Connecting Sri Lanka's Smallholder Farmers and Consumers: The Role of Local Markets

In Sri Lanka, close to 1.65 million smallholder farmers are responsible for 80% of total food production [1]. An estimated 40% of households in the country are agricultural households, 94% of which are engaged in crop production activities and 12% in livestock farming [2]. Even though Sri Lanka is a small island nation, the scale of farming and cultivated crops vary significantly across the country. For instance, paddy is the key crop cultivated in the mid- and low-country intermediate zone, whereas potatoes are dominant in the up-country intermediate zone. Based on this, the level of interaction between farmers and markets varies as well.

Despite the significant role that smallholder farmers play in ensuring food security, they are faced with many barriers during their production cycle. Climate risks in particular present major threats and uncertainties, with an increasing number of extreme weather events such as heavy rains, droughts, changes in rainfall patterns, wild animal attacks, and pests and diseases affecting production from sowing to harvesting. In the event of losses and damages to their cultivation, small-scale farmers are often not able to settle their debts and resort to pawning assets or migrating away, resulting in different layers of socio-economic problems.

The power of local markets

Each season, many Sri Lankan smallholder farmers purchase crop seeds and fertilizer on credit or rely on cash advances, mainly through informal means, to continue their agricultural activities. Ideally, they settle these loans or debts upon selling their harvest. Farmers often sell their harvest to a set of regular middle-men buyers, which offers a degree of security but might not reflect the price paid by the end-consumer at the market. There are also government-owned centers that directly purchase the harvest from farmers. Yet, this is limited to paddy crop varieties, and farmers have to transport their produce to the centers (whereas middlemen tend to visit fields directly), stay in queues to sell it, and ensure that it meets the high standards set by the government. These difficulties can discourage farmers from trading with government centers. Given such reasons, including the lack of infrastructure, storage facilities, means of transportations, and having to pay debts or secure advances for the next cultivation season, smallholder farmers may opt to trade with middlemen, despite low price rates offered.

Local food markets, especially those that operate as weekly fairs in every part of the country, could link smallholder farmers with end consumers and reduce the role of middlemen. These local food markets often tap into locally available food, which increases the bargaining power and household income of small-scale farmers. The reduced costs and time needed for supply chain activities allows end consumers to better access to fresh and nutrient-rich foods at a reasonable price.

Local food markets also empower women farmers, who are often small-scale cultivators, by giving them a platform to sell their harvest. The increased income generated through such market interactions can help women to build economic empowerment, giving them a say in household decisions and matters related to resource allocation within the household. Women who often take the role of the primary caregiver to their children, have the potential to positively impact the nutritional status of family members [3]. Enhanced purchasing power and decision-making power allows women to make healthy and nutritional food choices that may have been previously restrained due to price differences. However, there could also be instances where major vendors buy produce from regional markets and sell it at weekly fairs. Such trends may result in middle-men monopolizing the weekly market, blocking farmers’ opportunity to connect with the end-consumer.

Covid-19: New barriers and new ways forward

The lockdown measures taken due to the COVID-19 pandemic restricted access to and disrupted the function of and visits to local markets in Sri Lanka, mainly affecting smallholder farmers relying on weekly fairs to sell their produce, resulting in lost income as well as food waste. As opposed to that, middlemen with transport and storage facilities often managed to secure curfew passes and continued their businesses as usual.

On the other hand, movement restrictions due to the pandemic encouraged new ways of doing business. Many supermarket chains launched online order platforms to provide door-to-door delivery services. Some producers and vendors with access to transport sought permission to drive food trucks from door to door to sell their produce. Some also started setting up temporary food stalls along the roadside, often in urban and suburban areas, to sell their produce. Yet, smallholder farmers in rural parts of the country have not been able to venture out in this manner due to some of these limitations.

Therefore, regaining the momentum of and strengthening local markets through innovative ways are vital to benefit smallholder farmers and ensure food and nutrition security, especially in rural parts of Sri Lanka. For instance, local markets can be made more interactive by taking them to a mobile platform which allows farmers to advertise the range of produce in their stalls on a given day. Such a platform could also be used to showcase each farmer’s cultivation land and good practices used in the production process, which could help to gain consumer trust and encourage sustainable agriculture practices.

Local food markets contribute to the rural economy, directly and indirectly influence food choices, and strengthen the purchasing power of rural farming communities. Linking food producers to end-consumers through local markets also minimizes food miles and thereby reduces the food system’s overall carbon footprint.

© SLYCAN Trust

Sources:

[1] Government of Sri Lanka, Ministry of Agriculture (2021). Sri Lanka - Agriculture Sector Modernization Project.

[2] Government of Sri Lanka, Department of Census and Statistics (2019). Agricultural Household Survey 2016/17.

[3] FAO (2020). Gender Equality and Women’s Empowerment in the context of Food Security and Nutrition.

The information presented here is based on interviews conducted with farmers, government extension officers, local supply chain actors, and other members of farming communities conducted in 2020 in certain areas in the districts of Anuradhapura, Batticaloa, Kurunegala, and Trincomalee.