Sri Lanka’s agricultural sector remains hindered by structural inefficiencies and a lack of agripreneurship. Transforming traditional farming into an entrepreneurial, market-oriented model is now seen as a critical step to enhancing the sector.
Despite opportunities in value-added markets, systemic issues such as inadequate infrastructure, skills, and technology call for modernisation in the agricultural value chain.
Agriculture plays a major role in Sri Lanka’s economy, with nearly 27% of the population engaged in agricultural activities. In terms of the entrepreneurship scale, however, only around 1.5% of Sri Lanka’s population is actively engaged in entrepreneurship, which is lower than in many developed countries. Moreover, the country comprises a very limited number of agripreneurs.
Lag in agricultural development
The growth rate in agriculture also remains low, with the value added (annual percentage growth) of agriculture, forestry, and fishing in Sri Lanka being reported at 2.5693% in 2023.
Speaking to The Sunday Morning, Rajarata University Faculty of Agriculture Department of Agricultural Systems Senior Lecturer Dr. L.P. Rupasena highlighted this lag in agricultural development in Sri Lanka.
“Since independence, the annual growth rate of agriculture has been nearly 2%. Agriculture has fallen behind the development of other sectors, which has led to problems such as agrarian poverty, high food inflation, and unsatisfactory progress in the sector,” he stated.
Dr. Rupasena pointed to the shortage of agripreneurs as a major factor for these issues. “There are plenty of market opportunities in the agricultural sector due to factors such as globalisation, urbanisation, export facilitation, and the demand for processed products. However, we have yet to fully tap into these markets,” he explained.
He also highlighted the potential of value-added processed markets, which open up various opportunities for growth.
“Entrepreneurs are key drivers of economic growth. However, the percentage of entrepreneurs in Sri Lanka remains very low,” Dr. Rupasena noted, adding that fostering more agripreneurs in rural areas could help reduce the urban-rural disparity as well.
Pointing out that that infrastructure played a crucial role in supporting agripreneurship, he stressed the need for more business incubation centres.
“Countries like India and Pakistan allocate substantial funds for developing such centres, which help inventors transform their products into market-ready innovations. Business incubators are essential for turning ideas into action and inventions into innovation, which is vital for the agripreneurship ecosystem,” he said.
He also emphasised the importance of developing the agricultural value chain. “Currently, many people are involved in the value chain, but interactions are limited and there needs to be more transparency in transactions.”
Dr. Rupasena added that technologies such as blockchain were being used to enhance stakeholder collaboration across the value chain.
“If Sri Lanka aims to establish agro-based industries, it is critical to support rural areas by facilitating networking among farmers and entrepreneurs. There is a need for enhanced institutional support, with the Government’s role in development, financing, and market enhancement being vital.
“A major reason for the slow growth rate is the lack of institutional support and poor inter-institutional relations. For instance, it takes more than six months to start an enterprise in Sri Lanka,” he observed.
He further highlighted the importance of improving infrastructure, particularly storage facilities, which was also in line with the administration’s focus on a production economy.
“Support from farmers is essential for the development of agripreneurship and it is crucial to foster an entrepreneurial mindset among farmers, transforming them into agripreneurs. Currently, the agricultural extension system in rural areas mainly focuses on maximising production. However, the major role should be to shift farmers from a product-oriented approach to a market-oriented one,” he said.
Need for robust infrastructure facilities
Meanwhile, speaking to The Sunday Morning, Agro-Culture Trends Chairman/Managing Director (MD) and Sri Lanka Agripreneurs’ Forum (SLAF) Committee Member Aruna Weerakoon pointed out that agriculture, as a whole, was lagging behind Sri Lanka’s regional peers.
“Starting with inputs, we have been quite backward. With entrepreneurship being inherently a risk-taking venture, there are progressive farmers who are willing to take risks and invest in technology, as well as subsistence farmers who rely on handouts.
“While progressive farmers are more open to adopting innovations, even young people from subsistence farming backgrounds are often hesitant to engage in agripreneurship,” he explained.
Moreover, Weerakoon highlighted factors that could contribute to growth in agripreneurship, noting the importance of good seeds, fertilisers, and adherence to Good Agricultural Practices (GAP).
“Training programmes conducted by the Government and various associations, combined with support and market creation, can foster the emergence of agripreneurs. Digital platforms have also enabled farmers to network, further advancing agribusiness,” he added.
Highlighting infrastructure challenges, Weerakoon stressed the need for efficient transportation and market access to facilitate distribution. He noted that the lack of a robust distribution system had significantly hindered the agricultural market.
“Currently, a few individuals with one or two lorries handle the transport of produce to economic centres. The Government must encourage large logistics companies to enter agripreneurial distribution. Without organised distribution, farmers are unable to access markets effectively, leading to significant wastage during peak seasons,” he said, pointing to hub-based consolidation and infrastructure upgrades as solutions.
“Production itself isn’t an issue, as Sri Lanka can grow vegetables and fruits year-round. The bottleneck lies in infrastructure. With proper distribution systems, agripreneurship will gain momentum,” Weerakoon said, adding that young people were already adopting advanced technologies such as drones to modernise agriculture.
He also emphasised the need to reduce Sri Lanka’s reliance on imported agricultural produce, since the country spent a substantial amount annually on importing.
“We have hybrid seeds in Sri Lanka as well and I was instrumental in introducing them nearly 20 years ago. I’m happy to say we have every kind of seed in the country. It’s promising that the Government is working to develop hybrid seeds and supporting their adoption by a larger number of farmers,” he noted.
