PremiumFor the first time since the end of the civil war in Sri Lanka, refugees from the island nation are once again landing on Indian shores. This time, they are not fleeing war or destruction – they are trying to escape the consequences of arguably the biggest policy-induced economic disaster worldwide in this century.
The seeds of the current crisis were sown last year, with Mahinda Rajapaksa government’s Tuglaqian decisions – first to slash taxes, including a near halving of value added tax (VAT) rates, which derailed Sri Lanka’s debt management programme. As if that wasn’t enough, in April last year, Rajapaksa suddenly banned the import of chemical fertilizers and pesticides and decreed that the country will switch overnight to organic farming. Warnings by agricultural scientists that such a shift needs to be planned and executed over years, and required a complete re-conditioning of the soil to increase organic content, were ignored.
The result - a sharp reduction in food grain output, even though the organic farming decision was revoked after a few months, first for ‘export crops’ and then for rice and other staples, following massive food shortages and protests by farmers, who are now to be compensated to the tune of $200 million by the government.
Sri Lanka missed its fiscal deficit target by more than 2% in 2021, and a reckless increase in money supply has sent inflation soaring.
The lack of foreign currency, coupled with the disastrous overnight ban on chemical fertilizers and pesticides, has sent food prices soaring. Inflation is currently over 15% and is forecast to average 17.5% this quarter, pushing millions of poorer Sri Lankans to the brink. The government declared an economic emergency last September and imposed rationing of food, sugar and milk powder.
Meanwhile, the trade deficit widened to $8.1 billion in December 2021 from $6 billion in the ‘peak Covid’ year of 2020, even as foreign remittances plunged by more than a fifth to $5.5 billion in 2021, worsening the forex shortage.
Sri Lanka’s ill-advised shift to organic farming, lured by the high prices of organic agricultural produce in major western countries, is a cautionary tale for India, which has also been making a push toward organic and natural farming. Prime Minister Narendra Modi, addressing a national conclave on organic farming in December 2021, warned against the “dangers" of chemical fertilizers and pesticides and urged Indian farmers to shift to natural and organic farming to protect themselves from the vagaries of climate change. Urging farmers to shift to cow dung as fertilizer, the Prime Minister said, “We need to take agriculture out of the chemical lab and connect it with nature’s lab."
That may well be, but the fact is that just 1.5% of the world’s agricultural land is organically farmed. Out of 140.1 million hectares (ha) net sown area, only 0.409 million ha is under natural farming in Andhra Pradesh, Chhattisgarh, Kerala, Himachal Pradesh, Jharkhand, Odisha, Madhya Pradesh and Tamil Nadu, according to a written reply by the government in the Lok Sabha in August last year
Over half of the world’s organically farmed land is in the Oceania region, which is a major food exporting region. Farmers there have access to advanced technologies and better linkages to high-return markets. Farmers in Sri Lanka or India do not have anything like the same access.
In a recent interview, Buddhi Marambe, a professor of agriculture at Peradeniya University in Sri Lanka, lamented that Sri Lanka’s short-sighted decision to ban chemical fertilizers was based on misconceptions and a “romanticized" view of agriculture. “We must not forget that agriculture is the sole means of livelihood for millions of people."
It is a warning that India’s policymakers would do well to keep in mind.
