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Wednesday September 29th, 2021

Sri Lanka plans to export sugar for Rs2,500 a kg after fertilizer ban: Minister

ECONOMYNEXT- Sri Lanka could export sugar at 2500 rupees a kilogram (about 12 US dollars) after banning agro-chemicals, and also produce 20 percent of the country’s organic fertilizer, a minister said.

Farmers will be saved with a superior organic fertilizer produced two state sugar firms, State Minister of Development of Minor Crops including Sugarcane, Maize, Cashew, Pepper, Cinnamon, Cloves, Betel Related Industries and Export Promotion Janaka Wakkumbura said.

State sugar enterprises were aiming to get an organic certification by 2023 and export sugar at high prices, he said.

The firms were now operating as Latin America style ‘import substitution industries (ISI)’. However the minister is trying to make them into export companies.

“If we get that organic certificate then sugar that is sold at Rs 115 per kg in Sri Lanka can be sold for Rs 2500 per kg in foreign markets without increasing the local market price of sugar,” Wakkumbura said on July 21.

Economists and philosophers usually blame losses of state enterprises on the lack of imagination and innovation which cannot keep up with the voluntary choices made in the market by customers involving free exchange and of resorting to coercion and totalitarian methods to operate state agencies.

Sri Lanka’s state sugar firms initially ran billions of rupees of losses after expropriation.

The firms then made profits with the help of high import taxes on brown sugar and ethanol, diverting import duties that would otherwise have gone to the Treasury (tax arbitrage).

Related Sri Lanka sugar SOE making profits after ethanol ban

Last year ethanol imports were banned, giving sugar SOEs more profits. In export markets there are no governments to tie the hands of customers and force them to buy the products of Sri Lanka state enterprises, forcing the firms to compete.

The state sugar firms which were expropriated in 2011 will also produce organic fertilizer, catering to the void created by the chemical fertilizer band.

“We expect to produce 20 per cent of the fertilizer demand in Sri Lanka,” Wakkumbura said.

Sri Lanka’s agriculture sector is in crisis with widespread farmer protests after fertilizer imports after authorities banned chemical fertilizer saying it will ‘save foreign exchange’ and reduce kidney disease.

Two state enterprises involved in sugar production and cane farming will also produce 20 percent of the country’s organic fertilizer he said.

“A sugar bag is produced by one side and ethanol is produced by the other side in Pelwatte and Sevanagala sugar factories…,” Minister Wakkumbura said.

“I hope to get out an organic fertilizer bag from the same factories within this year.”

Minister Wakkumbura dismissed fears by critics that large volumes of organic fertilizers are needed to replace chemical fertilizer.

He said sugar firms will produce granules (keta pohora).

Usually one hectare of sugar cane will use 650 kilograms of chemical fertilizer.

“But only 500 kilograms of the fertilizer we produce is needed,” Minister Wakkumbura said.

“The biggest fear of the people of this country is that they would have to put lorries and tippers full of organic fertilizer for growing crops, but we will produce granular fertilizer using new technology.”

He said the cabinet paper in this regard will be presented to the cabinet in the coming week.

“We know that nothing can be done without fertilizer, we know that farmers cannot do farming without fertilizer,” Wakkumbura said.

“Since foreign exchange is brought to the country through these crops, the government will not intervene to put the farmers in trouble. We have come to power through the votes of the farmers.”

Sri Lanka also plans to double exports from the current 10 to 12 billion US dollars through the export of organic spices and other agricultural products, Trade Minister Bandula Gunewardene said. (Colombo/July22/2021)

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