SRI LANKA'S AGRI-FOOD TRADE: STRUCTURE, OPPORTUNITIES, CHALLENGES & IMPACTS OF COVID-19

In 2019, Sri Lanka was ranked 66th in the world in terms of Gross Domestic Product (GDP), 86th in total exports, and 83rd in total imports, according to the Economic Complexity Index (ECI). The agriculture sector plays a vital role in the country's economy, contributing 7% to the GDP in 2019 and employing 25.3% of the total labor force, comprising 8.18 million workers. The agriculture export share of total exports accounts for about 20% in 2019 in Sri Lanka. Traditional agricultural exports include tea, spices, coconut, and rubber, which have been the mainstay of the country's exports for decades. However, in recent years, horticultural and floricultural crops have also been exported, but the traditional products still constitute the bulk of agricultural exports. The country's main export destinations include countries in the European Union, the United States, and other parts of Asia. The COVID-19 pandemic has had a significant impact on Sri Lanka's agri-food trade, resulting in a dual shock on agriculture markets that has affected both supply and demand. Measures taken to control the spread of the virus have affected supply chain-related activities, including production, processing, assembling, logistics, and retailing. Border and travel restrictions have led to shortages in agricultural labor, limited access to agriculture inputs such as seeds, fertilizers, and agro-chemicals, lower food processing capacity, and other challenges in food product distribution. The pandemic has also resulted in rapid changes in food consumption patterns, with reductions in income, restrictions on people's movement, and the closure of restaurants and food services. Despite these challenges, the governments and agricultural sector stakeholders are trying to keep agricultural markets open to make trade flows smooth. The pandemic has had far-reaching consequences, including economic, social, and environmental impacts, and the country is struggling to come to terms with the challenges posed by rising food insecurity. Sri Lanka's exports mainly consist of tea and spices, targeting specific markets in the world. However, changes in consumer preferences over time and massive competition from other export partners have significantly impacted the country's exports. Therefore, it is essential to analyze the country's trade flows over time to forecast future trade flows and the likely impact of the COVID-19 or other possible shocks. Identifying emerging agri-food products with high potential to grow is crucial for the expansion of international trade in new arenas. The study aims to compile findings regarding the overview of Sri Lanka's agricultural trade flows in the world, including main import and export partners, market characteristics, shifting of main export destinations, export potential of Sri Lanka's agricultural products to other countries, the immediate impact of the COVID-19 pandemic on Sri Lanka's import and export sectors, and the barriers to the trade of agricultural products in Sri Lanka. The trade flow analysis study was conducted by the Institute of Policy Studies (IPS) supported by the PRCI and the International Food Policy Research Institute (IFPRI) to analyze Sri Lanka's opportunities and challenges in agri-food trade amid COVID-19. The study's results indicate that Sri Lanka's agri-food trade is facing significant challenges due to the COVID-19 pandemic. The country's main export destinations are experiencing changes in consumer preferences, and massive competition from other export partners is impacting Sri Lanka's exports. The study highlights the need to identify emerging agri-food products with high potential to grow and potential export markets to expand international trade in new arenas. The study's findings have significant implications for policymakers, researchers, and stakeholders in the agricultural sector. The results suggest that Sri Lanka needs to diversify its exports and identify new markets to reduce its dependence on traditional export commodities. The study also emphasizes the need for the government and agricultural sector stakeholders to work together to address the challenges posed by the COVID-19 pandemic and to ensure the smooth functioning of agricultural markets. In conclusion, the study provides a comprehensive analysis of Sri Lanka's agri-food trade and its challenges amid the COVID-19 pandemic. The study's findings highlight the need for the country to diversify its exports, identify new markets, and address the challenges posed by the pandemic to ensure the smooth functioning of agricultural markets and to promote sustainable outcomes in the agricultural sector.