Understanding Sri Lanka’s Food Crisis

The loss of foreign exchange from tourism and migrant workers shook the national economy. For months, Government didn’t have enough foreign currency to buy even necessary supplies from abroad such as food, oil, paper, etc. Shortage of food and fuel has caused prices to soar and frequent power cuts and lack of medicines have brought the health system to the verge of collapse. A long queue has been formed in front of a shop selling gas cylinders of which prices have soared to nearly 5000 rupees ($14) from 2,675 rupees in April and People have started protesting on the streets of the capital demanding the resignation of its President Mr. Gotabaya Rajapaksa. This political and economic unrest has also given rise to a severe food crisis that Sri Lanka’s citizens are facing. Food prices have gone up by 57% as of April 2022 (Source: World Economic Forum), and with reduced availability and accessibility due to disruption in supply chains, 70% of Sri Lankan households have reduced the amount they eat (Source: UNICEF). In response, the government is giving its 1 million public sector workers every Friday off for the next 3 months to grow food, although this looks like a cover story of the underlying issue, i.e., shortage of fuel and rather than coming up with a strategy to prioritize fuel allocation for key sectors of the economy and to reduce fuel consumption, the government decides on this arbitrary measure to reduce travel demand.

Sri Lanka’s Human Development and socio-economic indicators have always been better than its South Asian neighboring countries. After the civil war ended in 2009, Sri Lanka made significant progress in these indicators such as Human Development Index (HDI), Literacy rate, and health-related indicators. According to the world bank, it showed a considerable low poverty rate in the South Asian region at 0.77 percent, with India at 13.42 Percent, Bangladesh at 15.16 Percent, and Pakistan at 5.23 Percent, and aimed to achieve a nationally determined contribution toward sustainable Development goals by 2030. Despite the progress made, with the onset of COVID-19, a trade deficit of $3 billion (US) was created, accumulation of debt interest exceeded the US $78 million. A decline in foreign reserves from (US) $7,600 million to (US) $2,311 million by May 2022 and export revenue dropped from (US) $1,057 million in March 2022 to (U S) $915.3 million in April 2022, that’s a 3.4 percent decline in revenues.

WHAT LEAD TO THIS FOOD AND ECONOMIC CRISIS IN SRI LANKA?

Sri Lanka lost its first ranking position in 2017 on the Food Security Index for South Asia dropping 3rd place by 2021. Food security is a crucial aspect that poses a long-term socio-economic impact on the development of a country. Today, Sri Lanka’s experiencing food insecurity due to economic crisis in two ways: First, the escalating human unrest, protests, and long queues for food; second, the extreme dependency on foreign countries, for credit and aid.

However, COVID-19 can only be partially held accountable for the ongoing food insecurity in the country. As Sri Lanka pushed through the pandemic with high production despite the changes in weather patterns and climatic conditions. The country produced a great harvest of rice and tea during the pandemic; therefore, the impact would have been marginal.

IMPRUDENT POLICIES 

Rice has been a staple diet for the majority of rural poor households by fulfilling their caloric requirement to a great extent. Sri Lanka became self-sufficient in rice by 2010 and was producing an average volume of 900,000 metric tons of fruits and vegetables. Tea alone was contributing 17% of total Sri Lanka’s exports. Thus, food security was ensured within a range of affordability but due to the aftermath of the COVID-19 pandemic and rising economic crisis, Sir Lanka lost its food security. Mainly due to two political blunders.

First, by replacing subsidies given on fertilizers with the coupon system. For decades farmers of Sri Lanka have been benefitting from subsidies given on fertilizers while buying NPK fertilizers to give them a good return even if their yield is sold at a low price. This policy aided low-income farmers as vegetables, fruits, and rice became affordable. Unfortunately, following the change in the policy, farmers used the coupons to buy non-essential agricultural items. Resulting, in a decline in yield production in both Yala and Maha seasons- The main crop production seasons in Sri Lanka. The situation was further extended by the extended drought. Therefore, the decline in the production of rice and vegetables was compensated by imports.

