about 300% due to security restrictions and subsequent supply shortages. The total size of the Jaffna market for fish is estimated at about 1,500 tons monthly while the current catch fluctuates at about 250 tons. Given the significant shortage of supplies and prevailing high prices, fish proteins will continue to be outside the reach of a significant segment of people in the peninsula, further increasing dietary imbalances.

After improvements in the overall security situation, the SLA gradually eased fishing restrictions in certain areas during the past month. By end March 07 the fishing ban was replaced by restrictions for the islands of Delft, Punkudutivu, Navinativu, Analaitivu and Paratitivu and nearly the entire North coast. However, fishing is still limited to non motorised traditional crafts, daytime fishing, and a maximum of about 50% of all fishermen daily.

Blue water fishing with motorized day and multi day crafts remains prohibited and consequently landings continue to be only about only 15% of the volume prior to August 2006. In addition to restrictions imposed on fishing activities, losses and damages to fishing boats, engines and fishing gear, attributed to the on going conflict and to the non-utilization of assets, were reported from all 12 Fisheries Divisions in Jaffna. In the current context of restrictions to access more productive and distant fishing grounds, it is not sure that boat-owners and/or investors would contemplate investing the necessary funds for a prompt recovery of the sector. Imports of input equipment and materials for the fishing industry (e.g. boat repair and building materials, fishing nets and engines spare parts) and exports of fresh and processed fish are curtailed due to the current lack of access to markets.

However, given the limited quantity of fish landed, local markets are absorbing the entire catch. A strength, weakness, opportunities and threads (SWOT) analysis of the fishery sector in Jaffna was conducted during the livelihood recovery workshop.

An outline of the main impediments relevant to the sector and a sector analysis currently support measures to promote indigenous coping mechanisms to support livelihoods are not comprehensive in nature and are not based on an analysis of individual Divisions.

Some immediate food-aid relief (dry rations) to fishermen and their families was given by the Government Agent (GA), Jaffna.

However, particularly the Samurdhi beneficiaries numbering around 8,000, who are being issued reduced quantities, have expressed their dissatisfaction over the inadequacy of the dry rations. As an alternative occupation, cash for work programmes have been arranged by the fisheries cooperative society (FCS) to be funded by INGOs and in certain areas, the works have already been undertaken. Caritas has undertaken to fund cash for work programmes in Jaffna town for up to LKR 4 million. Care International is active in Sandilipay DS Division (Mathagal area), and Sewa Lanka is active in the Point Pedro DS Division2.

The question remains as to whether cash for work interventions are an appropriate tool in the current context of imperfect markets, lack of commodities and exorbitant commodity prices.

However, fishermen need to complement their income in cash and kind through temporary employment in local infrastructure projects and against the backdrop of available local construction materials. A number of general fields of temporary employment were identified in the fields of tank and reservoir rehabilitation, rehabilitation and extension of drainage canals, and construction of local feeder roads. This list, however, is not extensive and needs to be completed regarding the analysis of localized livelihood impediments of fishermen, local infrastructure development and rehabilitation requirements, and requirements of other sectors. Moreover, such programmes need to be in line with general ethics and need to properly include weaker sections of the community (women, elderly, disabled, orphans, etc).

However, as the main source of their livelihoods remains fishery, one important task will be to improve the communication and coordination between the local

fishing communities, local Government (GA) and the local army and navy commanders with the aim at improving fishing opportunities while taking security concerns of the military into consideration. It was thus proposed to establish and facilitate a forum for the fishery sector to reduce impediments to economic development, consisting of sector stakeholders.

Agriculture provides a livelihood to 85,000 farming families, including farm laborers. The dairy, goat and poultry rearing industry constitute the main segments of the livestock sector in Jaffna with 30,000 registered poultry and 15,000 dairy farmers respectively.

