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Notes on the Jaffna Economy

by Ahilan Kadirgamar, Kafila, (South Asia-based blog), June 7, 2010

In sum, the three major issues that came up in conversations are as follows.  First, access to lands, particularly those abandoned lands that remain fallow.  Here, the problems of land ownership, whether they be related to the reluctance to sell land to oppressed castes or that of affluent sections who have migrated out including those residing in the Tamil Diaspora.  Second, mechanisms such as cooperatives to address the exploitative position of traders and to ensure that a larger proportion of the surplus goes to the farmers.  Third, access to credit, to restart farming, and the need for a Government program to give much lower interest credit to farmers.   

One of my friends in a discussion group in Colombo on ‘Democratising State and Society’ put forward the following challenge couple weeks ago.  He said, a year after the end of the war, many of us who had been following the situation of the displaced people in the North, including the lack of freedom of movement and the militarization of the North have done little to engage the oppressive economic conditions of those affected by the war and now being resettled.  That challenge was in the back of my mind as I visited Jaffna for ten days over the last two weeks.  I tried to grasp what one could on a short visit.  The following are very preliminary notes on the Jaffna economy, with a particular emphasis on agriculture and fisheries which ¬- despite technocratic and diasporic dreams of an information economy – continue to determine the economic life of the larger Jaffna population.  These tentative notes I hope will stimulate some interest towards much needed research on the economy of the Jaffna District and the war affected Northern and Eastern Provinces.

I have been for sometime now, reading the political economy literature that came out of Lanka in the 1970s and early 1980s.  In fact, I feel we have lost that calibre of research and intellectual engagement partly due to the war, partly due to the pit-falls of Western Donor funded research, and partly due to the limitations of the rights based framework that has come to dominate activist work.  In beginning these notes, I want to draw inspiration from Newton Gunasinghe, who along with others at the Social Scientist Association carried out one of the finest research projects back in the early 1980s.  Coming a couple years after liberalisation and the open economy policies of 1977, the research that was subsequently published in 1985 in an important volume ends with Gunasinghe’s insightful essay which looks at four different agrarian systems.  One of those agrarian systems is on Jaffna and I reproduce here the opening paragraphs:

“Market oriented cash crop cultivation in the Jaffna peninsula has been known for a fairly long period of time, for its levels of efficiency, productivity and innovative tendencies.  Even in the late 19th century chewing tobacco was widely cultivated in the Jaffna peninsula and was marketed not only inside Sri Lanka, but also in South India.  The historical pattern of land tenure in Jaffna was not one where land was heavily concentrated in a few families, but one where small-holder ownership concentrated in the agricultural caste of the Vellala prevailed.  It is this small-holder land tenure that provided the basis on which the subsequent developments of the agrarian system took place.  In more recent times the cultivation of specific commercial crops for an island-wide market was started by the Jaffna cultivator.  Vegetables, chillies, onions and more recently potato and grapes form the most important commercial crops cultivated in the peninsula.

When conceptualised at an abstract level, the agrarian system found in the Jaffna peninsula basically consists of the following constituent elements.  (i) Ecological conditions characterised by dry climate and reserves of underground water, which compels the cultivator to resort to a specific type of irrigation, (ii) Prevalence of basically small holder cultivation and monetary rent and a total absence of archaic agrarian relations such as share cropping and labour rent.  (iii) Production process being mainly dependent on the use of smallholder’s family labour and wage labour.  (iv) Capital intensive agricultural practices, which make use of agricultural machinery and chemical inputs at each step of the production process.  (v) In the sphere of commodity circulation, a relative absence of a hierarchy of merchants and the direct relations the cultivators maintain with the commission agents in Colombo.  (vi) A strongly hierarchical caste system which still impinges on the division of labour and the landholding patterns.  (vii) Presence of internal dynamics of change within the system with a potentiality of reaching a qualitatively higher level.”

Gunasinghe, Newton, ‘Peasant Agrarian Systems and Structural Transformation in Sri Lanka’, in Abeysekera, Charles (Edited), Capital and Peasant Production: Studies in the continuity and discontinuity of Agrarian Structures in Sri Lanka, Social Scientists Association of Sri Lanka, Colombo, 1985.

I begin with this brilliant sum up of the Jaffna economy in the early 1980s by Gunasinghe in part because in my recent conversations in Jaffna, whether they were about agriculture or about fisheries, the conversations inevitably returned to the early 1980s prior to the devastating war.  For war, disruption and displacement propel memories of an earlier economy, which also at one level are the promise of a future. 

In Jaffna today there are at least three trends influencing ideas about the future of the Jaffna economy.  First, for the middle classes, life in Jaffna is increasingly transitory with the eye on migration and of joining kith and kin that make the Diaspora in the West.  Economically, it is this section that also benefits the most from foreign remittances.  Second, there are the technocrats and the ‘experts’ who speak, sometimes rather dishonestly, about the trickle down phenomena of a knowledge economy and the Singaporean potential in Jaffna.  This second category of thinking like the first does little by way of engaging the subaltern and dispossessed, and in reality have little commitment to building the economic institutions that will sustain the larger population.  Third, is the reality of the Jaffna economy which continues to be characterised by agriculture and fisheries.  There is much one can learn from those practicing farmers and fisher-folk whose economic lives are inter-related with those displaced and war affected people returning in the thousands over the last year.  It is such people with their relationship and access to lands and the seas, to their labour and their need for capital, and the mechanisms of their exploitation, and the possibilities for their dignity and emancipation that I want to begin to understand. 

