Why Agricultural Value Chains Fail? Curse of the Subsidy

Posted on December 15, 2016  /  0 Comments



Agricultural subsidies have been an important economic intervention for agriculture dependent countries. This has significantly impacted the production, efficiency and sustainability of agriculture. It is important to identify the dynamics of the agricultural value chains if the benefits of subsidies are to be harnessed. Type of the subsidy, size and the intended stakeholders in the value chain are important to identify prior to implementation. It is also important to have a transition plan. Subsidy can’t be a lifetime intervention. At the same time the agricultural subsidy should never become an economic tool motivated by political interests.


However, many least developed and developing countries are being cursed by agricultural subsidies. Sri Lanka is no different. Failure to identify the incentives for stakeholders to adopt the agricultural subsidy has been a top candidate for this curse. As a result many subsides have become over-used and misused. This has created many economic, health and environmental negative externalities. Subsides motivated by political interests have resulted in unsustainable agriculture. Should we then blame the farmers?

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