Sri Lanka’s central bank can make changes to the exchange rate in the future if necessary, but the current level is appropriate amid calls to float the currency and stop reserve sales for imports.
In a move to counter economic headwinds in the country, the Central Bank proposed urgent policy measures towards economic stability by managing inflation, attracting non debt, creating foreign capital to build foreign reserves while honouring foreign debt payment obligations.
This was disclosed by Central Bank Governor Ajith Nivard Cabral when he addressed a media conference on Friday convened to review the latest monetary policy, announcing the increase of the standing deposit facility rate and the standing lending facility rate by 100 basis points (bps) each to each, to 6.50 per cent and 7.50 per cent, respectively for the first time in 11 years.
The Central Bank has been taken by surprise with the sharp increase in inflation, Governor Nivard Cabraal said after inflation rose to 15.1 percent in February 2022,
He blamed banks for not raising deposits after injecting hundreds of billions of in new rupee reserves into banks despite running a pegged regime, to maintain artificially low policy rates as budget deficits expanded.
Sri Lanka’s 12-month inflation has gone up from 5.7 percent in September 2021 to 15.1 percent by February 2022 after two years of unrelenting money printing, 40 percent broad money growth and reserve money growing 40 percent despite two years of balance of payments deficits.
Governor Cabraal removed the price controls, allowing market rates to move up, but policy rate hikes have been slow providing rupee reserves to the banking system at low cost.
He noted that it is the responsibility to make suggestions to the government to maintain economic stability carefully considering the current and expected macroeconomic developments both globally and domestically.
Under the present economic set up, a comprehensive policy package containing both traditional and non-traditional measures, along with other initiatives that have an impact on the overall economy is essential to handle economic head winds although its immediate impact is unbearable for the people.
Answering questions raised by journalists, he said that they are ready to discuss with the IMF but most of their suggestions have already been implanted by the Central Bank.
The Monetary Board has not taken a decision on the flexible exchange rate and therefore it will remain as it is he said adding that up coming debt repayments will be made accordingly and it was never faulted by the Central Bank, he said.
However he noted that Central Bank will hold talks with donor countries and international lending agencies including China and on the government’s stance of encouraging non debt creating financial facilities.
He specifically mentioned issues faced by banks and non- banking institutions with regard to moratorium given to borrowers which would expire on March 31 this year.
The unwinding moratorium and issues faced by banks and finance companies will be discussed with the representatives of this sector and arrive at a feasible solution, he revealed.
It has transpired that several banks are showing exorbitant profits in their balance sheets due to the moratorium offered to creditors as they were unable to make provisions for non-performing facilities.
As such they have to consider these facilities as performing loans and are absorbing the interest into their profits even though they have not been actually recovered.
The effects and repercussions of these will be felt only after the moratorium is lifted and the banks are compelled to make provisions for these non-performing facilities. This matter will be rectified during talks on unwinding the moratorium, he said.
The Ceylon Electricity Board (CEB) will be implementing a short term emergency plan to halt power cuts as soon as possible with the involvement of engineers and power sector experts.
Accordingly it has announced a Power Cut Management schedule as an immediate measure , in event the CEB is unable to meet the demand of electricity commencing from today Monday (7) in accordance with this plan.
President Gotabaya Rajapaksa has issued a directive at a top level meeting recently to take prompt action according to a plan for the implementation immediately and the CEB has been asked to devise the emergency plan, a senior official of the Power Ministry disclosed.
The Finance Ministry has also expressed willingness to contribute their input in the preparation of the emergency plan.
As an immediate solution it has been suggested to expedite the emergency power purchase from private power suppliers as eight out 10 power plants of the CEB have been shut down at present due to lack of furnace oil and naphtha.
Under this set up CEB is to renegotiate the power purchasing agreements to be signed with the two leading power suppliers for a further three years.
The Ceylon Electricity Board (CEB), in keeping with a government decision, decided to call for proposals to buy 200MW of emergency power with immediate effect.
CEB General Manager Rohantha Abeysekera said the need to buy emergency power had arisen and the CEB would do it based on approval granted by the Public Utilities Commissions of Sri Lanka (PUCSL) and the Cabinet.
CEB sources pointed out that the move would be costly as even if the power plants ran or not high-capacity charges would have to be paid to buy emergency power.
Although the CEB had emphasised the need for scheduled power cuts from January, the PUCSL had continuously rejected the move, thus triggering a massive crisis, they said.
The government does not agree to the condition of private power suppliers but the President instructed to discuss this matter again making it compulsory for the ministry to purchase power as and when it is required but not for three years.
New tenders will be called for the purchase of emergency power as the previous tender was cancelled due to the condition put forward by private power providers. .
Two private power purchasing agreements are due to be approved by the Cabinet – one for 100 MW from the Ace Embilipitiya Power Plant and the other for 20 MW from the Ace Matara Power Plant.
The new emergency plan will include immediately restarting the Sapugaskanda oil refinery which was shut down twice in December 2021 and January due to non-importation of crude oil citing the dollar crisis.
Refining crude oil in Sri Lanka was the most economical way for the country because by-products of refining are also vital for the CEB and many industries, a Finance Ministry official said.
