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Friday December 9th, 2022

Sri Lanka tea farms fear 40-pct crop loss in 2022, rubber wipe-out over fertilizer ban

ECONOMYNEXT – Sri Lanka’s tea output could fall 40 percent in 2022 and rubber could be wiped out by leaf disease, threatening livelihoods and export revenues, if a fertilizer agro-chemical ban suddenly imposed this year is continued, industry officials said.

“In 2022, all experts estimate that we will record reduction in tea exports over 40 percent,” Bathiya Bulumulle, President of Sri Lanka’s Planters’ Association representing managers of commercial tea plantations and factories, who was re-elected for a second time said at its annual general meeting.

Severe Crop Losses

“With an immediate halt to use of fertilizer of agro-chemicals, the consensus is that there will be severe crop losses, and as a result, a reduction in export revenues by as early as the end of this year.”

Sri Lanka has banned imports of fertilizer saying 300-400 million dollars were spent on it a year and that agro-chemicals caused non-communicable diseases.

Sri Lanka’s central bank has been printing money, triggering forex shortages.

Sri Lanka’s Government Medical Officers Association, an influential policy driving body has said according to Pliny the Elder, a Roman author, ancient residents of the island lived for 140 years, before there were any agro-chemicals.

However, critics have said Pliny the Elder is likely to have been wrong and policy should be made on refutable science.

Over several decades Sri Lanka abandoned evidence-based policy making involving, green papers, white papers, expert consultation and finally public consultation which leads to a law to suddenly resorting to bans through executive action and gazette rule.

Up to now plantations companies are using fertilizer already imported to the country for tea. Crop losses have not been severe up to July, amid good rainfall though down from 2019.

“All this time we were managing with whatever the fertilizer issued by the government,” Bulumulle said.

“But it is too premature to tell what it is going to be. There may be a 30 to 40 percent reduction of crop maybe early next year when there is no adequate quantity of fertilizer given to tea.”

Sri Lanka exported 1.2 billion US dollars of tea in 2020 and 1.3 billion in 2019.

The government at the moment has introduced liquid nitrogen. However its efficacy compared to urea based fertilizer is not yet known, planters said.

Usually, Sri Lanka’s Tea Research Institute or Rubber Research Institute recommends fertilizer and application volumes after study.

Rubber Break

Rubber is also hit by diseases and is under threat without adequate fertilizer.

“By the end of 2021, the industry expects an estimated 20 percent Year-on-Year reduction in output from rubber plantations due to this disease,” Bulumulle, said.

A leaf disease (Pestalotiopsis ) is spreading in the plantations. Already about 20,000 hectares are affected.

Rubber plantation experts have said it has reached an epidemic level.

“This disease results in continuous fall of tree leaves so the Rubber Research Institute has instructed us to give additional dosages of fertilizer,” Bulumulle explained.

Farms need fungicides, Carbendazim and Hexaconazole and also fertilizer to help the trees recover leaves.

“One of the key issues in addressing Pestalotiopsis is the lack of necessary fertilizer and the required agrochemicals,” Bulumulle said.

“Since rubber trees lose their foliage due to the disease, to compensate and provide extra nourishment for foliage re-growth, the Rubber Research Institute’s main recommendations is to apply additional inorganic fertilizer,”

The shortage of fertilizer is also going to hinder progress on replanting of rubber, given that the uptake of fertilizer is most crucial when rubber is in the nursery phase, Bulumulle said.

The planters are sounding the alarm, says this could be as bad as the “coffee blight of late 1800s” without fertilizer.

Sri Lanka was a prominent coffee producer in the late 1800s when a disease known as ‘coffee rust’ blight wiped out Sri Lanka’s coffee plantations in the late 1800s.

By next year, planters predict that if crop falls companies will not be able to provide work for the staff.

About 120,000 work in the regional plantation companies. Similar plight will fall on smallholders the PA warned.

“For replanting too, the entire industry – including tea smallholders – who account for over 70 percent of total tea production, need fertilizer for their nurseries,” Bullumulla explained.

“Without it, we cannot grow viable cultivars.”