In my notes below, I also throw in much empirical data, none of which has been cross checked and needs to be viewed only as preliminary material.  Tentative as these notes are, I will not reference my sources and all of this should be reworked with further research.  Given the urgency with which my interlocutors spoke to me and provided some data, I reproduce them here, well aware of the limitations of my notes.  These notes are meant for those who want to follow through and reach their own conclusions.

On Agriculture

Today, 65% of Jaffna District’s population are farming families; an estimated total of 54,000 farming families. Of them 8,000 are recently resettled families after displacement from the Vanni. Of the total farming families 30,000 families are landless labouring families.  The immediate priority continues to be one of resettling the displaced farmers.  So land inevitably becomes a central concern.

Jaffna has two classifications of land: Paddyland used for paddy cultivation and Highland used for vegetable cultivation as well as residential use.

In Jaffna District, there are 13,000 hectares of Paddyland and 8,500 hectares of Highland. And then there are the peculiar measures of land in Jaffna.

1 hectare = 2.47 acres
Highland 16 lachams = 1 acre
Paddyland 24 lachams = 1 acre
10 perches = 1 lacham

Farms in Jaffna are usually quite small and are about 4 lachams and go up to 25 lachams when they are large farms. Banana farms tend to be the larger farms, and grape farms on the average are 10 lachams.

Currently about 2,500 hectares of Paddyland and 2,000 hectacres of Highland are abandoned.  Possibly 60% of such abandoned land is owned by those who have left Jaffna including those in the Tamil Diaspora.  This includes in particular the islands close to the Jaffna peninsula where 70% of land is not cultivated.  In terms of lands held as High Security Zones by the military, it is mainly around the Palaly Airport where about 400 hectacres are uncultivated because of the High Security Zones. 

There are legal provisions for the State to take over abandoned Paddyland and provide it to the displaced.  Land ownership, transfer and sale continue to be shaped by caste relations.  When it comes to Highland held by those who have left Jaffna, there are yet no provisions to distribute it to those displaced needing land.

The closed economy in the 1970s led to a major agricultural boom in the cash crops such as red chillies, onions and tobacco.  FAO (Food and Agricultural Organisation of the United Nations) encouraged inorganic fertilizers in the 1970s, but now FAO and the State are trying to reverse this with an emphasis on organic fertilizers.  In 1990, 57% of red onions in the entire country came from Jaffna. Chillies production began to decline with competition from the accelerated Mahaweli scheme, the largest development project to date that also led to some measure of ethnicisation of development policies.  The World Bank funded Mahaweli irrigation project led to settlements and agricultural schemes that mainly benefited the Sinhalese farmers.  Demand for tobacco leaves has been on the decline due to a reduction in the smoking of cigars.

In Jaffna District, unlike in the South, paddy is only cultivated for one season and its rain fed.  But throughout the year onion, tobacco, chillies as well as vegetables such as brinjal and ladies’fingers are cultivated.  In this context, water management systems and related new technologies are needed.  Some technologies that were introduced have worked, such as irrigation pumps but some technologies such as solar sprinklers have failed due to the high calcium content of water in Jaffna.  Infrastructure development related to agriculture mainly consists of minor irrigation schemes and the major infrastructure initiatives that make up the Government’s post-war reconstruction and development plans may not necessarily benefit the small farms peculiar to Jaffna.

Given the small size of farms in Jaffna, agriculture in Jaffna is not capital intensive.  Tractors are given for hire including through government departments.  Changes in farming practices have mainly focused on the introduction of inputs whether it be fertilisers or new seeds and not on new forms of marketing.  Traders and a middle layer of marketing continue to extract most of the surplus.

Investment necessary to start a 10 lacham farm is approximately Rs. 1.5 Lakhs.  One acre of Paddyland will require Rs. 10,000 to start and up to a total cost of Rs. 24,000 if harvesting costs etc are included.  As part of Vaddakin Vasantham (the Government’s development and reconstruction plan for the North) Rs. 4,000 per acre is given for new lands that are cultivated. Free seeds and subsidized fertilizers are also given and Highland farmers are given buckets and other implements.

The major problem facing a revival of agriculture is access to credit.  High interest loans continue to be a big problem. Bank loans for farmers are in the order of 14%.  Farmers can get Government loans at about 9%.  If farmers who have lost so much are to get started, reduced loans that only take into consideration servicing fees are necessary.