He added that the Energy Ministry and Ceylon Petroleum Corporation (CPC) have been asked to stop the previous practice of trying to find dollars to clear the fuel shipment after its arrival at the port.
The Energy Ministry and the CPC will have to take their actions with responsibility and according to a proper plan of fuel procurement rather than ad hoc measures to go for spot purchases and placing orders without considering availability of foreign exchange until the last minute, he added.
However several senior engineers of the CEB said that it is impossible to do anything now due to the failure of the authorities to heed their advice. They warned that the CEB has no alternative other than imposing 16 hour power cuts per day if the inter monsoon is not activated as expected in April.
They pointed out “if there is no rain in hydro catchment areas hydro power generation would definitely come to a standstill and thereafter nothing can be done.
The Ministry of Energy stated that 30,000 MT of Furnace oil required for Power Plants was expected by March 8.
Disheartened by Sri Lanka’s stance towards China in awarding strategic development projects, India is delaying its offering of a fiscal package on an urgent basis to assist the island nation, several foreign and current affairs analysts claimed.
This package is focused on measures to tackle an economic crisis that the country is facing in which India is expected to extend food and health security aid to Sri Lanka on an urgent basis, along with an energy security package and currency swap, and also promote its investments.
The food and health security package would envisage the extension of a line of credit to cover the import of food, medicines and other essential items from India.
In return for this gesture India is expecting Sri Lnka to fulfill certain conditions till then the future of the fiscal package including one billion dollar emergency loan from India seems uncertain, analyst said.
India has called for a road map from Sri Lanka on how it is going to overcome its economic crisis in the long term as well as to clear the decks for a long list of its economic cum strategic demands for implementation in the North and the East of Sri Lanka..
Finance Minister Basil Rajapaksa’had to postpone his visit to India twice after securing a US$ 500 million loan in December last year to clinch a further one billion dollar loan for emergency supplies of food, fuel and medicines to overcome the country’s ongoing economic crisis.
The Indian conditions for the granting of this loan package included several maritime security agreements that will strengthen India’s strategic interests, particularly around the eastern Trincomalee harbour.
These include Donier surveillance aircraft for the Sri Lanka Air Force, a ship repair dock for the Sri Lanka Navy in Trincomalee and posting of a Sri Lankan Navy officer at the Intelligence Fusion Centre, a Bahrain-based intelligence sharing office which is a US Navy initiative to combat international terrorism, the narcotics trade and ensure safe maritime passage for commercial vessels in the region.
One of the key pressure-points from the Indian Government is to start a renewable energy (solar power) project in and around Sampur near Trincomalee.
An earlier plan by India to begin a coal power project in joint partnership with Japan has now been abandoned as Sri Lanka announced a move away from coal plants as part of its futuristic energy policy.
The reopening of the Palay airport for commercial operations and several cultural projects in the Jaffna peninsula are also among items on the list already made public.
The Indian Government also wants to enter into the renewable energy field in the Delft islet after it scuttled a Chinese company securing the project following an Asian Development Bank ((ADB) tender procedure.
Assistance from India in the last six months have come in the form of;1. $ 500 million oil line of credit, $ 1 billion line of credit for essentials to be imported from India under negotiation,. Currencies swap $ 400 million, deferral of $ 515 million under Asian Clearance Union,. 40,000 MT of fuel on credit , 100,000 Rapid Antigen Test kits and. Supply of 1,000 tons of liquid medical oxygen.
The Sri Lankan delegation to the United Nations Human Rights Council (UNHRC) suffered a great setback when its promise to amend the Prevention of Terrorism (Temporary Provisions) Act, No. 48 of 1979 as amended (PTA) was responded to by the 16 UN special experts calling on the Government of Sri Lanka (GoSL) to suspend the PTA altogether and immediately. The experts said, after the suspension, the Government could suitably enact anti terrorism law which is in keeping with international law.
Thus, the usual trick employed by Sri Lankan delegations before the sessions of the UNHRC by making various promises and even exhibiting draft Bills, thereby trying to create the impression that some compliance with the request of the Council is being considered by the Government was not able to convince the international community of the sincerity of the GoSL. For many years, Sri Lankan delegations including this time’s delegation led by Foreign Minister Professor G.L. Peiris himself, had sophisticated the art of practicing various kinds of deceptions to create a false impression that the Government is willing to expand the freedom of the people and that they will take necessary steps for this purpose. When the Council sessions are over, and all the promises are forgotten, the next stage of discussing these things begins only when the next sessions of the UNHRC are to be held. This circus goes on and on and as far as the people are concerned, the situation of repression is ever increasing.
The purpose of the UN HR mechanisms is to assist Governments in order to improve the means by which their own people will enjoy a greater freedom. The various meetings such as UNHRC sessions and discussions with the various treaty bodies are all designed with the idea of mutual cooperation through which the ultimate beneficiaries will be the people of each country.
What the PTA involves is not just only the rights of the minorities but the rights of the entire nation that whatever measures that are taken for ensuring national security be made without striking the right to protection of the individuals and groups living in a society, which is the primary concern of promoting human rights. When the balance is shifted and the security laws are merely used not in order to protect the people’s freedom but against the people themselves, then the very possibility of the existence of a free nation comes to be challenged. In Sri Lanka, everybody has reached that stage quite sometime back.
