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Political culture and agricultural policy: The case of cinnamon in Sri Lanka
POLITICAL CULTURE AND AGRICULTURAL POLICY: THE CASE OF CINNAMON IN SRI LANKA
M. P. MOORE*
Agrarian Researchand Training Institute, P.O. Box 1522, Colombo, Sri Lanka (Received: 21 September, 1977)
SUMMARY The long-term market prospects for Sri Lanka’s cinnamon are very poor and the Government would be ill-advised to invest resources in promoting the industry. Yet the political culture legitimates and promotes the subsidisation of almost all consumer and producer activities. The replanting of cinnamon is also subsidised. An evaluation of the subsidy shows it to be misconceived, ineflective, inconvenient, inappropriate, biased and possibly damaging to the objective it is supposed to serve. Some of the problems arise from the specific conditions under which this subsidy is given, while others are inherent in the very process of a publicly-administered subsidy. These manifest failures do not apparently much aflect the perceptions of either the applicants or the public oficials concerned about possible and desirable alternative policies.
THE
CINNAMON
INDUSTRY
In former times cinnamon was an important commodity in international trade, and it was the quest for this spice which was in large part responsible for the Portuguese -and later the Dutch-occupation of part of Sri Lanka in the sixteenth to eighteenth centuries. Sri Lanka remains the main producer and exporter, as well as the source of the finest quality cinnamon, but the product is of minor importance today. Its place in world trade is miniscule and, even in Sri Lanka, it accounted for only about 1% of all export earnings in the period 1972-1976. 1 In its cultivated state cinnamon is grown as a bush with between six and a dozen shoots emanating from the base. On reaching approximately the thickness * Present addreSs: The Institute of Development 9RE, Sussex, Great Britain.
Agricultural Administration (5) (1978)-a
Printed in Great Britain
121
Studies, University
of Sussex, Brighton
Applied Science Publishers Ltd, England,
1978
BNl
122
M. P. MOORE
of a thumb, these shoots are cut and the bark peeled. Sticks of the dried bark, called quills, comprise the main product: they are exported in unprocessed form. Other cinnamon products are loose pieces of bark and shavings, collectively termed chips, and oil distilled from the leaf and the bark, respectively; these are, however, of minor importance in comparison with quills. Cinnamon may be peeled during most months of the year, but the more care that is taken to cut shoots at their optimum level of maturity, the higher the quality of the product. The most labour-intensive aspect of cinnamon production is the peeling process. This was traditionally the monopoly of the Halagama caste and largely remains so. Members of this caste are concentrated around the heart of the cinnamon industry -the town of Ambalangoda. From this base itinerant peelers move through other cinnamon-growing areas in search of work. Almost without exception, they are rewarded with half the crop. After peeling, the other main source of employment is the annual weeding of cinnamon land. Most peelers concentrate exclusively on that one highly-skilled occupation but the majority of the other workers and virtually all landowners are involved in the industry only on a part-time basis. Most landowners may be characterised as smallholders : according to a 1969 survey, 92y/0 of all cinnamon holdings were less than three acres in extent.2 However, the majority of even the smallest owners employ outsiders to do the peeling. In comparison with its contribution to the national income, the cinnamon industry involves a large number of households. It is significant from the political point of view that this section of the electorate is concentrated in a few areas along the western and southern coastal fringes of the island.
THE ECONOMICSOF CINNAMON
From the point of view of present concerns there are three aspects of the economics of cinnamon which are important. The first is that the domestic price is very unstable: it is not uncommon for prices to double or halve within a few months. This appears to be the consequence of a number of features of the marketing structure. Almost all cinnamon is exported; there are only three significant producer countries, of which Sri Lanka is the largest; interruptions in supply are common; the market for Sri Lanka’s cinnamon is highly concentrated, more than half of it going to Mexico; only a handful of Ceylonese firms undertake export contracts. The producer price in Sri Lanka is dependent on the interaction of such factors as the size of the crop or the political situation in the Seychelles and Malagasy, the level of stocks held by Mexican importers and whether or not exporters urgently need to purchase in order to fulfil an order. Cinnamon is not, however, a perishable product. A more orderly marketing structure, incorporating some buffer stock arrangements, could eliminate the worst price fluctuations. The second economic aspect is that the long-term outlook for the international
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cinnamon price is poor from the producers’ point of view. Cinnamon is used in small quantities in the household, while in the food processing industry it has to compete with the similar but cheaper and inferior cassia originating mainly in Indonesia and China. As in the case of most spices, the demand for cinnamon seems unresponsive to increases in income. It has been estimated that in the period 1962-1970 world imports (which practically equal production) of cinnamon increased at a linear rate of O-9:/, per year. 3 The long-term price trend for Sri Lanka cinnamon is downwards. Taking 1967 as a base year (= lOO), the index of (current) cinnamon quill prices stood at 116 in 1976, while the index of quill exports by volume stood at 197. The general index of (current) Sri Lanka export prices was at 225.4 The real price has declined considerably and Sri Lanka has exported an increased volume (produced in part with increasingly expensive imported fertiliser) in an attempt to maintain earnings. Other export products have performed much better, even before the big increase in tea prices in early 1977. Not only is the international price tending downwards, but Sri Lanka’s own place in the market as a producer of high quality cinnamon is vulnerable to changes in consumer taste in its major market, Mexico. Mexicans may not continue to relish cinnamon in tea and other beverages, or may develop a liking for the synthetic cinnamon which has appeared there.5 Our third point partly follows from the last two. The general standard of husbandry in cinnamon cultivation is extremely low, largely because of poor and very uncertain returns. Fertiliser application is exceptional, weeding sometimes neglected and some land semi-abandoned. Some owners value the crop as much for the firewood (i.e. the peeled sticks), as for the cash it produces. Others treat cinnamon rather like a ‘piggy bank’, to be peeled when there is a need for cash. Poorly cultivated cinnamon is the ideal crop for the absentee cultivator. The number of producers who treat cinnamon as a business-carefully trying to maximise returns and produce the finest quality-is very low; they are to be found mostly among the largest producers.
