A deep economic crisis has hit Sri Lanka hard. Images of angry protesters storming the presidential palace went viral. Shortly after the storm, the theory began to circulate that sustainability had caused the economic crisis in Sri Lanka. The policy of organic farming would have fueled a food crisis. At times like these, it always pays to do your homework. So let’s see. What caused the crisis in Sri Lanka, what was the role of organic farming and what can we learn from this?
Sri Lanka depends on imports to maintain living standards. Fuel is Sri Lanka’s largest import commodity. Without imports, no fuel and no electricity. In addition, about a quarter of the calories consumed by Sri Lankans come from imported food. Without imports, you will starve. How does Sri Lanka pay for fuel and food? With dollars. But only the US central bank can print dollars, so Sri Lanka has to import or borrow dollars.
Sri Lanka’s economy is hugely dependent on tourism for dollars. About half of the dollars in the country come in through tourism. The country also exports clothing (50% of exports) and tea (20%). So when the covid pandemic brought tourism to a standstill, the country was immediately in trouble. It no longer had enough dollars to buy fuel and food. They were able to absorb this in a short time by borrowing huge amounts of dollars (mainly from the Chinese). But borrowing dollars cannot continue indefinitely. Sri Lanka was headed for an economic crisis.
Then Sri Lankan President Gotabaya Rajapaksa recalled that in the 2019 election campaign he promised to switch the country’s farmers to organic farming over a 10-year period. He believed that it should also be faster. Last April, the Rajapaksa government made good on that promise by suddenly imposing a nationwide ban on the import and use of synthetic fertilizers and pesticides and instructing the country’s 2 million farmers to go organic.
The reason was simple, he wanted to save money. In 2020, the total cost of fertilizer imports and subsidies was nearly $500 million per year. By banning synthetic fertilizers, Rajapaksa seemed to kill two birds with one stone: the country would need fewer dollars, and it reduced the huge expenditure on agricultural subsidies.
The result was terrible. Despite claims that organic methods would produce yields equivalent to conventional farming, domestic rice production fell by 20% in just six months. Sri Lanka was forced to import $450 million worth of rice while domestic rice prices rose by about 50%. The ban also destroyed the country’s tea crop, reducing exports. The policy has since been reversed.
Lessons for the European Union
The accelerated adoption of organic farming was therefore a response to a crisis, not the cause of the crisis. Nevertheless, it did not help. The European Union’s goal is for 25% of agriculture to be organic by 2030. Are we headed for a similar crisis, or can we still learn from this failure?
According to the Dutch Agricultural Council for Sri Lanka, Michiel van Erkel, the lesson is that the expansion of organic farming must be done step by step. ‘The transformation from traditional to organic farming takes time’, also analyzes the Dutch ambassador Tanja Gonggerei in the Sri Lankan newspaper. Daily Mirror.
The EU is not in the same currency crisis as Sri Lanka. There will therefore be no immediate reason to stop the import of artificial fertilizers and pesticides. But even without a currency crisis, developments in Sri Lanka make it clear that agriculture is a fragile system that needs to be managed with policy.
Organic farming does not cause an economic crisis, mindless politics does.