Sri Lanka is in the grip of its worst economic crisis in decades, facing depleted petrol reserves, food shortages and a chronic lack of medical supplies.
More than a month of mainly peaceful protests against the government’s handling of the economy turned deadly last week when supporters of the former prime minister stormed an anti-government protest site in the commercial capital Colombo.
For New Zealanders, the troubles being experienced by Sri Lanka’s 22 million people might trigger humanitarian concerns but – at first blush – have little to teach us about good policy.
Kiwis therefore may shrug off Sri Lanka’s plight as the consequence of incompetence by the governing Rajapaksa brothers, one of whom has resigned as prime minister, the other whose job as president is under threat.
But the policy blunders that precipitated the crisis should be studied by policy wonks in this country
Essentially, an ill-conceived national experiment in organic agriculture triggered a rapid and massive drop in farming output and food shortages. A country that had been self-sufficient in rice suddenly had to import it.
The situation in the tea industry was described as critical, with farming under the organic programme being described as 10 times more expensive but producing half the yield by the growers.
The Rajapaksa brothers had decided that the country should go organic in anticipation of global warming. The use of nitrogen fertilisers was banned.
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 per cent 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, the government partially lifted its fertiliser ban on key export crops and, in response to 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 earlier this year. But it continued for some others.
The government has offered hundreds of millions of dollars to farmers as direct compensation and in price subsidies to rice farmers, although this fell far short of the damage and suffering they incurred.
Before the pandemic’s outbreak, Sri Lanka had achieved upper-middle-income status. By March this year, half a million people had sunk back into poverty, and soaring inflation and a rapidly depreciating currency had forced Sri Lankans to cut down on food and fuel purchases as prices surged.
And therein can be found key lessons for NZ. Only this week the lobby group Greenpeace was lamenting the failure of the Ardern Government to ban what it calls “synthetic nitrogen fertiliser”.
Here is what the lobby group said:
“Greenpeace has dubbed the Government’s Emissions Reduction Plan an ‘Omissions Ridiculous Plan’, for its failure to address New Zealand’s biggest climate polluter – the dairy industry.
“Lead agriculture campaigner Christine Rose says, ‘Intensive dairying is the number one cause of climate pollution in Aotearoa, so it’s absolutely staggering to see that the Emissions Reduction Plan fails to include policy that would reduce cow numbers or phase out the synthetic nitrogen fertiliser that drives emissions.
“This Emissions Reduction plan is not credible because it fails to deal with the dirty great cow in the room – New Zealand’s biggest climate polluter – intensive dairy,” says Rose.
Despite initial Climate Change Commission recommendations that New Zealand needed to reduce the livestock herd and area farmed, the Government has not included those policies in the plan it has announced.
Other nations have been taking such steps, including the Netherlands which plans to cut the herd by 30% by 2030”.
The Greenpeace statement went on:
“Despite the climate emergency, industrial dairy has yet again been given a free pass that now comes with a huge subsidy from the rest of New Zealand. This is a kick in the guts for New Zealanders who are effectively subsidising the intensive dairy industry due to the industry’s exemption from the ETS. To truly deal with the climate crisis the Government needs a far better plan than they have produced today. A plan that cuts cow numbers, phases out synthetic fertiliser and drives the transition to more plant-based regenerative organic farming,” says Rose.
Point of Order reckons this looks suspiciously like the path that led to Sir Lanka’s economic disaster— and to riots in the streets, a population going hungry, and a nation facing bankruptcy.