THE
POLITICAL
CONTEXT
In the light of the above paragraphs, one might not expect the Ceylonese Government to concern itself with the promotion of the cinnamon industry. Attempts to stabilise the producer price would be both understandable and justified, but, in general, scarce resources could be better used in developing more promising crops. Yet, when the Department of Minor Export Crops was established in 1971, it undertook, as one of its major activities, a programme of subsidies for rehabilitating and replanting cinnamon. In large part such a decision was the natural consequence of the prevalent political culture. We must attempt in a few sentences to sketch the outline of this culture.
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P. MOORE
Independent governments of Sri Lanka inherited a painless (to them and most of the electorate), mode of revenue extraction in the form of taxes on tea and on the large, export-oriented plantations owned by foreigners or a handful of local rich. This has provided the economic basis for what has become the most comprehensive welfare state system in existence in any poor country, perhaps not even excluding countries of the Socialist blocs. At the same time-and partly as a result of the impact of the colonial economy and the spread of education-Sri Lanka has developed into one of the most politicised nations in the world. Not only is the general level of interest and participation in politics high, but almost all social groups down to the poorest are politically organised and consider that they have legitimate rights to share in the bounty flowing from an apparently inexhaustible government treasury. Successive governments have both encouraged and yielded to such pressures in the competition for votes. Not only are consumers subsidised with free or cheap food, education, health services and transport, but almost all producers have become consumers of government subsidies. In the agricultural sector, fertilisers, water, pesticides, imported dairy cows and many other items are given free or at very cheap rates. Settlers in irrigation colonies were outraged (and successfully so) when a previous government suggested that they might help pay for the lavish infrastructural facilities provided for them. Generous replanting subsidies are available for tea, rubber and coconuts-the main export crops. It was in this context that the Minor Export Crops Department was set up to ‘do something’ for the producers of minor export crops. Cinnamon, citronella, pepper and cacao are each eligible for a replanting subsidy. It is significant that the prevailing attitude translates the urge to ‘do something for’ into the policy of ‘give a subsidy to’. A political culture which focuses on extraction of resources from the state focuses the attention of both producers and government officers on measures to subsidise rather than, for example, measures to boost or stabilise producer prices.
THE
SUBSIDIES
The subsidies for rehabilitating and replanting cinnamon were first made available in 1972. The rehabilitation subsidy is available where there are reckoned to be more than eight hundred bushes to the acre. Upon receipt of an application, the field officer is required to inspect the land, determine the number of bushes, specify the optimum planting density according to the terrain and make arrangements to supply free seedlings in order to make up the deficit. No cash subsidy is given. The Minor Export Crops Department does not itself maintain nurseries but pays private individuals or rural institutions (co-operatives, rural development societies, etc.) to do so, and asks approved applicants to collect seedlings from these local centres. Alternatively, applicants with large areas of land may be paid to rear their own seedlings.
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The replanting subsidy involves both the issue of free seedlings and the payment of a cash allowance of three hundred Rupees (Rs. 30040) per acre. This subsidy is given in cases where the existing stand is less than eight hundred bushes an acre. In principle, all existing bushes should be uprooted and a fresh start made, but in practice old bushes are generally allowed to remain. The cash is paid in three separate instalments as each stage of the work (land preparation, replanting and maintenance) is certified by the field officer to have been completed on the basis of a personal inspection. The field officer must therefore visit each successful applicant a minimum of four times. It is important to note that very little research has ever been conducted into the reproduction of cinnamon. There are no ‘high yielding varieties’ and replanting is undertaken with the same robust genetic material as was previously used.
