Abstract:
This study investigates the impact of Sri Lanka's 2021 fertilizer policy on the
relationship between rice yield and selling prices in the South Coastal region of the
Ampara District. Following the government's prohibition on the importation of
chemical fertilizers and agrochemicals in May 2021, rice cultivation was significantly
affected, leading to a decline in yields and an increase in rice prices. The study
hypothesizes that the new fertilizer policy may have affected the correlation between
yield and selling price, prompting farmers to become less attentive to pricing based on
their yield. Data for the study were collected from 145 farmers during the Yala 2021
season (pre-policy) and the Maha 2021/22 season (post-policy) using structured
questionnaires. Yield per acre and price per kilogram of dry paddy were calculated for
both seasons, with wet yields converted to dry yields for consistency.The results
indicate that during the Yala season, there was a significant correlation between yield
and price (r = 0.254, p= 0.002). This suggests that yield and price were not independent,
and farmers were keen on selling prices based on their yield (F= 1.877). In contrast,
during the Maha season, the F-statistic (1.02) was lower than the table value, indicating
independence between yield and price, and farmers were less focused on selling prices.
Although there was no significant difference in income variance between the two
seasons, the variance in selling prices was significantly higher during the Yala season
(124.38 Rs./kg²) compared to the Maha season (55.18 Rs./kg²). This variation in Maha
was reduced following the implementation of the fertilizer policy, leading to less
concern among farmers about pricing. Overall, the study concludes that the fertilizer
policy led to reduced price variation, a shift in farmers' focus away from pricing based
on yield, and an increase in income during the Maha season despite lower yields, driven
by rising paddy prices.
