Organics derails economy

By Mark Ross

In Solutions4 Minutes
A woman picking tea in the Bogawantalawa Valley, also known as the ‘Golden Valley of Tea’ in Central Sri Lanka.

The Sri Lankan government is bailing out its farmers and being blamed for a food crisis, due to a ban on agrichemicals and chemical fertilisers.

President Gotabaya Rajapaksa introduced the ban in May 2021 to realise his ambitious goal of becoming the world’s first completely organic farming nation.

This failed scheme was part of a wider import ban that plunged the farming sector into crisis and was renounced months later.

As exports of goods and services were hampered by the pandemic last year, Sri Lanka’s trade deficit increased, eroding foreign reserves. The country’s foreign reserves fell to $2.8 billion in July 2021, down from $5.6 billion at the end of 2020, providing the government with a rationale for harsh import restrictions.

In attempts to save foreign exchange reserves, Sri Lanka banned a host of imported goods, including food. Supermarkets were already rationing milk powder, sugar, lentils and other essentials as commercial banks ran out of dollars to pay for imports.

Food shortages worsened after the government’s ban on agrichemical imports which resulted in widespread crop failures and intense farmer protests. About a third of Sri Lanka’s agricultural land was left dormant because of the import ban.

The government quickly abandoned its quest in November 2021, announcing it would immediately lift an import ban on pesticides and other agricultural inputs. This followed the renouncing of the ban on fertiliser imports in October for tea – the country’s main export earner.

Sri Lanka’s Agricultural Ministry Secretary, Udith Jayasinghe was quoted as saying: “We will now allow chemical inputs that are urgently needed.

“Considering the need to ensure food we have taken this decision.”

Shortages worsened in the week before the ban ended, with prices for rice, vegetables and other market staples having doubled.

The devastating effect of the government’s sudden decision to stop importing chemical fertilisers and pesticides is still being felt in tea plantations and paddy fields.

The Sri Lankan government announced compensation for more than a million rice farmers whose crops failed. It will pay 40,000 million rupees (NZ$296m) to farmers whose harvests were affected by the chemical fertiliser ban, agriculture minister Mahindananda Aluthgamage said in late January.

“We are providing compensation to rice farmers whose crops were destroyed.

“The government will spend another $149m on a price subsidy for rice farmers,” he said.

While the government has rolled back many of those policies, the Central Bank has continued to restrict banks from issuing letters of credit to traders seeking to import food and other items, aggravating shortages.

Changing farm systems overnight has had devastating impacts on the people of Sri Lanka, especially farmers. Any change to farming requires careful analysis and consultation with farmers and their representatives, including accounting for individual circumstances and growing conditions. Idealised policy can lead to costly mistakes when the reality of the changes bite and remedial actions are needed to rectify them.

  • Mark Ross is chief executive of Agcarm.