The possibilities open for prolonged detentions through the PTA has not in any way strengthened the Sri Lankan criminal justice system to deal with horrendous violations of rights. That you can easily get away with murder is today a kind of common belief. That is in a backdrop where grave kinds of abuses have taken place such as large scale enforced disappearances, events like the Easter Sunday bomb blasts and so many other daily events where the arbitrary use of detention has become a matter of grave concern for the people. Fear and intimidation reigns in the civil society and thereby the public space for participation to improve their own life conditions have been stifled. Under these circumstances, a strong condemnation by 16 Special Mandate Holders of the UN is a quite welcomed gesture to point to the need for action rather than promises in terms of dealing with the freedom of the people.
The 1978 Constitution which has lasted for 43 years now and the PTA which has lasted for 40 were the two hands of the former President J.R. Jayewardene which has been keeping the Sri Lankan political and legal systems strangled. Now, both are being seriously challenged as the people have experienced enormous sufferings due to such repressive laws.
The statement by the 16 Special Mandate Holders should be an encouragement to the people of Sri Lanka themselves to utilize the situation to demand the end of the PTA and at the same time to also demand the end of the repression that is carried out through the 1978 Constitution. What the UN agencies can do is to merely assist the people themselves who themselves must decide as to what kind of nation they want to live in. Many declare publicly that Sri Lanka is a less attractive place for them to live than ever before. Under these circumstances, efforts by the people themselves including the Opposition political parties, the trade unions and all civil society organizations should be in order to improve their own rights and end the extremely repressive laws and practices that are developed in Sri Lanka.
Only 25 per cent of all buses will be able to run tomorrow in the event that fuel was not issued for passenger buses, said Gemunu Wijeratne, President of the All Ceylon Private Bus Owners’ Association, speaking to media today (06).
Accordingly, bus operations are likely to stop completely at night, he warned.
Revealing that the total number of buses operating daily islandwide does not exceed 5000, Wijeratne added that these buses are likely to stop their operations, should the diesel crisis escalate.
The government recently stated that the depots belonging to the Sri Lanka Transport Board (SLTB) will distribute diesel for private buses in a move to solve the ongoing fuel crisis, but Wijeratne went on claiming that the initiative has failed.
Despite the authorities’ claim that diesel will be distributed from 50 SLTB depots islandwide, only 03 depots have distributed yesterday, the Union President added, pointing out that the diesel stocks possessed by the SLTB are not even sufficient to fill up their own buses.
In the wake of the shortage of wheat flour triggered by the ongoing crisis in the country, the price of a loaf of bread could soar over Rs. 100, warned the All Ceylon Bakery Owners’ Association, speaking to a briefing today (06).
Union President N.K. Jayawardena stated that the soaring of the price of bread may be inevitable given the situation.
“As of now, about 1000 bakeries have been closed as they cannot continue. Others work only five days per week. So, should this continue, the price of a loaf of break will soar over Rs. 100 for sure. We should be thankful if it stops below Rs. 150. With the crises ongoing such as the commodity prices, gas and others, a loaf of bread will have to be sold for over Rs. 100. Should it be sold for below Rs. 100, it will not be a loaf of bread of the accurate weight,” he said.
The Union President added: “So, there is nothing left for us to say. The problem has already gone upwards and is on our shoulders. Should this situation continue, all bakeries in the country may have to be closed. Only a handful of bakeries may remain open. 90 per cent of bakery owners are being driven into poisoning themselves due to being unable to settle bank loans. We urge the government authorities to pay their attention to us. We urge them to provide a solution to our problems. But it is doubtful whether it will happen. The dollar crisis is the reason behind them all. Until that problem is solved, none of our problems will be solved.”
A date has been set to hold a special discussion between President Gotabaya Rajapaksa and the Sri Lanka Freedom Party (SLFP), in view of the resolution formulated by the SLFP consisting of 15 recommendations to solve the prevailing economic crisis in the country.
Accordingly, the meeting is due to be held on Tuesday, March 08 at 4 pm at the President’s Office.
“I don’t think many people read the game better than he did, and of course he had great character and a way of putting it across. All the intelligence you saw as a player came across in his commentary” – Michael Atherton on Shane Warne; Michael Holding: How Warne changed spin bowling
Sky Sports Cricket’s Michael Atherton gives his reaction to Friday’s shocking news of the passing of Australia great Shane Warne – a long-time adversary on the pitch and colleague in the commentary booth…
Hearing the news, I was totally stunned. I don’t think I’ve ever been more shocked in my life.
A man who had such vitality, full of energy and life and suddenly not to be there.
He’s my age effectively – he’s a year younger than I am – so he’s somebody I played against a lot for a decade in Ashes cricket and I commentated alongside him for a long, long time so I know him pretty well.
I enjoyed his commentary enormously. I think he was at his best when was what we call the colour person, the expert No 2.
I don’t think many people read the game better than he did, and of course he had great character and a way of putting it across.
But all the intelligence you saw as a player – I think he’s the most intelligent bowler I played against – came across in his commentary.
