Agricultural “awakening” and economic crisis in Sri Lanka

The sudden transition to organic farming was the final blow that contributed to the current economic crisis in Sri Lanka.

The unprecedented economic crisis in Sri Lanka has made the rounds in mainstream media, academia, political circles as well as the global political dispensation. From the recent resignation of Mahinda Rajapaksa as Prime Minister to the appointment of new Prime Minister Ranil Wickremesinghe, new dynamics are unfolding in the island nation almost every day, making it difficult to keep track of political and economic developments. effects of this puzzle.

Sri Lanka has a long history of economic challenges, which includes the repercussions of the country’s 30-year-long civil war, successive loans from the International Monetary Fund (IMF), excessive increase in the money supply to to stifle its budget deficits – the economy’s money supply has grown by about 42% over the past four years, the significant tax cuts that were enacted just months before the pandemic hit and, well course, the skyrocketing foreign debts the country owed to other powers such as China and Japan. However, the myopic shift to organic farming in Sri Lanka could be said to be the final nail in the coffin that led to a series of economic disasters that will go down as a lesson in the history of agricultural policy, especially for countries from South.

Biological agriculture

Following the 2019 presidential election, incoming President Gotabaya Rajapaksa presented a 10-year vision for the transition to full organic agriculture in Sri Lanka.

Fertilizer shortage hinders paddy harvest

According to a report by News18, it was on the advice of an Indian environmentalist and modern anti-agrarian activist, Vandana Shiva, and her organization Navdanya International, that the Sri Lankan government decided in April 2021 to completely ban the importation of agrochemicals to mitigate the health impacts of chemical fertilizers and pesticides in agriculture, and also promote sustainable, environmentally friendly agricultural systems. It was also a measure to control Sri Lanka’s foreign exchange reserves which were rapidly depleting due to various imports at that time.

Even though the transition to organic farming seemed like an environmentally sustainable step forward, the sudden change was a ticking time bomb waiting to explode. As the new production methods seemed more expensive with lower yields, this unprecedented agricultural policy had serious repercussions on the Sri Lankan economy. Twenty percent of rice production plummeted, leaving nearly 33 percent of its farmland unused and boosting rice prices by 50 percent in about seven months. This disrupted the economy’s self-sufficiency in rice production, and they had to import rice from countries like Myanmar and China to derail the impending food crisis in the economy.

Conditions got so bad that the country had to import rice, sugar and various other basic products, including intermediate goods. The tea industry, which was an important commodity of exchange, suffered losses in the order of US$425 million, which further aggravated the foreign exchange situation in the economy.

The currency crisis was further aggravated by a host of other reasons which unfortunately played out during the same period, leaving no time for an economic recovery. The economy lost foreign exchange reserves due to a series of suicide bombings coordinated by Islamist terrorist groups, which weighed on the tourism sector months before the outbreak of the pandemic. The tourism sector, which accounted for almost 10% of its GDP and was also the third largest source of foreign exchange, was hit hard, leading to a dramatic drop in total revenues of 81% from 2019 to 2020. The situation s is further aggravated. worsened due to the ongoing war between Russia and Ukraine, which has resulted in a global supply chain problem.

Sustainable development program

Indeed, the Sri Lankan crisis teaches us two very important lessons in the field of development policies that the world is currently undertaking. First, the contemporary sustainable development agenda has its flaws, where one aspect of development often induces a negative externality on another. For example, when it comes to the United Nations Sustainable Development Goals framework, there is no doubt that instinctive policies on organic agriculture will help advance the targets of SDG 13 (Climate Action), but will impose a huge burden on achieving SDG 8 (Decent Work and Economic Growth) – as the Sri Lankan case shows. The SDG framework is presented with some inherent challenges that not only make it difficult to operationalize directed policy action, but also to understand their outcomes.

Second, Sri Lanka is a classic case of how a one-size-fits-all approach to sustainable development is detrimental to inclusive progress. Not all policies can be absorbed at the same pace for developing countries relative to the global North. This is mainly due to the lack of resources in the foundations of the economy. For example, when organic farming was introduced in Sri Lanka, the sudden transition was extremely problematic due to lack of agricultural infrastructure, dependence on imported agrochemicals, lack of access to modern techniques and agricultural illiteracy, among others. The transition would undoubtedly be easier (if not seamless) in an advanced economy compared to Sri Lanka.

In November 2021, the ban was lifted following industry backlash due to declining productivity, soaring inflation and thus continued protests to drop the policy. Despite this step, the country experienced a sharp increase in prices for all commodities, as farmers were unable to access imported fertilizers due to dwindling foreign exchange reserves.

In response, Sri Lanka’s closest neighbor India delivered 100 tonnes of Nano Nitrogen liquid fertilizer to Sri Lanka immediately afterwards. However, as is evident now, lifting that ban did little to save the island nation from the mess it had already landed in. Now is the time to tell how Sri Lanka is planning its recovery over the next few months and, more importantly, to provide lessons for the entire South Asian neighborhood on the political directions to take in the post-recovery phase. pandemic.

– Observer Research Foundation

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