THE
EFFECTIVENESS
OF SUBSIDY
ADMINISTRATION
Students of public administration are aware that, in their interaction with their ‘clients’ (i.e. the public), public bureaucracies achieve rather different results from those they claim. Institutional analysis can often explain how this came about and it seems clear that a certain level of malfunctioning is inherent in the very nature of a public bureaucracy.6 The procedures of a bureaucracy are inevitably routinised and de-personalised and each item of business subject to internal validation and checking. If the client requires a service which is rapid and flexible according to his personal requirements, a public bureaucracy is in general likely to disappoint. In the case with which we are concerned, disappointment is inherently more likely. In the first place, the bureaucracy is offering a valuable service at little apparent cost to the client; the queue for the service is large, while the procedures required to service each client are lengthy. In the second place, it is in the nature of agriculture to require both timely and environment-specific action. Thirdly, the potential clients are widely scattered, many living in relatively inaccessible places and most not well equipped by culture or education to deal satisfactorily with educated public officials and the procedures they adopt. The author evaluated this subsidy programme in the first half of 1977, principally by interviewing sixty-five persons from a randomly selected sample of applicants. The main findings are easily summarised. The subsidies are ineffective, inconvenient, inappropriate, biased, open to corruption and possibly damaging to the objective they are supposed to serve. Each of these charges will be discussed in separate paragraphs below. The term ‘ineffective’ indicates that the majority of applicants do not, in fact, receive the subsidy. Out of a sample of thirty-three applicants for the rehabilitation subsidy, only five had actually received free plants and two of these complained that the number was insufficient. Eight applicants had heard nothing since lodging their applications and a further ten had been visited once by the field officer and
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had expected to receive plants, but heard no more. Eight persons had rejected the offer of free plants because they had been asked to travel too far to collect them and found it easier to grow their own or purchase them locally. One man had been too ill to do the necessary work and one had only ever wanted subsidised cinnamon fertiliser and made an application in the hope of getting this. In the case of the replanting subsidy, five of the thirty-two sample applicants had obtained the full subsidy and six had obtained one or two cash instalments and would presumably receive the- rest eventually. Five people had been asked to prepare their land and had not yet started, while six had done so on the field officer’s instructions only to find that he failed to come and inspect it in time for replanting to begin during the rainy season. Seven applicants had heard nothing since applying and three had been visited by the field officer and, despite alleged promises of a subsidy, had heard no more. Note that out of sixty-five applications, forty-nine had been received by the Department in the years 1972-1974 and only five in the most recent year (1976). The field staff of the Department of Minor Export Crops are clearly unable to keep up with the work, despite the fact that the administration of the subsidy constitutes their single most important activity. Field officers have to travel by public transport; the norm is that they should make one field visit a day. This is realistic given that many cinnamon cultivators live in relatively remote areas. A very crude calculation suggests that, in the case of the replanting subsidy, the cost of administration is perhaps roughly comparable to the cash value of the subsidy; in the case of the rehabilitation subsidy it must exceed it several times. The procedures are inconvenient to the applicants in several senses. Some have wasted time and a small amount of money in making fruitless applications. More annoyingly, a substantial minority of applicants for the replanting subsidy had cleared their land on the officer’s instructions only to find that he failed to come to inspect it at the correct time. The applicant either went ahead and replanted without the subsidy or allowed the land to grow over and all the work to go to waste. We heard tales of applicants who had experienced this frustration in two consecutive years; at least one case led to a physical assault on the field officer when he finally appeared. The third kind of inconvenience is not related to the excessive work-load of field officers but is inherent in the very nature of the prccedures. Cultivators normally replant or rehabilitate their cinnamon land piecemeal, putting in a few plants each year according to the time they have available. The procedures of the subsidy require that they complete the whole job at once. Not only does this sometimes represent an unusual concentration of effort, especially for poorer people who must earn their daily living in other activities, but it is inherently risky. A man may fall ill half way through the job and be left with no bearing cinnamon, no new plants and no subsidy. One of our interviewees had replanted an entire fourteen acre block at once because of the availability of the subsidy, and lost all his investment in an ensuing drought. The charge of inappropriateness arises out of the information given in the
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preceding paragraph. The supply of free planting material is inappropriate because cultivators can and do raise their own seedlings or purchase them locally. Many of the applicants find it not worth their while to travel to collect the free plants offered. More generally, the very concept of large-scale block replanting is not appropriate to smaller and poorer cultivators who cannot afford to hire labour to do the work, cannot easily bear the risk of failure to obtain the subsidy or loss of young plants and cannot afford to be entirely without cash income during the three years it takes for seedlings to reach maturity. The charge of bias arises from the fact that both the general sample of applicants and, more noticeably, the successful applicants, owned much more land than the average cinnamon cultivator. Even more striking is the difference in social status between successful and unsuccessful applicants. All applicants were assigned either to the ‘ordinary class’ (small farmers, labourers, one watchman), or the ‘middle class’ (businessmen, teachers and other government employees). The ‘middle class’ applicants were much more successful than those of the ‘ordinary class’ in actually obtaining the subsidy (especially the cash). All ‘middle class’ occupations bring regular daily contact outside the village with other persons of professional status. Persons of this class are best equipped, by virtue of their personal contacts as well as their culture and education, to follow up their applications and ensure that they receive the service. Any subsidy of this nature is open to corruption. It is to the credit of the field staff of the Department concerned that the author did not even hear any allegation of corruption on their part. There was, however, one case of a nominal ‘cooperative’, actually run by one man, who made a profit both by‘ distributing and forwarding application forms for a small charge and maintaining a ‘co-operative’ seedling nursery for which he was paid. Our final charge is that the subsidy is possibly damaging to the objective it is supposed to serve. It seems possible that the nominal availability of the subsidies, combined with long delays in actually receiving them, has resulted in reducing the rate of replanting below what cultivators would have achieved by their own efforts had the subsidies not existed.
