MICRO-ECONOMIC IMPACT OF FERTILIZER SUBSIDY IN PADDY CULTIVATION IN SRI LANKA

ABSTRACT:Concerning Paddy cultivation, it is one of the major sectors of livelihood of Sri Lanka employingfor more than 1.8 million people. Therefore, it is necessary to evaluate the fertilizer subsidy given for the paddysector. Mahaweli Development Project is one of the most important projects regarding agriculture sector in SriLanka. The contribution of paddy yield under that areas are much higher than the other areas in Sri Lanka.Evaluating that micro level sector of paddy farmers is timely important regarding fertilizer subsidy scheme inSri Lanka. Therefore, the objective of the study is to evaluate microeconomic impact of fertilizer subsidy in SriLanka with special reference to Murawesihena Block under Udawalawe irrigation system.Primary data wasgathered from 110 farmers inMurawesihena Block in order to find the impact of fertilizer subsidy in micro level.Multiple regression analysis and Cobb-Douglas Production function were used to analyze the impact of fertilizerusage. In this study, it was found that, there is a positive relationship between fertilizer usage and average paddyyield in the study area. However, the contribution of that amount is a little bit amount compared to othervariables in the model. Furthermore, in order to increase the yield, it should be used more capital-intensivepaddy farming methods than labor intensive methods by reviewing study results. So, it can be concluded that,the need of existence of all farmers inclusive fertilizer subsidy scheme in Sri Lanka with the assistance ofMahaweli Block Management Offices.

Key Words:Fertilizer Subsidy, Microeconomic impact,Murawesihena Block, Paddy Cultivation