And using the word intelligence, I’m not talking about A-Levels and that kind of thing, but raw cricketing intelligence which he had in spades.
He was a fabulous bowler.
‘He was two bowlers in one’
In fact, leg spin was a dying art when he was picked actually.
With Australia, you think of the land of the wrist spinner, it’s where wrist spin flourished and really developed because of the hot sun and the hard pitches.
But in the 70s it was pace bowling that dominated: Dennis Lillee, Jeff Thomson – and Lillee was Shane Warne’s hero when he was growing up.
So wrist spinners had slightly withered away a little bit and it was almost this forgotten art, and then suddenly Allan Border picked him [Warne] in 1992.
The early Tests were a bit in and out and then obviously that first Ashes Test match at Old Trafford in 1993, we hadn’t seen much of him until that point, and unlike today it wasn’t a time where you had a lot of footage of opposition players.
He came a little bit under the radar, but not after he bowled Mike Gatting. And then for the next 15 years, he was the superstar of the game.
Wrist spin is a tricky art, and what he did was combine the accuracy you normally associated with a finger spinner, with the guile, mystery and aggressive instincts of a wrist spinner. He was two bowlers in one really.
He was a brilliant defensive bowler, because he didn’t bowl any bad balls, but he was also a magnificent attacking bowler because he applied that pressure.
He’s the greatest leg-spinner, I think you can say without dissent, that the game has seen.
Wisden picked him as one of the five cricketers of the 20th century and there wasn’t much dissent there.
You’re talking about a cricketer who stands tall with Don Bradman and Garfield Sobers, and all these absolute giants and greats of the game.
‘Highly competitive, but sociable and with an eye for the opposition’
The 2005 Ashes showed him at his best, because that was the one series Australia lost.
What you saw there was a guy with tremendous competitive spirit, and at a time when the rest of his team-mates were just slowly wilting towards the end of that series, he came to the fore.
I enjoyed playing against him, I have to say. He was highly competitive – all the great players have got that competitive streak in them, that never-say-die attitude, that total belief in their own ability.
But he was also somebody that if you did well, he’d say well played. You could have a drink with him at the end of the game, he was very sociable guy.
I remember when Australia regained the Ashes after they were beaten in 2005 in England.
They regained the Ashes in Perth, and at the Ashes-winning moment – Steve Harmison was the batsman out – all the Australians went into a celebratory huddle, and the one man who went to shake the England players’ hands who were in the middle at the moment of victory was Shane Warne.
And that in a way summed up the cricketer he was. He was highly competitive, but he always had an eye out for the opposition.
They always say Keith Miller and Shane Warne were the greatest captains Australia never had, maybe Rod Marsh as well who also passed away in a dreadful week for Australia cricket, losing two giants like that.
Holding: How Warne changed spin bowling
Michael Holding:
Yes, Shane Warne was a great cricketer, a great commentator, knew the game and was very insightful, but he was also a very kind person who was willing to talk to anyone – from any country – about the game and assist them.
This is such a loss, an extremely sad loss and my heart goes out to his family and close friends. I’m still in shock, believe me.
The way Shane Warne played the game, he didn’t ask for any favours on the cricket field and of course gave none. But once he left the field, he forgot everything that had taken place on the field and just went back to being another human being.
I saw Shane before the international world saw him, as he came to the Caribbean as an U19 cricketer with an Australian U19 team. I was doing a little bit of commentary on that game, so I’d seen Shane Warne from very early days. Initially, the first time I saw him, I just thought he was another leg-spinner, to be honest. Then when he came to the Test arena and again he didn’t have immediate success, but as soon as he hit his straps and started to look like a proper spin bowler, you could see greatness coming.
Obviously from his record, he was great. But not just from his record, but when you get to know the man, seeing the brain power behind Shane Warne and the mind that he has for the game, it was obvious when you meet him that he was going to be a great.
Before Shane Warne came along, a lot of spin bowlers were around and came along and got some wickets, but nobody really looked up at them as great match-winners. This man on his own changed the outlook of people with regards to spin bowlers.
His high skill and his highly-competitive nature meant everybody had to think differently about spin bowlers. I think Shane Warne’s skills really encouraged more captains to look at spin bowlers and look at the role they can play, even in one-day games.
I think a lot of spin bowlers who have got their opportunities in one-day games owe that to Shane Warne, because he showed the world that spin bowlers could operate beautifully in one-day cricket, and very successfully. He definitely changed that. Shane Warne was the man who changed the entire focus of spin bowling. We’ve had a lot of great spin bowlers but he changed the dynamic.
Figures have soared by 1.2m in two years of pandemic as long Covid takes its toll
More than a third of working-age people in the UK now suffer from a long-term illness, with new figures showing a dramatic rise since the pandemic began. Post-Covid conditions, including long Covid, breathing difficulties and mental-health problems, are among the causes, according to disability charities and health campaigners.
An Observer analysis of the Office for National Statistics’ (ONS) labour market status of disabled people figures shows that nearly 14.2 million people in the UK aged 16 to 64 said they had a health condition lasting for at least 12 months in 2021 – a rise of 1.2 million during the two years of the pandemic.