GROUP
PERCEPTIONS
The findings of the evaluation survey reported in the section above are of interest in their own right but our present concern is rather more with the attitudes of the people concerned to the kind of situation which these findings imply. Let .us take first the officers of the Minor Export Crops Department. In the first place, they seemed to be genuinely unaware both of the vast backlog of work which had built up and of the kinds of problems caused for cultivators by the procedures they adopted. Secondly, there was a desire to do what seemed, from
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their professional point of view, an even better job. ‘Farmers do not always do their replanting correctly, we should really keep a closer check on them, perhaps give the subsidy in a larger number of smaller instalments, and visit them more often.’ Thirdly, there was an evident desire to concentrate all activities connected with cinnamon in the hands of the Department. For example, a common complaint amongst cultivators is that the special cinnamon fertiliser mix is available only in two or three main towns; for the vast majority it is not worth their while to go to great lengths to obtain it. There was a strong desire among cultivators that cinnamon fertiliser, like rice fertilisers, should be stocked by the dense network of local branches of the multi-purpose co-operative societies. Yet some officers seem much more enamoured with the idea of establishing their own separate network of cinnamon fertiliser depots, as has already been done, for, example, in the case of coconut. Such a network would inevitably be wasteful, ye&at the same time could never, because of resource constraints, be dense enough to serve as a local source of supply for more than a small fraction of cinnamon cultivators. The applicants interviewed were asked a range of open ended questions about government policy with regard to cinnamon cultivation. The response was overwhelmingly in favour of more subsidies on fertiliser and higher replanting subsidies (despite the experience of most interviewees in their attempts to obtain the latter). Unprompted suggestions that something should be done about the level or variability of prices came only from a very small minority of respondents, most of them large cultivators for whom cinnamon was the source of a relatively large income. Persons in this category tend both to keep accounts and to sell cinnamon almost throughout the year and, perhaps for these reasons, be more aware than others of the price issue. Amongst those few respondents who did refer to the price issue, several conceived the problem in terms of cheating on the part of cinnamon traders. In so far as such a creature exists, the objective and informed observer of Sri Lanka’s cinnamon industry might identify two main problems which the Government could attempt to tackle. One is the instability of producer prices which, upon close enquiry, is clearly perceived by some cultivators as a valid reason for not investing more resources in cinnamon. The second is the environmental issue. A great deal of cinnamon is grown on hilly and sandy soils. It is equalled only by poorly-managed tea in its inability to protect soil from the force of rainfall, and thus is a major contributor to soil erosion. To a certain extent this problem could be mitigated if every effort were made to encourage close planting, especially on hillsides, and to enforce soil conservation measures.
CONCLUSION
The long-term market outlook for Sri Lanka’s cinnamon is poor; it is not advisable
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for the Government to invest scarce financial and manpower resources in the general promotion of cinnamon production. The rehabilitation/replanting subsidies are inappropriate for three different reasons. They are, firstly, intended to achieve an unwise objective. Secondly, because they are widely advertised and, in principle, costless to the applicant, they generate a far larger number of applications than can be processed in a reasonable length of time. Not only is there a lengthy queue of dissatisfied applicants, but overwork causes field officers to fail to process each application they take up in a timely manner. This causes great inconvenience to some applicants and possibly reduces the overall rate of replanting below the level which might have been attained without the subsidy. Thirdly, the procedures involved are, regardless of the problem of time lags, inherently inconvenient for many of the applicants, especially the smaller cultivators. If the Government is to intervene in the industry at all, this could best be achieved by a price stabilisation scheme. The decision to give a replanting subsidy was made because it accords with the political culture of the country. The most common perception of what the Government can do to assist any given activity is that a subsidy be given. This perception may endure even when experience suggests that the public bureaucracy is unable to distribute the subsidy effectively. The public officials concerned tend to seek solutions to such of the problems they perceive both within the framework of the possible range of activities of their own department and, more narrowly, within the framework of the programmes they are already administering. There are few sources for a fundamental reappraisal of the effectiveness of established subsidy programmes.
REFERENCES
1. ANON, Central Bank of Ceylon, Bulletin (May, 1977). Tables 31 and 32. 2. MCCONNELL, D. J. & UPAWANSA, G. K., The spice industries of Sri Lanka 2: Cinnamon, industry structure andproduction economics, Farm Management Report No. 2, UNDP/SF-FAO Agricultural Diversification Project, Peradeniya? 1972, Fig. 1.1. ANON, Tropical Products Institute, London, Private Communication, 1977. :. ANON, Central Bank of Ceylon, Bulletin (May, 1977). Tables 28 and 32. 5: ANON, Tropical Products Institute, London, Private Communication, 1977. 6. SCHAFFER, B., The deadlock in development administration. In: Politics and change in developing countries (Ed. C. Leys), Cambridge, 1976.
