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The Government’s decision to ban chemical fertiliser and pesticides immediately to promote a green agriculture in the island has serious repercussions on the economy and livelihoods of people. The Government should consider the economic consequences of banning chemical fertilisers immediately and adopt a phased introduction of organic agriculture on scientific principles.

Economic consequences

An immediate ban of chemical fertilisers, weedicides and pesticides would have dire economic consequences on agricultural production, livelihoods of farmers and external finances of the country.

A ban on chemical fertiliser would reduce production of both food crops and export crops, impoverish farmers, decrease food availability, increase food prices and reduce accessibility of low incomes to adequate food, threaten food security, increase import expenditure, reduce export earnings and worsen the country’s weak external finances.

The Government should consider all the economic consequences of such a sudden ban and adopt a phased introduction of organic agriculture on scientific principles and realistic possibilities.

Vibrant discussion

There has been a vibrant discussion on the agronomic and economic consequences of the fertiliser ban in the media, among the scientific community and agricultural economists. Yet, as is often the case, these do not appear to have had any influence on policy makers.

Agricultural economists

A few weeks ago, the Sri Lanka Agricultural Economics Association (SAEA) consisting of a large number of agricultural economists in Sri Lanka and its members abroad had a vibrant discussion on the impact of banning chemical fertiliser.

On the basis of this extensive discussion, a well-considered memorandum titled: The Green Socio-Economic Model and the Agriculture Sector of Sri Lanka: Insights from the Sri Lanka Agricultural Economics Association (SAEA) was sent to His Excellency the President with copies to all important policy makers. Last week’s Sunday Times and other newspapers had succinct summaries of this memorandum titled “The pros and cons of organic agriculture.”

The SAEA’s position

The memorandum said the membership of the SAEA “endorses the Government’s decision to adopt a green socio-economic model for development as we firmly believe that such a strategy would be critical to conserving the environment and improving human health.”

The Association agrees that “green approaches in crop cultivation contribute significantly towards achieving Sustainable Development Goals (SDGs)” and “is of the view that most of the current farming systems in Sri Lanka are unsustainable. Hence, the conversion of them into organic farming systems, in the long run, would help promote health of the people and nurture integrity of the nation’s environment.”

Other countries

The letter points out “that many countries currently take systematic and pragmatic approaches to achieve this long-term objective by first setting targets, standards, and subsequently, investing and promoting farmers to adopt
best practices.”

Serious concerns

In spite of support for a green agriculture, SAEA, brings out serious concerns on the appropriateness of the newly introduced regulation to restrict forthwith the importation of chemical fertilisers and pesticides by the Gazette Extraordinary No 2226/48 of May 6, 2021, to achieve the above-mentioned broader development goal.

Economic losses

The SAEA predicts massive economic losses due to potential yield losses in the absence of proper substitutes for chemical fertilisers and pesticides with the implementation of the import ban on fertilisers and pesticides.

The immediate adverse impacts on food security, farm incomes, foreign exchange earnings and rural poverty can be detrimental to achieving the cherished long-term goals. The SAEA’s primary concerns and the less costly policy alternatives proposed by its members in place of the newly introduced import ban are that “the policy instrument identified by the government to promote organic farming is less appropriate due to potential economic losses and its incompatibility with other policy goals of the Government.”

Costs and benefits: Paddy

It points out that “When converting from conventional agriculture into organic farming, the government should weigh the technological, environmental, and economic costs and benefits.  The preliminary findings of the studies conducted by the SAEA on potential economic losses of the import ban reveal that the average yields from paddy can drop by 25 percent if chemical fertilisers are fully replaced by organic fertilisers and this loss in productivity could reduce the profitability of paddy farming by 33 percent and rice consumption by 27 percent, if paddy is cultivated only with organic fertilisers with a complete ban on rice imports.

In contrast, applying organic fertiliser with the recommended dosages of chemical fertilisers would improve the profitability of farming by 16 percent.

Tea

The SAEA points out that the absence of chemical fertiliser would drastically reduce the productivity of Vegetative Propagated Tea (VPT) by 35 percent and the export volume from 279 to 181 million kg that would in turn result in an income loss of Rs 84 billion.

Estates are likely to incur significant losses compared to those of tea smallholders and could be further aggravated due to increased cost of labour to apply bulky organic fertilisers.

Coconut

The SAEA points out that coconut yields would be reduced by 30 percent if chemical fertilisers and pesticides are not applied. This situation will adversely impact fresh coconut availability, production of coconut oil, desiccated coconut and other coconut products.

Foreign exchange loss

The loss in foreign exchange earnings, it states can be as high as Rs 18 billion, based on the assumption that only 26 percent of the total coconut extent is fertilised. When the additional cost for the importation of edible oils is considered, the loss of foreign exchange earnings will be even higher.

Other consequences

The SAEA memorandum discusses several other adverse economic consequences of the fertiliser ban on GDP, trade balance and other development objectives of the government. It goes on to suggest an alternate strategy for agricultural development.

Alternate strategy

The SAEA suggests the Government uses more cost-effective instruments to achieve the stated health and environmental outcomes in place of the newly introduced import regulation. They note that globally, the approach to environmental protection has been evolving from a regulation-driven approach to a more proactive approach involving voluntary and market-led initiatives.

Policy package

Accordingly, they propose the following three-point policy package to incentivize organic cultivation using safe and environmentally friendly organic fertilisers and pesticides:

1. Open up pathways towards encouraging organic fertiliser production, storage, distribution, etc. and promote Public-Private Partnership (PPP) models to achieve those.

2. Develop national standards for organic fertilisers and pesticides to ensure non-importation of substandard products to the country and domestic production meeting specified quality standards.

3. Improve awareness of various organic farming technologies among farmers through a strengthened extension system. These are discussed in much detail in the memorandum to the President.

Recommendation

The recommendation of the Sri Lanka Agricultural Economics/Association (SAEA) is for the Government to lift the ban on chemical fertiliser and pesticides and to gradually reduce the subsidy on chemical fertilisers.

In conclusion

It would be prudent to consider all the above economic consequences and adopt a phased introduction of organic agriculture on scientific principles and realistic possibilities. The economic consequences of banning chemical fertilisers immediately are horrendous. We should adopt a phased introduction of organic agriculture on scientific principles.