Fertiliser saga
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The protests by farmers have all but ended. There are a few but not as widespread and volatile as they were in the second half of last year after chemical fertiliser was banned in May 2021 and farmers roared in protest.The fuel queues have also reduced with the introduction of the QR code though there was panic this week that the fuel supply had been affected. Gas queues have also ended.
In other news this week, a mission from the International Monetary Fund (IMF) arrived and had talks with the President and other officials. A staff-level agreement by the IMF on providing a bailout package to Sri Lanka depends on the presentation of a plan of action on restructuring foreign debt, an exercise yet to be finalised by foreign experts. The Opposition’s economic team headed by Dr. Harsha de Silva seems to be on the government page, saying they hope a deal with the IMF would be clinched.
As I dwelt on these issues, the phone rang. It was Pedris Appo, short for Appuhamy, a retired agriculture expert who is into farming a range of crops.
“Hello…..hello,” I said, adding: “I haven’t spoken to you for a long time.”
“That’s right……I was thinking of you when I went through recent developments in the agriculture sector,” he said.
“Well the government has lifted the ban on chemical fertiliser; the ban was a foolish move by the former president based on unscientific theories,” I said.
“Yes, while in theory it’s nice to reduce chemicals in the production of our crops, it has to be done in a scientific way, largely based on a gradual departure from chemical fertiliser to organic fertiliser. In this case, it was a one-shot ban which badly affected farmers and their production,” he said.
The chemical fertiliser saga has resulted in crop losses in the 2021/22 September to March Maha season and during this year’s April-August Yala season.
The ban on chemical fertiliser imposed on May 6, last year, was reversed on November 30, but the lagged impact of the ban continues as fertiliser prices also rose in the international markets and there were insufficient stocks for the Yala season. While initial crop estimates revealed that production is likely to drop during Yala, it may improve, according to latest information.
Fertiliser prices in the world market have declined to US$690 per metric tonne from $800 per MT, but the supply has also been disrupted, to some extent, by the shortage of foreign exchange which continues to dog the Sri Lankan economy. Earlier this week, the government banned 300 imported items as it sought to ration foreign exchange. The authorities have also plugged the open account system, which was permitted for a short period, and now all goods are based on the opening of Letters of Credit (LCs).
The open account system allows importers to secure goods from abroad without opening LCs and is based on the payment being made at a later stage.
According to official sources, the government is to provide paddy farmers with 70 per cent of the total requirement of fertiliser for the forthcoming Maha season at subsidised rates and the balance to be purchased either from the Agrarian Centres or the open market. A decision on this was due to be taken sometime this week.
Agriculture experts like Peradeniya University Weed Science Senior Prof. Buddhi Marambe point out that it’s a good move by the government to provide 70 per cent of the fertiliser.
He said the balance 30 per cent can be purchased by farmers as either chemical fertiliser in the open market or as organic fertiliser from the Agrarian Centres.
The government has also been considering a food security plan for Sri Lanka in a bid to avert a national food crisis. According to an official report, the United Nations estimates that 5.7 million people in Sri Lanka need humanitarian assistance, with 4.9 million – 22 per cent of the population – being food insecure, meaning they do not have consistent access to adequate, nutritious food.
While the Central Bank has said it is working out a schedule of foreign exchange inflows to meet critical import needs for this year, the inflows are still slow and causing concern to economic planners, as government officials worry over rising inflation, particularly food inflation.
The World Bank said this week that Sri Lanka was ranked fifth among the 10 countries with the highest food price inflation in its latest assessment. Lebanon, Zimbabwe, Venezuela and Turkey were the first four, followed by Sri Lanka, Iran, Argentina, Suriname, Ethiopia and Moldova.
In July, headline inflation, as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI) increased to 66.7 per cent from 58.9 per cent in June 2022. Food inflation (Y-o-Y) rose to 82.5 per cent in July 2022 from 75.8 per cent in June 2022, while Non-Food inflation (Y-o-Y) increased to 52.4 per cent in July 2022 from 43.6 per cent in June 2022.
As I was close to winding up my column, the trio was having their usual conversation under the margosa tree. Walking into the kitchen to pick up the second mug of tea that had been prepared for me, I could hear Kussi Amma Sera saying: “Ape gamey, goviyo balaporoththu wenawa mey maha kanneta honda aswennak ganna (In our village, farmers are hoping they could get a better harvest this time for the Maha season).”
In response, Serapina said: “Den pohora thiyenawa-ne. Ithin apith balaporoththu wenne prashnayak nethi-wewi kiyala (Fertiliser is now available, so we hope there won’t be any issues).”
But Mabel Rasthiyadu, who was sipping tea, noted: “Prashna thama ivara-ne, mokada govin wishala padu windala thiyenne pahu giya samaye. Indana mila ihala gihin-uth thiyanawane, thava duratath karadara wedi wenna (The problems are still not over, as farmers had huge losses during the last season. The high cost of fuel is making it even more difficult these days).”
As I walked back to the office room, a mug of tea in one hand, I reflected on the fuel costs which have been increasing sharply in recent times and affecting all sectors of the economy. Yes, the fuel queues have reduced but fuel prices are exorbitantly high and beyond the reach of the middle class.
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