M. P. MOORE*
Agrarian Researchand Training Institute, P.O. Box 1522, Colombo, Sri Lanka (Received: 21 September, 1977)
SUMMARY The long-term market prospects for Sri Lanka’s cinnamon are very poor and the Government would be ill-advised to invest resources in promoting the industry. Yet the political culture legitimates and promotes the subsidisation of almost all consumer and producer activities. The replanting of cinnamon is also subsidised. An evaluation of the subsidy shows it to be misconceived, ineflective, inconvenient, inappropriate, biased and possibly damaging to the objective it is supposed to serve. Some of the problems arise from the specific conditions under which this subsidy is given, while others are inherent in the very process of a publicly-administered subsidy. These manifest failures do not apparently much aflect the perceptions of either the applicants or the public oficials concerned about possible and desirable alternative policies.
THE
CINNAMON
INDUSTRY
In former times cinnamon was an important commodity in international trade, and it was the quest for this spice which was in large part responsible for the Portuguese -and later the Dutch-occupation of part of Sri Lanka in the sixteenth to eighteenth centuries. Sri Lanka remains the main producer and exporter, as well as the source of the finest quality cinnamon, but the product is of minor importance today. Its place in world trade is miniscule and, even in Sri Lanka, it accounted for only about 1% of all export earnings in the period 1972-1976. 1 In its cultivated state cinnamon is grown as a bush with between six and a dozen shoots emanating from the base. On reaching approximately the thickness * Present addreSs: The Institute of Development 9RE, Sussex, Great Britain.
Agricultural Administration (5) (1978)-a
Printed in Great Britain
121
Studies, University
of Sussex, Brighton
Applied Science Publishers Ltd, England,
1978
BNl
122
M. P. MOORE
of a thumb, these shoots are cut and the bark peeled. Sticks of the dried bark, called quills, comprise the main product: they are exported in unprocessed form. Other cinnamon products are loose pieces of bark and shavings, collectively termed chips, and oil distilled from the leaf and the bark, respectively; these are, however, of minor importance in comparison with quills. Cinnamon may be peeled during most months of the year, but the more care that is taken to cut shoots at their optimum level of maturity, the higher the quality of the product. The most labour-intensive aspect of cinnamon production is the peeling process. This was traditionally the monopoly of the Halagama caste and largely remains so. Members of this caste are concentrated around the heart of the cinnamon industry -the town of Ambalangoda. From this base itinerant peelers move through other cinnamon-growing areas in search of work. Almost without exception, they are rewarded with half the crop. After peeling, the other main source of employment is the annual weeding of cinnamon land. Most peelers concentrate exclusively on that one highly-skilled occupation but the majority of the other workers and virtually all landowners are involved in the industry only on a part-time basis. Most landowners may be characterised as smallholders : according to a 1969 survey, 92y/0 of all cinnamon holdings were less than three acres in extent.2 However, the majority of even the smallest owners employ outsiders to do the peeling. In comparison with its contribution to the national income, the cinnamon industry involves a large number of households. It is significant from the political point of view that this section of the electorate is concentrated in a few areas along the western and southern coastal fringes of the island.
THE ECONOMICSOF CINNAMON
From the point of view of present concerns there are three aspects of the economics of cinnamon which are important. The first is that the domestic price is very unstable: it is not uncommon for prices to double or halve within a few months. This appears to be the consequence of a number of features of the marketing structure. Almost all cinnamon is exported; there are only three significant producer countries, of which Sri Lanka is the largest; interruptions in supply are common; the market for Sri Lanka’s cinnamon is highly concentrated, more than half of it going to Mexico; only a handful of Ceylonese firms undertake export contracts. The producer price in Sri Lanka is dependent on the interaction of such factors as the size of the crop or the political situation in the Seychelles and Malagasy, the level of stocks held by Mexican importers and whether or not exporters urgently need to purchase in order to fulfil an order. Cinnamon is not, however, a perishable product. A more orderly marketing structure, incorporating some buffer stock arrangements, could eliminate the worst price fluctuations. The second economic aspect is that the long-term outlook for the international
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cinnamon price is poor from the producers’ point of view. Cinnamon is used in small quantities in the household, while in the food processing industry it has to compete with the similar but cheaper and inferior cassia originating mainly in Indonesia and China. As in the case of most spices, the demand for cinnamon seems unresponsive to increases in income. It has been estimated that in the period 1962-1970 world imports (which practically equal production) of cinnamon increased at a linear rate of O-9:/, per year. 3 The long-term price trend for Sri Lanka cinnamon is downwards. Taking 1967 as a base year (= lOO), the index of (current) cinnamon quill prices stood at 116 in 1976, while the index of quill exports by volume stood at 197. The general index of (current) Sri Lanka export prices was at 225.4 The real price has declined considerably and Sri Lanka has exported an increased volume (produced in part with increasingly expensive imported fertiliser) in an attempt to maintain earnings. Other export products have performed much better, even before the big increase in tea prices in early 1977. Not only is the international price tending downwards, but Sri Lanka’s own place in the market as a producer of high quality cinnamon is vulnerable to changes in consumer taste in its major market, Mexico. Mexicans may not continue to relish cinnamon in tea and other beverages, or may develop a liking for the synthetic cinnamon which has appeared there.5 Our third point partly follows from the last two. The general standard of husbandry in cinnamon cultivation is extremely low, largely because of poor and very uncertain returns. Fertiliser application is exceptional, weeding sometimes neglected and some land semi-abandoned. Some owners value the crop as much for the firewood (i.e. the peeled sticks), as for the cash it produces. Others treat cinnamon rather like a ‘piggy bank’, to be peeled when there is a need for cash. Poorly cultivated cinnamon is the ideal crop for the absentee cultivator. The number of producers who treat cinnamon as a business-carefully trying to maximise returns and produce the finest quality-is very low; they are to be found mostly among the largest producers.