In sum, the three major issues that came up in conversations are as follows.  First, access to lands, particularly those abandoned lands that remain fallow.  Here, the problems of land ownership, whether they be related to the reluctance to sell land to oppressed castes or that of affluent sections who have migrated out including those residing in the Tamil Diaspora.  Second, mechanisms such as cooperatives to address the exploitative position of traders and to ensure that a larger proportion of the surplus goes to the farmers.  Third, access to credit, to restart farming, and the need for a Government program to give much lower interest credit to farmers.   

On Fisheries

From the peak of the fishing boom in 1983, fisheries in Jaffna district started to decline with the war in 1985.  In 1983, one third of fisheries exports were from Jaffna amounting to 49,000 metric tonnes.  By 1990 night fishing was banned and in the following years with the escalation of the war, much fishing in Jaffna was brought to a complete standstill.  During the war Jaffna fishermen could not go to the seas, but Indian fishermen were able to fish in those waters and exploit the seas.  This is also the context for some tension between the Indian and Lankan fisher-folk.

Today, there continues to be some restriction on fishing particularly near the High Security Zones (HSZ).  In the Northern coast of the Jaffna Peninsula for example places like Myliddy are under the HSZ and along the Northern coast a total of around 2,000 fishing families have been displaced by the HSZ.  This is also true in other places such as Nagarkoil and Kytes.

In Jaffna District there are around 23,000 fishing families who are part of some 117 fishing Sangams or Fishing Societies.  In Jaffna District there is one Fishing Union per Divisional Secretary area. Each Union has some 10-15 Sangams or Fishing Societies.  Each Fishing Society can have up to 300 fishing families.  In this manner the fishing communities are well organised. 

Today an average fisherman needs Rs. 700 to Rs. 800 per day to contribute towards sustaining the family income, but cannot earn this only by day time fishing.  Most of them continue to use fiber glass boats for day time fishing.  One 18 ft fiber glass boat costs about Rs. 1.5 Lakhs and an outboard engine costs Rs. 2.1 Lakhs.  To go deeper into the seas, a 3.5 Tonner 28ft to 30ft in length with an inboard engine, costs Rs. 1.5 million.  Multi-day boats with 10 – 12 people can go out to sea for 2-3 weeks. They are 40 ft to 45 feet in length and can store with refrigeration 5 tonnes of fish and carry 5,000 litres of fuel.  There is only one such boat owned in Jaffna and it is yet to hit the seas.  Lack of access to a good fisheries harbour for Multi-day boats is a problem given naval restrictions around HSZs.  Refrigeration and marketing continue to be other issues.

There are growing concerns about environmental resources and environmental sustainability in the seas surrounding Jaffna.  There is a need for education of the fisher folk as well as change in State policies in Sri Lanka and India relating to fisheries and the environment.

Access to capital is a problem.  Interest rates for loans from banks can be around 13%.  As part of Vaddakin Vasantham the Government, in its post-war reconstruction plan for the North, is giving loans at 6% but there are bureaucratic barriers.

For example, there was an excess of boats given to Jaffna after the tsunami in 2004. These could not be used during the war due to naval restrictions.  Now, those boats could be bought and repaired for Rs. 50,000 but the government loan for Rs. 1.5 Lakhs under Vaddakin Vasantham is only for new boats. But if fishermen do not follow this regulation they may have trouble with registration etc. They also prefer not to take large loans.

In sum, the access to the seas and naval restrictions continue to be a major problem.  There also needs to be better access to capital and the Government needs to address the concerns of fisher-folk in its major post-war development schemes.  Perhaps this is another argument for much greater devolution of power to the regions so that the concerns of local fisher-folk for example can be addressed locally.  The environmental issues require education of the fisher-folk, but more importantly needs to be addressed in regional forums.

Research and Democratisation

As I said at the outset these notes are merely tentative reflections to raise the need for research and to engage the concerns of the agricultural and fisher communities in Jaffna.  What is clear to me are that the political economic analysis of a previous generation of scholars around land, access to the seas, exploitation of labour, of the character of the state, of the problems of development policies, access to credit and capital all continue to be relevant today.  However, there are new issues that have emerged in the post-war context following the massive physical and economic devastation that call for renewed research building on the work of intellectuals like Newton Gunasinghe.  The challenges of restarting economic life after the war is no easy task and raises a range of issues relating to the resettlement of the displaced, from day to day needs to the injection of capital, a range of environmental concerns etc. The Government’s Colombo centred approach to development, the superficial analysis of the economy in the public sphere and for that matter the attitude of the large donors all point to the dangers to the economic geography of Jaffna and the war-affected North and East, that we may have to tragically revisit in a few years time if not addressed now.  That is also the urgency of engagement that those involved with agriculture and the fisheries alerted to me.  There is a need for much broader conversations at various levels, and particularly at the level of local agricultural and fisher communities that only a community of engaged researchers can address.  Such engaged research I believe can contribute towards a process of democratisation.  Economic development with local participation and leadership, and the shaping of economic policies to address the local population also relates to issues of democratisation, the ‘devolution debate’ and a political settlement that are now being swept under the carpet.  On that matter, another set of notes might be necessary to begin a discussion on its own terms.