Levels of long-term ill-health had been rising more slowly before the emergence of Covid, at an annual average of about 275,000 cases a year between 2014 and 2018, but the rapid increase over the last two years highlights the health problems facing the UK, says the disability charity Scope.
Dr Susannah Thompson got Covid in April 2020 and now uses a wheelchair as a result.
About 800,000 more people suffered from mental-health problems in 2020-21 than did so in 2018-19, Scope said, and the number of people with chest and breathing problems had grown by about 570,000 over the same period.
James Taylor, Scope’s director of strategy, said: “These figures show the ongoing shock waves of the past two years continue to affect lives today. We’re concerned things will continue to get worse as time goes on.
“ These figures could mean more people living with the extra costs that come with disability. As the cost of living crisis continues to bite, we know that disabled people are twice as likely to live in a cold house and three times as likely to not have been able to afford food. “The government needs to get a grip on the cost of living crisis, and target financial support directly at disabled people.”
Susannah Thompson before she got Covid: ‘I’ve always been active – I was a cold-water sea swimmer.’
Long Covid is another factor. The latest ONS long Covid report estimates that 1.5 million have had Covid symptoms for more than four weeks, and 685,000 people had symptoms that had lasted more than a year.
Further analysis by Long Covid Kids shows that people with pre-existing conditions are more likely to suffer long Covid than those without. Those whose activity is limited are, on average, more than three times as likely to suffer long Covid as those with no pre-existing conditions.
Dr Susannah Thompson was infected in April 2020 while working as a GP in her local hospital’s urgent care centre in north-west England. She made a “slow, gradual recovery” over the next months and was involved in setting up the GP-led vaccination programme until she had a “massive relapse” in January 2021.
“I ended up in hospital, rushed into resus [resuscitation],” she said. “I struggled to even hold a pen to write my name.” She has had constant leg pain, chilblains, brain fog – and even sitting up can send her heart racing to 140 beats per minute. “Since then I haven’t been able to see a patient,” she said. “I’ve always been active – I was a cold-water sea swimmer. I went from being able to throw myself in the sea twice a week to struggling to get in and out of a bath.”
She now uses an electric wheelchair to take her children to school and is on sick leave from her roles as GP and medical director.
“It feels like we’re ignoring long Covid,” Thompson said. “People in the middle of their lives are getting robbed of their livelihoods, at risk of losing their homes. I can’t fathom why we don’t try to prevent it. But we’re not.”
Ondine Sherwood, co-founder of Long Covid SoS, said: “We don’t yet have data on how many infected during the huge Omicron wave will go on to experience prolonged symptoms, so [numbers] will almost certainly grow. Many, if not most of those with long Covid, are of working age and were previously fit and healthy – there is surely going to be a major effect on the workforce.”
She pointed to a study published in Nature last month, which shows that even a mild infection can increase the risk of heart disease for a year after diagnosis. “Given the huge numbers affected, both in the UK and worldwide, there is a real danger that the ‘average’ level of health people enjoy could already be lower and will deteriorate further.”
A nationwide experiment is abandoned after producing only misery.
By Ted Nordhaus, the executive director of the Breakthrough Institute, and Saloni Shah, a food and agriculture analyst at the Breakthrough Institute.
Faced with a deepening economic and humanitarian crisis, Sri Lanka called off an ill-conceived national experiment in organic agriculture this winter. Sri Lankan President Gotabaya Rajapaksa promised in his 2019 election campaign to transition the country’s farmers to organic agriculture over a period of 10 years. Last April, Rajapaksa’s government made good on that promise, imposing a nationwide ban on the importation and use of synthetic fertilizers and pesticides and ordering the country’s 2 million farmers to go organic.
The result was brutal and swift. Against claims that organic methods can produce comparable yields to conventional farming, domestic rice production fell 20 percent in just the first six months. Sri Lanka, long self-sufficient in rice production, has been forced to import $450 million worth of rice even as domestic prices for this staple of the national diet surged by around 50 percent. The ban also devastated the nation’s tea crop, its primary export and source of foreign exchange.
By November 2021, with tea production falling, the government partially lifted its fertilizer ban on key export crops, including tea, rubber, and coconut. Faced with angry protests, soaring inflation, and the collapse of Sri Lanka’s currency, the government finally suspended the policy for several key crops—including tea, rubber, and coconut—last month, although it continues for some others. The government is also offering $200 million to farmers as direct compensation and an additional $149 million in price subsidies to rice farmers who incurred losses. That hardly made up for the damage and suffering the ban produced. Farmers have widely criticized the payments for being massively insufficient and excluding many farmers, most notably tea producers, who offer one of the main sources of employment in rural Sri Lanka. The drop in tea production alone is estimated to result in economic losses of $425 million.
Human costs have been even greater. Prior to the pandemic’s outbreak, the country had proudly achieved upper-middle-income status. Today, half a million people have sunk back into poverty. Soaring inflation and a rapidly depreciating currency have forced Sri Lankans to cut down on food and fuel purchases as prices surge. The country’s economists have called on the government to default on its debt repayments to buy essential supplies for its people.