THE
POLITICAL
CONTEXT
In the light of the above paragraphs, one might not expect the Ceylonese Government to concern itself with the promotion of the cinnamon industry. Attempts to stabilise the producer price would be both understandable and justified, but, in general, scarce resources could be better used in developing more promising crops. Yet, when the Department of Minor Export Crops was established in 1971, it undertook, as one of its major activities, a programme of subsidies for rehabilitating and replanting cinnamon. In large part such a decision was the natural consequence of the prevalent political culture. We must attempt in a few sentences to sketch the outline of this culture.
124
M.
P. MOORE
Independent governments of Sri Lanka inherited a painless (to them and most of the electorate), mode of revenue extraction in the form of taxes on tea and on the large, export-oriented plantations owned by foreigners or a handful of local rich. This has provided the economic basis for what has become the most comprehensive welfare state system in existence in any poor country, perhaps not even excluding countries of the Socialist blocs. At the same time-and partly as a result of the impact of the colonial economy and the spread of education-Sri Lanka has developed into one of the most politicised nations in the world. Not only is the general level of interest and participation in politics high, but almost all social groups down to the poorest are politically organised and consider that they have legitimate rights to share in the bounty flowing from an apparently inexhaustible government treasury. Successive governments have both encouraged and yielded to such pressures in the competition for votes. Not only are consumers subsidised with free or cheap food, education, health services and transport, but almost all producers have become consumers of government subsidies. In the agricultural sector, fertilisers, water, pesticides, imported dairy cows and many other items are given free or at very cheap rates. Settlers in irrigation colonies were outraged (and successfully so) when a previous government suggested that they might help pay for the lavish infrastructural facilities provided for them. Generous replanting subsidies are available for tea, rubber and coconuts-the main export crops. It was in this context that the Minor Export Crops Department was set up to ‘do something’ for the producers of minor export crops. Cinnamon, citronella, pepper and cacao are each eligible for a replanting subsidy. It is significant that the prevailing attitude translates the urge to ‘do something for’ into the policy of ‘give a subsidy to’. A political culture which focuses on extraction of resources from the state focuses the attention of both producers and government officers on measures to subsidise rather than, for example, measures to boost or stabilise producer prices.
THE
SUBSIDIES
The subsidies for rehabilitating and replanting cinnamon were first made available in 1972. The rehabilitation subsidy is available where there are reckoned to be more than eight hundred bushes to the acre. Upon receipt of an application, the field officer is required to inspect the land, determine the number of bushes, specify the optimum planting density according to the terrain and make arrangements to supply free seedlings in order to make up the deficit. No cash subsidy is given. The Minor Export Crops Department does not itself maintain nurseries but pays private individuals or rural institutions (co-operatives, rural development societies, etc.) to do so, and asks approved applicants to collect seedlings from these local centres. Alternatively, applicants with large areas of land may be paid to rear their own seedlings.
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CASE
OF CINNAMON
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SRI LANKA
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The replanting subsidy involves both the issue of free seedlings and the payment of a cash allowance of three hundred Rupees (Rs. 30040) per acre. This subsidy is given in cases where the existing stand is less than eight hundred bushes an acre. In principle, all existing bushes should be uprooted and a fresh start made, but in practice old bushes are generally allowed to remain. The cash is paid in three separate instalments as each stage of the work (land preparation, replanting and maintenance) is certified by the field officer to have been completed on the basis of a personal inspection. The field officer must therefore visit each successful applicant a minimum of four times. It is important to note that very little research has ever been conducted into the reproduction of cinnamon. There are no ‘high yielding varieties’ and replanting is undertaken with the same robust genetic material as was previously used.