Secondly, the current president, Gotabaya Rajapaksa took an impolitic decision to ban chemical fertilizers and agrochemicals under the slogan of ‘organic agriculture’ in May 2020. However, there was not a proper mechanism or transition strategy to produce enough organic manure for a possible disease/pest attack. A lack of sufficient organic input, technology, and substitutions to cope up with farming issues resulted in, the farmers losing their harvest due to poor crop productivity, pest, and disease attacks, which compelled many to switch to a minor job in the industrial/construction sector. Although the ban on agrochemicals was lifted in November 2021, the impact of this decision is still seen amidst skyrocketing inflation making food inaccessible. A decline of 35 percent in fruits and 40 percent in paddy production during the period of 2020-2021 are indicative of future decline. Sri Lanka’s largest foreign exchange earning crop Tea, saw a decline of almost 50 percent as a result.

The root of this current economic crisis goes way back to 1948 when Sri Lanka got its independence. Unfortunately, Sri Lanka’s always being a victim of its ad-hoc policies. The coming of the Ceylon Citizenship Act in 1948 gave rise to an immense nationwide political and social unrest, ending in a civil war that took the lives of nearly 8,000 to 10,000 people leaving its economy completely in ruins, and instead of developing its nation post-independence, Sri Lanka’s government wasted its 26 years in a futile war costing them the US $200 billion. Its economic crisis is putting people out of employment, small business has become non-lucrative, and people have lost their livelihood. Moreover, there’s a disruption in the supply chain due to the energy crisis. Nutrient-rich food such as eggs, meat, lentils, and milk have become unaffordable to low-income earning groups, which is putting vulnerable groups such as the elderly, children, and pregnant ladies a risk of food and nutritional security, not to mention Sri Lanka’s malnutrition rates in children are already among the highest in the world at 15%

FUTURE AHEAD

Sri Lanka is urging its farmers to go back to paddy cultivation and has given assurance of taking pragmatic steps to increase food production. As an island nation, Sri Lanka should also look into supporting the fishing industry which could be a rich source of protein to the nation. 

Sri Lanka’s asking support from its neighbouring countries and with the help of the South Asian Association for Regional Cooperation (SAARC), it is expecting for 100,000 metric tonnes of food donations or subsidized sales. Japan has ensured financial assistance, credit lines, as well as food donations with loans and essential items, and India, has extended the US $1.5 billion in credit lines to allow Sri Lanka to keep meeting a portion of its food and energy.

The government is expected to increase its value-added tax (VAT) from 8 percent to 12 percent as well as its corporate tax expecting to increase the government’s revenue by 65 billion to ease the debt. The government also needs to take care of its policies to help low-income earning groups to help them recover, maybe through subsidies or monetary donations, and create various employment opportunities for them. The government also needs to take care of vulnerable groups, as this food crisis can bring a threat to nutritional security among children, elderly, and pregnant ladies by Awareness of utilization, dietary diversity, and gardening. The disruption in the supply chain needs to be strengthened by ensuring first to last-mile connectivity and creating a link between producers and the market, creating market opportunities for small business owners is also essential, especially amidst political and social unrest.

All these are short-term measures for combating the ongoing food crisis. In the long run, Sri Lanka needs to focus on its credit lines provided to the farmers, and the provision of credit and loan facilities for the purchase of seeds and fertilizers needs to be taken care of. Sri Lanka has an agricultural favourable climate, fertile soil, higher biodiversity, and gene pool but still, most of its inputs such as seeds, agrochemicals, machines, and technology are currently being imported, which also makes them more prone to global price fluctuations, availability, and limited quantity. Sri Lanka’s government needs to prioritize these measures and overcome the grappling issues in their policies for the long term, to emerge as a stronger nation.  

References:-

1.       Sri Lanka: Food security impacted by flawed economic policies

https://www.orfonline.org/expert-speak/sri-lanka-food-security-impacted-by-flawed-economic-policies/

2.      India rushes food, medicine to bankrupt Sri Lanka

https://timesofindia.indiatimes.com/world/south-asia/india-rushes-food-medicine-to-bankrupt-sri-lanka/articleshow/92440913.cms

3.      ‘We are going to die’: Food shortages worsen Sri Lanka crisis

https://www.aljazeera.com/news/2022/5/20/we-are-going-to-die-food-crisis-worsens-misery-of-sri-lankans

4.     Sri Lanka gives public-sector workers extra day off to grow food

https://www.weforum.org/agenda/2022/06/sri-lanka-public-workers-extra-day-off-worst-economic-crisis/

5.      Understanding the economic issues in Sri Lanka

https://www.orfonline.org/research/understanding-the-economic-issues-in-sri-lankas/

Pic Courtesy-IDSA GIS LAB

(The views expressed are those of the author and do not represent views of CESCUBE.)