The farrago of magical thinking, technocratic hubris, ideological delusion, self-dealing, and sheer shortsightedness that produced the crisis in Sri Lanka implicates both the country’s political leadership and advocates of so-called sustainable agriculture: the former for seizing on the organic agriculture pledge as a shortsighted measure to slash fertilizer subsidies and imports and the latter for suggesting that such a transformation of the nation’s agricultural sector could ever possibly succeed.
A worker carries leaves at a tea plantation in Ratnapura, Sri Lanka, on July 31, 2021. ISHARA S. KODIKARA/AFP via Getty Images
Sri Lanka’s journey through the organic looking glass and toward calamity began in 2016, with the formation, at Rajapaksa’s behest, of a new civil society movement called Viyathmaga. On its website, Viyathmaga describes its mission as harnessing the “nascent potential of the professionals, academics and entrepreneurs to effectively influence the moral and material development of Sri Lanka.” Viyathmaga allowed Rajapaksa to rise to prominence as an election candidate and facilitated the creation of his election platform. As he prepared his presidential run, the movement produced the “Vistas of Prosperity and Splendour,” a sprawling agenda for the nation that covered everything from national security to anticorruption to education policy, alongside the promise to transition the nation to fully organic agriculture within a decade.
Despite Viyathmaga’s claims to technocratic expertise, most of Sri Lanka’s leading agricultural experts were kept out of crafting the agricultural section of the platform, which included promises to phase out synthetic fertilizer, develop 2 million organic home gardens to help feed the country’s population, and turn the country’s forests and wetlands over to the production of biofertilizer.
Following his election as president, Rajapaksa appointed a number of Viyathmaga members to his cabinet, including as minister of agriculture. Sri Lanka’s Ministry of Agriculture, in turn, created a series of committees to advise it on the implementation of the policy, again excluding most of the nation’s agronomists and agricultural scientists and instead relying on representatives of the nation’s small organic sector; academic advocates for alternative agriculture; and, notably, the head of a prominent medical association who had long promoted dubious claims about the relationship between agricultural chemicals and chronic kidney disease in the country’s northern agricultural provinces.
Then, just a few months after Rajapaksa’s election, COVID-19 arrived. The pandemic devastated the Sri Lankan tourist sector, which accounted for almost half of the nation’s foreign exchange in 2019. By the early months of 2021, the government’s budget and currency were in crisis, the lack of tourist dollars so depleting foreign reserves that Sri Lanka was unable to pay its debts to Chinese creditors following a binge of infrastructure development over the previous decade.
Enter Rajapaksa’s organic pledge. From the early days of the Green Revolution in the 1960s, Sri Lanka has subsidized farmers to use synthetic fertilizer. The results in Sri Lanka, as across much of South Asia, were startling: Yields for rice and other crops more than doubled. Struck by severe food shortages as recently as the 1970s, the country became food secure while exports of tea and rubber became critical sources of exports and foreign reserves. Rising agricultural productivity allowed widespread urbanization, and much of the nation’s labor force moved into the formal wage economy, culminating in Sri Lanka’s achievement of official upper-middle-income status in 2020.
By 2020, the total cost of fertilizer imports and subsidies was close to $500 million each year. With fertilizer prices rising, the tab was likely to increase further in 2021. Banning synthetic fertilizers seemingly allowed Rajapaksa to kill two birds with one stone: improving the nation’s foreign exchange situation while also cutting a massive expenditure on subsidies from the pandemic-hit public budget.
But when it comes to agricultural practices and yields, there is no free lunch. Agricultural inputs—chemicals, nutrients, land, labor, and irrigation—bear a critical relationship to agricultural output. From the moment the plan was announced, agronomists in Sri Lanka and around the world warned that agricultural yields would fall substantially. The government claimed it would increase the production of manure and other organic fertilizers in place of imported synthetic fertilizers. But there was no conceivable way the nation could produce enough fertilizer domestically to make up for the shortfall.
Having handed its agricultural policy over to organic true believers, many of them involved in businesses that would stand to benefit from the fertilizer ban, the false economy of banning imported fertilizer hurt the Sri Lankan people dearly. The loss of revenue from tea and other export crops dwarfed the reduction in currency outflows from banning imported fertilizer. The bottom line turned even more negative through the increased import of rice and other food stocks. And the budgetary savings from cutting subsidies were ultimately outweighed by the cost of compensating farmers and providing public subsidies for imported food.
Left: Workers are seen at a tea plantation in Ratnapura, Sri Lanka, on July 31, 2021. ISHARA S. KODIKARA/AFP via Getty Images Right: A Sri Lankan farmer carries paddy on his head in a field on the outskirts of Sri Lanka’s capital, Colombo, on Sept. 7, 2018. LAKRUWAN WANNIARACHCHI/AFP via Getty Images
Farming is, at bottom, a fairly straightforward thermodynamic enterprise.
Nutrient and energy output in the form of calories is determined by nutrient and energy input. For most of recorded human history, the primary way humans increased agricultural production was by adding land to the system, which expanded the amount of solar radiation and soil nutrients available for food production. Human populations were relatively small, under 1 billion people in total, and there was no shortage of arable land to expand onto. For this reason, the vast majority of anthropogenic changes in global land use and deforestation has been the result of agricultural extensification—the process of converting forests and prairie to cropland and pasture. Against popular notions that preindustrial agriculture existed in greater harmony with nature, three-quarters of total global deforestation occurred before the industrial revolution.