The agricultural sector gained prominence over the past decades, as it was productive and flourishing. It is characterized by production of food and cash crops, such as grapes, red onions, chilies, tobacco, exotic and endemic vegetables, fruits and ground nuts. The production has consistently been of high intensity and yields thanks to favorable soils, climatic conditions and the skills of local farmers. In the livestock sector too, farmers have traditionally enjoyed high yields due to the adoption of new technologies.

At present the sector still produces considerable amounts of cash crops with the hope of selling to markets in the Centre and South of Sri Lanka. However, farmers are gradually adapting to cater for the local market.

The government and FAO brought in improved seeds to adjust the agricultural production as much as possible to local demand. However, due the continuing crisis, quantities and varieties of seeds supplied are insufficient to cover demand. Promotion of local food production over distribution of imported foreign food-aid is a prime livelihood support opportunity that needs urgent and appropriate consideration.

Due to the displacement of farmers from the security zones and their expansion, problems of supply in spare parts and fuel and lack of agro-chemicals, high intensity farming land has been left uncultivated, resulting in an estimated loss of about LKR 8 Million per season. Farming is also affected by the lack of fertilizers, agrochemicals and fuel since the closure of land supply routes. Likewise, farmers face significant difficulties in selling their produce on the markets in the central and western parts of the country. Prior to the conflict Jaffna district had 10% of the national cattle population, 20% of the goat population, 60% of the sheep population and 7% of the poultry population. During the period of the conflict, 37% of cattle, 45% of goat and 90% of poultry was lost. Irregular supply of feed for poultry and livestock together with the lack of animal vaccines and veterinary drugs has prompted about one in every three farmers to sell their animals.

Following the closure of the A9 and tightened security regulations, consumers in Jaffna experienced a sharp price rise in agriculture and livestock produce, putting these essential commodities outside the reach of poor households. Coping mechanisms can be supported in such a context of increased vulnerability of the Jaffna population at large and with poorly functioning public services and supply markets. The opportunities for reaching a minimal level of food security in the Jaffna peninsula are therefore seriously curtailed.

An agricultural working group comprising 26 stakeholders representing the public sector, INGOs, CBOs, University, local government and International Agencies etc. conducted a SWOT analysis of the agricultural and livestock sectors recently. The income earning capacity of the agricultural farmers (both crop and vegetable producers) and the livestock/poultry producers declined drastically due to the volatile situation prevailing in the district, the lack of fertilizers, pesticides, veterinary drugs and vaccines, lack of spare parts and cash to pay for casual on-farm laborers.

The first measure to support the coping mechanisms and in the longer term the livelihoods of farming and livestock rearing families would be the re-establishment and liberalization of regular input supply channels as well as marketing channels for produced outputs; This could be done by way of a systematic dialogue between farmer organizations, local governments, traders, investors and security forces.

Farmers are generally willing to complement their income by additional temporary employment activities. CARE plays the lead role with their cash for work programmes. Further, it has become necessary to identify alternatives to replace the agricultural inputs that are normally brought into Jaffna to reduce the current high cost of production. Encouraging production for the local market is definitely the most appropriate intervention that would support coping mechanisms and livelihoods in a sustainable manner. The workshop identified a number of measures to revitalize farming and livestock rearing in the short term. Measures include …

(i) subsidies for input materials and transport,

(ii) promotion of traditional, organic farming and integrated farming,

(iii) strengthening agro based industries and existing community based organizations, and

(iv) strengthening negotiation skills and channels to obtain permissions to cultivate land.

Besides improving on the delivery of input materials and marketing channels to Sri Lanka’s main markets around Colombo and the Highlands, it is crucial to provide farmers with daily information on sales prices on main markets (e.g. Jaffna, Colombo, Dambulla) in order to optimize local production and, subsequently, income and to map agricultural production as a basis to forecast market (under) supply and plan and implement mitigating action (e.g. imports from other parts of the country) in a timely fashion.

- Asian Tribune -

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