THE
EFFECTIVENESS
OF SUBSIDY
ADMINISTRATION
Students of public administration are aware that, in their interaction with their ‘clients’ (i.e. the public), public bureaucracies achieve rather different results from those they claim. Institutional analysis can often explain how this came about and it seems clear that a certain level of malfunctioning is inherent in the very nature of a public bureaucracy.6 The procedures of a bureaucracy are inevitably routinised and de-personalised and each item of business subject to internal validation and checking. If the client requires a service which is rapid and flexible according to his personal requirements, a public bureaucracy is in general likely to disappoint. In the case with which we are concerned, disappointment is inherently more likely. In the first place, the bureaucracy is offering a valuable service at little apparent cost to the client; the queue for the service is large, while the procedures required to service each client are lengthy. In the second place, it is in the nature of agriculture to require both timely and environment-specific action. Thirdly, the potential clients are widely scattered, many living in relatively inaccessible places and most not well equipped by culture or education to deal satisfactorily with educated public officials and the procedures they adopt. The author evaluated this subsidy programme in the first half of 1977, principally by interviewing sixty-five persons from a randomly selected sample of applicants. The main findings are easily summarised. The subsidies are ineffective, inconvenient, inappropriate, biased, open to corruption and possibly damaging to the objective they are supposed to serve. Each of these charges will be discussed in separate paragraphs below. The term ‘ineffective’ indicates that the majority of applicants do not, in fact, receive the subsidy. Out of a sample of thirty-three applicants for the rehabilitation subsidy, only five had actually received free plants and two of these complained that the number was insufficient. Eight applicants had heard nothing since lodging their applications and a further ten had been visited once by the field officer and
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had expected to receive plants, but heard no more. Eight persons had rejected the offer of free plants because they had been asked to travel too far to collect them and found it easier to grow their own or purchase them locally. One man had been too ill to do the necessary work and one had only ever wanted subsidised cinnamon fertiliser and made an application in the hope of getting this. In the case of the replanting subsidy, five of the thirty-two sample applicants had obtained the full subsidy and six had obtained one or two cash instalments and would presumably receive the- rest eventually. Five people had been asked to prepare their land and had not yet started, while six had done so on the field officer’s instructions only to find that he failed to come and inspect it in time for replanting to begin during the rainy season. Seven applicants had heard nothing since applying and three had been visited by the field officer and, despite alleged promises of a subsidy, had heard no more. Note that out of sixty-five applications, forty-nine had been received by the Department in the years 1972-1974 and only five in the most recent year (1976). The field staff of the Department of Minor Export Crops are clearly unable to keep up with the work, despite the fact that the administration of the subsidy constitutes their single most important activity. Field officers have to travel by public transport; the norm is that they should make one field visit a day. This is realistic given that many cinnamon cultivators live in relatively remote areas. A very crude calculation suggests that, in the case of the replanting subsidy, the cost of administration is perhaps roughly comparable to the cash value of the subsidy; in the case of the rehabilitation subsidy it must exceed it several times. The procedures are inconvenient to the applicants in several senses. Some have wasted time and a small amount of money in making fruitless applications. More annoyingly, a substantial minority of applicants for the replanting subsidy had cleared their land on the officer’s instructions only to find that he failed to come to inspect it at the correct time. The applicant either went ahead and replanted without the subsidy or allowed the land to grow over and all the work to go to waste. We heard tales of applicants who had experienced this frustration in two consecutive years; at least one case led to a physical assault on the field officer when he finally appeared. The third kind of inconvenience is not related to the excessive work-load of field officers but is inherent in the very nature of the prccedures. Cultivators normally replant or rehabilitate their cinnamon land piecemeal, putting in a few plants each year according to the time they have available. The procedures of the subsidy require that they complete the whole job at once. Not only does this sometimes represent an unusual concentration of effort, especially for poorer people who must earn their daily living in other activities, but it is inherently risky. A man may fall ill half way through the job and be left with no bearing cinnamon, no new plants and no subsidy. One of our interviewees had replanted an entire fourteen acre block at once because of the availability of the subsidy, and lost all his investment in an ensuing drought. The charge of inappropriateness arises out of the information given in the
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preceding paragraph. The supply of free planting material is inappropriate because cultivators can and do raise their own seedlings or purchase them locally. Many of the applicants find it not worth their while to travel to collect the free plants offered. More generally, the very concept of large-scale block replanting is not appropriate to smaller and poorer cultivators who cannot afford to hire labour to do the work, cannot easily bear the risk of failure to obtain the subsidy or loss of young plants and cannot afford to be entirely without cash income during the three years it takes for seedlings to reach maturity. The charge of bias arises from the fact that both the general sample of applicants and, more noticeably, the successful applicants, owned much more land than the average cinnamon cultivator. Even more striking is the difference in social status between successful and unsuccessful applicants. All applicants were assigned either to the ‘ordinary class’ (small farmers, labourers, one watchman), or the ‘middle class’ (businessmen, teachers and other government employees). The ‘middle class’ applicants were much more successful than those of the ‘ordinary class’ in actually obtaining the subsidy (especially the cash). All ‘middle class’ occupations bring regular daily contact outside the village with other persons of professional status. Persons of this class are best equipped, by virtue of their personal contacts as well as their culture and education, to follow up their applications and ensure that they receive the service. Any subsidy of this nature is open to corruption. It is to the credit of the field staff of the Department concerned that the author did not even hear any allegation of corruption on their part. There was, however, one case of a nominal ‘cooperative’, actually run by one man, who made a profit both by‘ distributing and forwarding application forms for a small charge and maintaining a ‘co-operative’ seedling nursery for which he was paid. Our final charge is that the subsidy is possibly damaging to the objective it is supposed to serve. It seems possible that the nominal availability of the subsidies, combined with long delays in actually receiving them, has resulted in reducing the rate of replanting below what cultivators would have achieved by their own efforts had the subsidies not existed.
