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“Kethata Aruna”, is the existing fertilizer subsidy programme for paddy sector, which was implemented in 2005 in Sri Lanka. Under this subsidy programme, the three major fertilizers, i.e. Urea, Triple Super Phosphate (TSP) and Muriate of Potash (MOP), have been heavily subsidized for paddy farmers with the intention of promoting the use of fertilizer to increase national paddy production. This paper investigates the impact of the price of paddy fertilizer on the level of fertilizer application and national level paddy production for the period 1981 to 2009. Secondary data obtained from the relevant government institutions were graphically and statistically analyzed to determine the trends and relationships of different parameters on national paddy production. The results revealed that the subsidized fertilizer prices promoted the use of recommended rates of fertilizer by farmers in their paddy crops. It also revealed that the “Kethata Aruna” fertilizer subsidy programme has triggered the paddy farmers to use more fertilizers per unit area than what they used previously. However, the imbalanced fertilizer use in the past, particularly the overuse of urea compared to TSP and MOP, was controlled by the present subsidy programme by making TSP and MOP available at the same price as of urea. About 88% of the variation of the national paddy production is explained by combined effect of total fertilizer, sown extent and the technological improvement. Results showed that a 1% increase of the input of total fertilizer has resulted in a 0.109% increase in the total national paddy production, while an increase in 1% of sown extent resulted in a 0.85% increase in the national paddy production. Tropical Agricultural Research Vol. 25 (1): 14-26 (2013)

The impact of “Kethata Aruna” fertilizer subsidy programme on fertilizer use and paddy production in Sri Lanka