Empowering youth to contribute
In Q2 2024, agriculture accounted for an 8.5% share of Sri Lanka’s Gross Domestic Product (GDP). In the first quarter of 2024, agricultural activities expanded by 1.1%, which was a slight decrease from the 1.6% growth in the same quarter of 2023. Meanwhile, in the second quarter of 2024, there is a growth of 1.7%, highlighting a slight increase in growth compared to 2023 and Q1 2024 both.
Unipower Chairman and MD and SLAF Committee Member Jayantha Rajapakse explained that agripreneurship spanned different levels, noting that it did not necessarily end with agriculture as it extended along the value chain by adding value and making products more market-viable.
Rajapakse explained that agripreneurs could also serve as input or service providers, contributing to the sector in diverse ways.
“Entrepreneurship today ranges from basic agricultural activities to high-tech products. Even existing input suppliers are considered agripreneurs, but advancing in this role requires acquiring entrepreneurship training and skills to uplift those involved,” he said.
A significant challenge, according to Rajapakse, is the lack of youth engagement in agriculture. However, he pointed out two key areas that could attract younger generations, which are modernisation with entrepreneurship and the adoption of digital technology in agriculture, as entering agriculture through modernisation and digitalisation created opportunities for youth to become agripreneurs.
Rajapakse stressed the importance of reducing dependency on imported crops, noting that Sri Lanka spent a substantial amount on importing crops that could be grown locally, highlighting the need to move towards self-sufficiency in major crops.
He highlighted the need for Government consideration to address the gap in youth involvement. “If the Government identifies this vacuum and provides opportunities for youth to engage in the sector, starting with agrarian services and progressing to agripreneurship, it could significantly transform the agricultural landscape,” he said.
Employment in agriculture has witnessed a notable drop in Sri Lanka, from 30.9% in 2012 to nearly 27% currently. Moreover, the agricultural sector in Sri Lanka has traditionally been dominated by subsistence farming, especially in rural areas.
Access to information, tech, infrastructure key hurdles
International Trade Centre (ITC) Market Systems Development and Value Chain Development Specialist Nimmi Galearachchi told The Sunday Morning that conventional farmers grew crops with the primary focus on consumption rather than trade or commerce. She noted that over time, subsistence farmers may transition into smallholder commercial farming, where agricultural produce was often funnelled through intermediaries or rural integrators to economic centres.
She added that in contrast, agripreneurship offered farmers a broader role, since it was about cultivating, harvesting, and introducing some degree of value addition, noting that in conventional agricultural value chains, farmers typically played a limited role and absorbed a small margin.
One of the main barriers to agripreneurship is the lack of access to information. Farmers are often unaware of the global demand for value-added products or the techniques required to produce them.
Galearachchi also highlighted the importance of financial literacy and awareness of external factors such as climate change, as farmers may not always have an updated understanding of changing climate patterns or know how to adjust their crops to reduce losses and maximise income.
Infrastructure limitations compound these challenges and certain Government interventions in the past have not always addressed these structural needs effectively.
“For agripreneurship, infrastructure is a significant requirement, the significance of which fluctuates over the years,” she emphasised. Galearachchi highlighted that as farmers grew their businesses or diversified into new crops, inadequate infrastructure became a significant obstacle to expansion.
She noted that lacking sufficient and maintained infrastructure to cater to their requirements was a major issue for farmers to not transform into agro entrepreneurs, restricting them to the role of farmer, merely getting paid by the price point that intermediaries determined.
Beyond infrastructure, the role of the private sector is vital to the ecosystem as well, with Galearachchi noting the significance of a collaborative model.
“Private companies can work with semi-agripreneurs to coordinate with larger networks of smallholder farmers. This creates a smaller, sustainable business model at the rural level. Private companies, incentivised to ensure quality, often provide farmers with infrastructure, skills training, and machinery, ensuring mutual growth.
“While having access to preliminary sources of information from either the Government or from a private sector company is needed, it’s vital to update. Meanwhile, private companies have become a change agent in the field in terms of changing the lives of agricultural communities and transforming them from a rather low-level commercial agricultural system into an entrepreneurial agricultural system,” she observed.
Farmers become entrepreneurs over time with a growth model and this relationship is important because private companies are incentivised to build infrastructure in the field, being aware of the significant role played by quality in the export market in particular.
Galearachchi noted that it was an inclusive endeavour, with farmers being paid premium price points based on quality.
Govt. measures
The Sunday Morning learns from a spokesperson at the Ministry of Agriculture that developing agripreneurship and agricultural products remains a significant priority, particularly under the new administration’s plan to promote entrepreneurship in production.
The spokesperson stated that reaching the export market with these products was also a key focus, adding that the ministry was in the process of identifying agricultural and related product development potential in the rural sector.
“There is a notable level of unemployment in rural areas, particularly among the youth, and the ministry aims to introduce these product possibilities while raising awareness. There are plans to better facilitate financial loans at low interest rates or issue grants based on viable business proposals from entrepreneurs.
“Addressing the financial challenges surrounding agriproducts legally will also be a priority, as well as establishing a robust agricultural database with information on value addition.”
Accordingly, foundational planning has been completed, with implementation at the rural level being the next step. The initial focus will be on developing agricultural products, some of which could serve as alternatives to imports.
Meanwhile, better distribution of produce has been identified as a significant infrastructural improvement needed to enhance the overall agricultural ecosystem, with over 20% of produce going to waste due to distribution issues.
The ministry has recognised the importance of improving transportation modalities to reduce post-harvest loss. Plans include fostering a network to sell regional produce regionally, developing a proper truck transport system, and potentially leveraging the railway system for agricultural logistics.