Picture Credit: BBC website
The origination of Sri Lanka’s food crisis was a gradual process. Although, the banning of all fertilser imports due to the Sri Lankan government’s effort to become a 100% organic farming nation, may have been the last variable in order for the food crisis to become an obvious threat.
Sri Lanka has obtained 16 loans from the IMF since 1965, and it has had a balance of payments deficit for decades now. Usually, when a economy is experiencing a downward turn, governments should spend more in order to inject stimulus into the economy. With the IMF conditions, that is not an option. Despite this, Sri Lanka kept adding more and more debt.
The situation was already bad, but within a few years, Sri Lanka's economy took multiple hits, making the situation worse. The Easter bombings in 2019 and then the pandemic in 2020, both led the tourist industry to take a nosedive, resulting in up to an approximately 80% drop. The sudden and drastic tax cuts that took place in 2019 following the new government was also a contributing factor, with a result of around 2% of the GDP being lost.
The economy was on the edge, and then suddenly in April 2021-amidst the warnings of experts and educated personnel , the president announced that starting in May, a ban of all imported chemical fertilisers and agrochemicals would be taking place (straying from the promise, made in November 2019, of free chemical fertilisers to farmers, who account for 27% of Sri Lanka’s labor force), making the country a 100% organic farming nation. The transition was supposed to be a gradual, 10-year process.
Picture Credit: Hiru News website
Sources claim this was an effort to prevent the draining of foreign exchange reserves, in order to save around $300- $400 million in foreign exchange (which the country spends on importing agrochemicals per year). The president claimed that the agrochemicals used in production has not increased the production, promising compensation for any farmer that faced a decrease in production after the transition into organic farming, using the savings from the agrochemical ban for said compensations.
With the protests from farmers due to the lack of preparation to switch to organic farming on such short notice, the ban didn’t last long, being lifted within seven months.
Although the ban was lifted, the damage had already been done. Sri Lanka’s monthly crop forecast points to the end of Sri Lanka’s record of self sufficiency in rice. The department of agriculture states that this year’s Maha is expected to yield 2.3 million tonnes of rice, that is 30% less than the normal yield of 3.2 million tonnes.
Approximately one third of Sri Lanka’s land had been left unused due to the agrochemical ban. Sri Lanka had to import $450 million of rice. The tea industry wasn’t spared either, with an economic loss of $425 million. The foreign exchange situation has only worsened.
An estimated 1.6 million of the country’s 22 million population are consisting of farming families. These families are suffering a great deal, forced to take two meals instead of three. The World Bank has already expressed concern about the social impact of the country’s economic situation. "Just above one-tenth of the population (11.7%) is living below the poverty line," said Faris Hadad-Zervos, World Bank country director for Sri Lanka, "It is certainly a reversal of the decline observed since 2002."
Picture Credit: BBC website
Due to the lack in food but no change in the demand, the food prices have increased, giving way domestic inflation rising to a 17.5% in February 2022, the second highest in Asia, after Pakistan.
As to what may happen in the future, experts say Sri Lanka will quite possibly obtain its 17th IMF loan in order to mull over the current crisis, said load will come with fresh conditions.
April 12th 2022 | 7:30 PM