GROUP
PERCEPTIONS
The findings of the evaluation survey reported in the section above are of interest in their own right but our present concern is rather more with the attitudes of the people concerned to the kind of situation which these findings imply. Let .us take first the officers of the Minor Export Crops Department. In the first place, they seemed to be genuinely unaware both of the vast backlog of work which had built up and of the kinds of problems caused for cultivators by the procedures they adopted. Secondly, there was a desire to do what seemed, from
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their professional point of view, an even better job. ‘Farmers do not always do their replanting correctly, we should really keep a closer check on them, perhaps give the subsidy in a larger number of smaller instalments, and visit them more often.’ Thirdly, there was an evident desire to concentrate all activities connected with cinnamon in the hands of the Department. For example, a common complaint amongst cultivators is that the special cinnamon fertiliser mix is available only in two or three main towns; for the vast majority it is not worth their while to go to great lengths to obtain it. There was a strong desire among cultivators that cinnamon fertiliser, like rice fertilisers, should be stocked by the dense network of local branches of the multi-purpose co-operative societies. Yet some officers seem much more enamoured with the idea of establishing their own separate network of cinnamon fertiliser depots, as has already been done, for, example, in the case of coconut. Such a network would inevitably be wasteful, ye&at the same time could never, because of resource constraints, be dense enough to serve as a local source of supply for more than a small fraction of cinnamon cultivators. The applicants interviewed were asked a range of open ended questions about government policy with regard to cinnamon cultivation. The response was overwhelmingly in favour of more subsidies on fertiliser and higher replanting subsidies (despite the experience of most interviewees in their attempts to obtain the latter). Unprompted suggestions that something should be done about the level or variability of prices came only from a very small minority of respondents, most of them large cultivators for whom cinnamon was the source of a relatively large income. Persons in this category tend both to keep accounts and to sell cinnamon almost throughout the year and, perhaps for these reasons, be more aware than others of the price issue. Amongst those few respondents who did refer to the price issue, several conceived the problem in terms of cheating on the part of cinnamon traders. In so far as such a creature exists, the objective and informed observer of Sri Lanka’s cinnamon industry might identify two main problems which the Government could attempt to tackle. One is the instability of producer prices which, upon close enquiry, is clearly perceived by some cultivators as a valid reason for not investing more resources in cinnamon. The second is the environmental issue. A great deal of cinnamon is grown on hilly and sandy soils. It is equalled only by poorly-managed tea in its inability to protect soil from the force of rainfall, and thus is a major contributor to soil erosion. To a certain extent this problem could be mitigated if every effort were made to encourage close planting, especially on hillsides, and to enforce soil conservation measures.
CONCLUSION
The long-term market outlook for Sri Lanka’s cinnamon is poor; it is not advisable
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for the Government to invest scarce financial and manpower resources in the general promotion of cinnamon production. The rehabilitation/replanting subsidies are inappropriate for three different reasons. They are, firstly, intended to achieve an unwise objective. Secondly, because they are widely advertised and, in principle, costless to the applicant, they generate a far larger number of applications than can be processed in a reasonable length of time. Not only is there a lengthy queue of dissatisfied applicants, but overwork causes field officers to fail to process each application they take up in a timely manner. This causes great inconvenience to some applicants and possibly reduces the overall rate of replanting below the level which might have been attained without the subsidy. Thirdly, the procedures involved are, regardless of the problem of time lags, inherently inconvenient for many of the applicants, especially the smaller cultivators. If the Government is to intervene in the industry at all, this could best be achieved by a price stabilisation scheme. The decision to give a replanting subsidy was made because it accords with the political culture of the country. The most common perception of what the Government can do to assist any given activity is that a subsidy be given. This perception may endure even when experience suggests that the public bureaucracy is unable to distribute the subsidy effectively. The public officials concerned tend to seek solutions to such of the problems they perceive both within the framework of the possible range of activities of their own department and, more narrowly, within the framework of the programmes they are already administering. There are few sources for a fundamental reappraisal of the effectiveness of established subsidy programmes.
REFERENCES
1. ANON, Central Bank of Ceylon, Bulletin (May, 1977). Tables 31 and 32. 2. MCCONNELL, D. J. & UPAWANSA, G. K., The spice industries of Sri Lanka 2: Cinnamon, industry structure andproduction economics, Farm Management Report No. 2, UNDP/SF-FAO Agricultural Diversification Project, Peradeniya? 1972, Fig. 1.1. ANON, Tropical Products Institute, London, Private Communication, 1977. :. ANON, Central Bank of Ceylon, Bulletin (May, 1977). Tables 28 and 32. 5: ANON, Tropical Products Institute, London, Private Communication, 1977. 6. SCHAFFER, B., The deadlock in development administration. In: Politics and change in developing countries (Ed. C. Leys), Cambridge, 1976.