Analysis of the Fisheries Sector in Sri Lanka: Guided Case Studies in Value Chain Development for Conflict-Affected Environments
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Date
2008-03
Journal Title
Journal ISSN
Volume Title
Publisher
United States Agency for International Development
Abstract
Sri Lanka has been affected by prolonged armed conflict, and attendant chronic governance failures, for the past three decades. Evaluating its impact on the performance of specific productive sectors, such as ocean fisheries, remains a timely and important exercise. The value chain analysis methodology offers an insightful way to approach this critical topic due to its focus on identifying the actual and potential competitiveness of particular products and the areas of possible economic development and growth. The USAID AMAP program commissioned this study to ascertain the ability of a value chain analysis to determine the impact these two types of conflict have had on the fisheries industry in southern Sri Lanka—both the direct and indirect physical and other effects the armed conflict has inflicted and the structural consequences of institutional and governance failures. The study used the analysis to compose recommendations for effectively developing the capacity of the fisheries sector to contribute to equitable economic opportunities in Sri Lanka.
The research team based their analysis on data from primary and secondary sources at both the national and regional levels. Team members obtained secondary data from fishery-related institutes—community-level organizations, the Ministry of Fisheries and others—and used a participatory appraisal approach to collect primary data from stakeholders involved directly and indirectly in the fisheries value chain—fishermen, traders, processors, government officials and other informed groups. The team selected three study sites—Negombo, Chillaw and Hambanthota—and convened focus groups representing the ethnic and religious heterogeneity of the country’s fishing communities and the range of impacts the conflict was having on different regions of the country.
The study addresses the research question, ‘How can value chain analysis and the value chain framework help to identify and understand both the major opportunities for upgrading and the driving constraints to market growth of the fisheries sector given the context of conflict?’ To fully demonstrate the opportunities and constraints associated with the direct and indirect impacts of the conflict, the team developed a value chain/conflict dynamics matrix that identifies both the different chain segments affected directly and indirectly by conflict and the ways in which they are affected. Further analysis of the opportunities and constraints posed by the various dimensions of the conflict yields case-specific examples of the ways the conflict interacts with and affects a given value chain.
Opportunities generated by the continuing violent conflicts and related institutional failures in Sri Lanka are negligible compared to the large number of constraints they present to the entire chain, including lack of access to and competitiveness in end markets; sluggish or dormant firms and supporting markets; the need for firm-level upgrading, and a poor business enabling environment. The limited supply of fish to end markets, both domestic and export, and the increased cost of inputs are the most visible impact of conflict on the fisheries industry at the present time. Further, increased security measures and related expenditures have increased the transaction costs for the industry. Such conditions have made ocean fishery a high-cost industry in Sri Lanka, thus reducing not only its competitiveness but also its ultimate potential for growth and ability to act as a driver of poverty reduction.
Many entrepreneurs in Sri Lanka’s fisheries industry have identified the constraints to and potential of the sector, but they are unable to bring about substantial change in the conflict-affected environment. The research concludes that the current situation is one of impact-mitigation and maximization of gains because of constraints imposed by the conflicts. Issues related to the generation of a favorable enabling environment through the improvement of public infrastructure (harbor facilities and roads) and services (research, extension and institutional support such as policy reform, quality assurance, input delivery, etc.) depend primarily on the capacity and commitment of relevant state agencies. Although private-sector actors may be able to play a role in advocating for needed reforms the weak governance environment poses obstacles to targeting such efforts and driving meaningful change. To improve competitiveness of the industry, the state should focus on identifying niche markets and product categories, introducing technology, facilitating support services, revising existing trade and export policies and developing needed infrastructure.
The private sector can improve the functioning of the value chain through wider access to credit, infrastructure enhancement and increased inter-firm cooperation. These changes are not easily implemented by individual actors, but are possible through collective action with existing fisheries cooperative societies playing a role. In addition, the development of micro-credit facilities is a promising way to circumvent the problems fishers experience with formal financial institutions and could provide them with an alternative to the private moneylenders who are part of an often highly exploitative industry. Cooperative societies can increase fishers’ bargaining power with large organizations higher up the chain and conduct lobbying efforts with state authorities for better operating conditions. Successful cooperative organizations have the potential to enter into public-private partnerships to facilitate the provision of much-needed infrastructure, such as harbors, anchorages and related facilities and to participate in broader development of the sector.
To further an understanding of how the conflict affects Sri Lanka’s fisheries industry and how the chain might realize its competitive potential, this study analyzes the value chain as well as the way it interacts with direct and indirect conflict dynamics. Section 1 provides an overview of the conflict context and the fisheries sector and identifies the key development and relief initiatives currently being implemented. Section 2 presents the methodology employed in conducting this study, and Section 3 gives a detailed analysis of the conflict environment in Sri Lanka.1 In Section 4, a detailed analysis of the fisheries industry leads to a discussion of the links between value chain and conflict dynamics. The concluding section highlights insights from applying the value chain analysis in a conflict-affected context, as well as possible ways forward identified by the integrated conflict/value chain analysis.
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Keywords
Sri Lanka, USAID, Fisheries, Conflict-affected environment, Environment