Even so, feeding ourselves required directing virtually all human labor to food production. As recently as 200 years ago, more than 90 percent of the global population labored in agriculture. The only way to bring additional energy and nutrients into the system to increase production was to let land lie fallow, rotate crops, use cover crops, or add manure from livestock that either shared the land with the crops or grazed nearby. In almost every case, these practices required additional land and put caps on yields.
Starting in the 19th century, the expansion of global trade allowed for the import of guano—mined from ancient deposits on bird-rich islands—and other nutrient-rich fertilizers from far-flung regions onto farms in Europe and the United States. This and a series of technological innovations—better machinery, irrigation, and seeds—allowed for higher yields and labor productivity on some farms, which in turn freed up labor and thereby launched the beginning of large-scale urbanization, one of global modernity’s defining features.
But the truly transformative break came with the invention of the Haber-Bosch process by German scientists in the early 1900s, which uses high temperature, high pressure, and a chemical catalyst to pull nitrogen from the air and produce ammonia, the basis for synthetic fertilizers. Synthetic fertilizer remade global agriculture and, with it, human society. The widespread adoption of synthetic fertilizers in most countries has allowed a rapid increase in yields and allowed human labor to shift from agriculture to sectors that offer higher incomes and a better quality of life.
The widespread application of synthetic fertilizers now allows global agriculture to feed nearly 8 billion people, of whom about 4 billion depend on the increased output that synthetic fertilizers allow for their sustenance. As a result, the modern food systems that have allowed global agriculture to feed Earth’s population are far more energy intensive than past food systems, with synthetic fertilizers accounting for a significant source of the energy for crops.
As synthetic fertilizers became increasingly available globally after World War II and combined with other innovations, such as modern plant breeding and large-scale irrigation projects, a remarkable thing happened: Human populations more than doubled—but thanks to synthetic fertilizers and other modern technologies, agricultural output tripled on only 30 percent more land over the same period.
The benefits of synthetic fertilizers though go far beyond simply feeding people. It’s no exaggeration to say that without synthetic fertilizers and other agricultural innovations, there is no urbanization, no industrialization, no global working or middle class, and no secondary education for most people. This is because fertilizer and other agricultural chemicals have substituted human labor, liberating enormous populations from needing to dedicate most of their lifetime labor to growing food.
A Sri Lankan farmer applies fertilizer at a vegetable farm in Horana South, Sri Lanka, on Oct. 25, 2017. LAKRUWAN WANNIARACHCHI/AFP via Getty Images
Virtually the entirety of organic agriculture production serves two populations at opposite ends of the global income distribution. At one end are the 700 million or so people globally who still live in extreme poverty. Sustainable agriculture proponents fancifully call the agriculture this population practices “agroecology.” But it is mostly just old–fashioned subsistence farming, where the world’s poorest eke out their survival from the soil.
They are the poorest farmers in the world, who dedicate most of their labor to growing enough food to feed themselves. They forego synthetic fertilizers and most other modern agricultural technologies not by choice but because they can’t afford them, caught in a poverty trap where they are unable to produce enough agricultural surplus to make a living selling food to other people; hence, they can’t afford fertilizer and other technologies that would allow them to raise yields and produce surplus.
At the other end of the spectrum are the world’s richest people, mostly in the West, for whom consuming organic food is a lifestyle choice tied up with notions about personal health and environmental benefits as well as romanticized ideas about agriculture and the natural world. Almost none of these consumers of organic foods grow the food themselves. Organic agriculture for these groups is a niche market—albeit, a lucrative one for many producers—accounting for less than 1 percent of global agricultural production.
As a niche within a larger, industrialized, agricultural system, organic farming works reasonably well. Producers typically see lower yields. But they can save money on fertilizer and other chemical inputs while selling to a niche market for privileged consumers willing to pay a premium for products labeled organic. Yields are lower—but not disastrously lower—because there are ample nutrients available to smuggle into the system via manure. As long as organic food remains niche, the relationship between lower yields and increased land use remains manageable.
The ongoing catastrophe in Sri Lanka, though, shows why extending organic agriculture to the vast middle of the global bell curve, attempting to feed large urban populations with entirely organic production, cannot possibly succeed. A sustained shift to organic production nationally in Sri Lanka would, by most estimates, slash yields of every major crop in the country, including drops of 35 percent for rice, 50 percent for tea, 50 percent for corn, and 30 percent for coconut. The economics of such a transition are not just daunting; they are impossible.
Importing fertilizer is expensive, but importing rice is far more costly. Sri Lanka, meanwhile, is the world’s fourth largest tea exporter, with tea accounting for a lion’s share of the country’s agricultural exports, which in turn account for 70 percent of total export earnings.
