Opinion Kees Maas
Today at 14.00 – Kees Maas
A riot broke out among the people of Sri Lanka last weekend. Incumbent President Gotabaya Rajapaska’s official residence in the capital Colombo has been stormed by thousands of protesters demanding the president’s resign. The president has fled and been brought to safety by the military.
The economy of Sri Lanka has completely collapsed and inflation is skyrocketing. In addition, there is a huge food shortage in the country due to wrong government decisions 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 into a fully organic farm that would no longer use fertilizers and pesticides. It was also promised that there would be enough food and that it would also provide a better income model for local farmers.
Prohibition of fertilizers and pesticides
After the 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 fell 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 supply 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 some important crops such as tea and coconuts. This exception coincided with the sharp worldwide increase in fertilizer prices.
The government offered farmers compensation and pumped $ 200 million back into agriculture. However, this hardly offset the losses suffered by farmers from crop failure and / or halving their yields. Inflation was again set in motion in the country, which became more and more dependent on food imports and could barely export. It was disturbing. Suddenly, the population had to pay three times for its food and was thrown 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 appear to have been reversed for the time being. The uprising of the population is therefore a direct attack on the incumbent regime, which has thrown an entire population into poverty, hunger and distortion through wrong agricultural policy decisions.
The key words for this disaster for this country are: organic farming, food security, idealism, inflation, food dependence, high food prices, economic compensation to farmers and unrest among the population. Find the similarities with Holland …
Kees Maas is the director of the DCA Group. He has more than 25 years of experience in commodity trading, both on the stock exchanges and in the physical market. Maas is a specialist in price risk management and a highly sought-after sparring partner for food companies for their sales and purchasing strategy.
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