Sri Lanka in revolt over green agricultural policy

An uprising broke out among the population in Sri Lanka last weekend. The official residence of incumbent President Gotabaya Rajapaska in the capital Colombo has been stormed by thousands of protesters demanding the president's resignation. The president has fled and taken to safety by the military.

The economy in Sri Lanka has completely collapsed and inflation is skyrocketing. In addition, there is a huge food shortage in the country due to wrong decisions by the government regarding Sri Lankan agriculture. During his election, the president had promised to reform agriculture into a modern, environmentally friendly agriculture with a revenue model for farmers (sounds like the Dutch government). 

Over a period of ten years, agriculture would be reformed to a fully organic agriculture that would no longer use fertilizers and pesticides. It was also promised that there would be sufficient food and that it would also provide a better revenue model for the local farmers.

Fertilizer and pesticide ban
After his election, President Rajapaska started a little too energetically under pressure from NGOs and environmental groups and banned the use of fertilizers and pesticides in Sri Lankan agriculture in 2021. More than 2 million farmers in Sri Lanka were forced to switch to organic farming.

The result was a complete collapse in agricultural yields and a 20% to 60% reduction in yields of the country's main foodstuffs. Rice yields dropped by 20% in the first six months. Where Sri Lanka was self-sufficient in its rice production for years, the government now had to import $450 million worth of rice to provide the population with food. The production of Sri Lanka's second most important product, tea, also completely collapsed with yield reductions of more than 50%. This fueled inflation and the population became increasingly dissatisfied.

In November, the government temporarily lifted the fertilizer ban on a number of key crops such as tea and coconuts. This exemption coincided with the sharp worldwide increase in fertilizer prices.

The government offered farmers compensation and again pumped $200 million into agriculture. However, this barely offset the losses farmers had suffered from crop failures and/or halving their yields. Inflation was again fueled in the country, which became increasingly dependent on food imports and could barely export. That was disruptive. Suddenly the population had to pay triple for its food and was plunged into poverty.

Below the poverty line
More than half a million Sri Lankans have now fallen below the poverty line. This downward spiral does not seem to be reversed for the time being. The uprising of the population is therefore a direct attack on the incumbent regime, which has plunged an entire population into poverty, hunger and dislocation through wrong agricultural policy decisions.

The keywords of this disaster for this country are: organic farming, food security, idealism, inflation, food dependence, high food prices, financial compensation for farmers and unrest among the population. Find the similarities with the Netherlands...

Keith Maas

Kees Maas is director of the DCA Group. He has more than 25 years of experience in commodities trading, both on the stock exchanges and in the physical market. Maas is a specialist in price risk management and a much sought-after sparring partner for food companies for their sales and purchasing strategy.

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