There is no conceivable way that export sales to the higher value organic market could possibly make up for sharp falls in production. The entire global market for organic tea, for example, accounts for only about 0.5 percent of the global tea market. Sri Lanka’s tea production alone is larger than the entire global organic tea market. Flooding the organic market with most or all of Sri Lanka’s tea production, even after output fell by half due to lack of fertilizer, would almost certainly send global organic tea prices into a spiral.
The notion that Sri Lanka might ever replace synthetic fertilizers with domestically produced organic sources without catastrophic effects on its agricultural sector and environment is more ludicrous still. Five to seven times more animal manure would be necessary to deliver the same amount of nitrogen to Sri Lankan farms as was delivered by synthetic fertilizers in 2019. Even accounting for the overapplication of synthetic fertilizers, which is clearly a problem, and other uncertainties, there is almost certainly not enough land in the small island nation to produce that much organic fertilizer. Any effort to produce that much manure would require a vast expansion of livestock holdings, with all the additional environmental damage that would entail.
Sustaining agriculture in Sri Lanka, for both domestic consumption and high-value export products, was always going to require importing energy and nutrients into the system, whether organic or synthetic. And synthetic fertilizers were always going to be the most economically and environmentally efficient way to do so.
Sri Lankan President Gotabaya Rajapaksa (center) waves to supporters during a rally ahead of the upcoming parliamentary elections, near Sri Lanka’s capital, Colombo, on July 28, 2020.ISHARA S. KODIKARA/AFP via Getty Images
While the proximate cause of Sri Lanka’s humanitarian crisis was a bungled attempt to manage its economic fallout from the global pandemic, at the bottom of the political problem was a math problem and at the bottom of the math problem was an ideological problem—or, more accurately, a global ideological movement that is innumerate and unscientific by design, promoting fuzzy and poorly specified claims about the possibilities of alternative food production methods and systems to obfuscate the relatively simple biophysical relationships that govern what goes in; what comes out; and the economic, social, and political outcomes that any agricultural system can produce, whether on a regional, national, or global scale.
Rajapaksa continues to insist that his policies have not failed. Even as Sri Lanka’s agricultural production was collapsing, he traveled to the U.N. climate change summit in Glasgow, Scotland, late last year, where—when not dodging protests over his human rights record as Sri Lankan defense minister—he touted his nation’s commitment to an agricultural revolution allegedly “in sync with nature.” Not long afterward, he fired two government officials within weeks of each other for publicly criticizing the increasingly dire food situation and fertilizer ban.
As farmers begin their spring harvest, the fertilizer ban has been lifted, but fertilizer subsidies have not been restored. Rajapaksa, meanwhile, has established yet another committee—this one to advise the government on how to increase organic fertilizer production in a further demonstration that he and his agricultural advisors continue to deny the basic biophysical realities that constrain agriculture production.
Much of the global sustainable agriculture movement, unfortunately, has proven no more accountable. As Sri Lankan crop yields have plummeted, exactly as most mainstream agricultural experts predicted they would, the fertilizer ban’s leading advocates have gone silent. Vandana Shiva, an Indian activist and ostensible face of anti-modern agrarianism in the global south, was a booster of the ban but turned mute as the ban’s cruel consequences became clear. Food Tank, an advocacy group funded by the Rockefeller Foundation that promotes a phase-out of chemical fertilizers and subsidies in Sri Lanka, has had nothing to say now that its favored policies have taken a disastrous turn.
Soon enough, advocates will surely argue that the problem was not with the organic practices they touted but with the precipitous move to implement them in the midst of a crisis. But although the immediate ban on fertilizer use was surely ill conceived, there is literally no example of a major agriculture-producing nation successfully transitioning to fully organic or agroecological production. The European Union has, for instance, promised a full-scale transition to sustainable agriculture for decades. But while it has banned genetically modified crops and a variety of pesticides as well as has implemented policies to discourage the overuse of synthetic fertilizers, it still depends heavily on synthetic fertilizers to keep yields high, produce affordable, and food secure. It has also struggled with the disastrous effects of overfertilizing surface and ground water with manure from livestock production.
Boosters of organic agriculture also point to Cuba, which was forced to abandon synthetic fertilizer when its economy imploded following the Soviet Union’s collapse. They fail to mention that the average Cuban lost an estimated 10 to 15 pounds of body weight in the years that followed. In 2011, Bhutan, another darling of the sustainability crowd, promised to go 100 percent organic by 2020. Today, many farmers in the Himalayan kingdom continue to depend on agrochemicals.
In Sri Lanka, as elsewhere, there is no shortage of problems associated with chemical-intensive and large-scale agriculture. But the solutions to these problems—be they innovations that allow farmers to deliver fertilizer more precisely to plants when they need it, bioengineered microbial soil treatments that fix nitrogen in the soil and reduce the need for both fertilizer and soil disruption, or genetically modified crops that require fewer pesticides and herbicides—will be technological, giving farmers new tools instead of removing old ones that have been proven critical to their livelihoods. They will allow countries like Sri Lanka to mitigate the environmental impacts of agriculture without impoverishing farmers or destroying the economy. Proponents of organic agriculture, by contrast, committed to naturalistic fallacies and suspicious of modern agricultural science, can offer no plausible solutions. What they offer, as Sri Lanka’s disaster has laid bare for all to see, is misery.
