The Effect of Fertilizer Subsidy on Small-Scale Paddy Production in Sri Lanka: A Case in Hinguraggoda Divisional Secretariat Division in Polonnaruwa District

At present, the expenditure on fertilizer subsidy has become a heavy burden on the budget in Sri Lanka. The studies which attempted to analyze the impact of fertilizer subsidy on the productivity of paddy farming also provide rather mixed results. Thus, the present study aims to identify the effects of government fertilizer subsidy policy on the productivity of small-scale paddy farming in Sri Lanka by employing the econometric model developed by Hu and Antle (1993). The primary data for the study were drawn from a field survey conducted in the Hinguraggoda Divisinal Secretariat division in Polonnaruwa district. The results revealed that fertilizer subsidy has a positive impact on the productivity of paddy farming, but with decidedly less responsiveness (highly inelastic) indicating the need for agricultural policy priorities to enhance the positive responsiveness of fertilizer subsidy on farm productivity. The results further revealed a positive relationship between the level of farmer education and the productivity of a paddy farm. The study suggests the need of farm-level experiments (soil analysis, technological adaptations, water management techniques, type of adaptable paddy varieties, and extension inputs) to enhance the positive responsiveness of fertilizer subsidy policy on small-scale paddy farm productivity in Sri Lanka.