Planters also said that once a market is lost, especially for tea, it cannot be regained. (Colombo/Sept30/2021)

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Sri Lanka shares fall on profit taking after nine sessions

ECONOMYNEXT – Sri Lanka shares slipped on Friday after gaining for nine straight sessions reverting from its highest gain in more than seven weeks on profit taking, brokers said.

“Bourse regressed to red ending the 9-day winning streak as investors resorted to book profits in blue chip counters,” First Capital Market Research said in it’s daily note.

The main All Share Price Index (ASPI) closed 0.54 percent or 47.84 points lower at 8,843.90.

The market witnessed a turnover of 1.6 billion rupees, lower than this year’s daily average turnover of 2.9 billion rupees.

The market saw a net foreign inflow of 1 million rupees. The total net foreign inflow stood at 22 billion rupees so far for this year.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis.

The government is in discussions with Asian Development Bank (ADB) and World Bank to get loans of 1.9 billion US dollars after a reform program with the International Monetary Fund is approved.

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

In the last few sessions, market gained after the Central bank governor said interest rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

The more liquid index S&P SL20 closed 0.59 percent or 16.77 points lower at 2,827.72.

So far in December ASPI gained 2.2 percent.

The ASPI gained 0.5 percent in November after losing 13.4 percent in October.

It has lost 27.6 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

John Keells Holdings pulled the index down to close at 1.5 percent lower at 147 rupees.

Aitken Spence lost 2.0 percent to close at 141 rupees and Commercial Bank closed 1.4 percent down at 50.50 rupees a share. (Colombo/Dec09/2022)

 

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Sri Lanka bond yields end higher, kerb dollar Rs370/371

ECONOMYNEXT – Sri Lanka bonds yields ended up and the T-bills eased on active trade on Friday, dealers said.

The US dollar was 370/371 rupees in the kerb.

“The bond rates went up, however more interest was seen in the short term bills by the investors” dealers said.

A bond maturing on 01.05.2024 closed at 31.90/32.20 percent on Friday, up from 31.25/70 percent at Thursday’s close.

A bond maturing on 15.05.2026 closed at 30.30/31.30 percent steady from 30.30/31.00 percent.

The three-month T-bills closed at 30.75/31.30 percent, down from 32.00/32.25 percent.

The Central Bank’s guidance peg for interbank transactions was at 363.18 rupees against the US dollar unchanged.

Commercial banks offered dollars for telegraphic transfers between 371.78 and 372.00 for small transactions, data showed.

Buying rates are between 361.78 – 362.00 rupees. (Colombo/Dec 09/2022)

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Foreign minister, US ambassador discuss future assistance to crisis-hit Sri Lanka

ECONOMYNEXT — In a meeting in Colombo, Sri Lanka Foreign Minister Ali Sabry and US Ambassador to Sri Lanka Julie Chung discussed ways in which the United States can continue to support Sri Lanka going forward, the Ambassador said.

Chung tweeted Friday December 09 afternoon that the two officials had reflected on the “twists and turns” of 2022, at the meeting.

Minister Sabry was recently in Washington D.C. where he US Secretary of State Antony Blinken.

A foreign ministry statement said the two officials held productive discussions at the Department of State on December 02 on further elevating bilateral relations in diverse spheres, including the 75th anniversary of diplomatic relations which will be marked in 2023.

Incidentally, Sri Lanka also celebrates the 75th anniversary of its independence from the British in 2023, and President Ranil Wickremesinghe has given himself and all parties that represent parliament a deadline to find a permanent solution to Sri Lanka’s decades-long ethnic issue.

The US has been vocal about Sri Lanka addressing concerns about its human rights record since the end of the civil war in 2009 and was a sponsor of the latest resolution on Sri Lanka passed by the United Nations Human Rights Council. Unlike previous resolutions, this year’s iteration makes specific reference to the country’s prevailing currency crisis and calls for investigations on corruption allegations.

In the lead up to the UNHRC sessions in Geneva, Minister Sabry Sri Lanka’s government under then new president Wickremesinghe does not want any confrontation with any international partner but will oppose any anti-constitutional move forced upon the country.

On the eve of the sessions on October 06, Sabry said countries such as the United States and the United Kingdom, who led the UNHRC core group on Sri Lanka, are greatly influenced by domestic-level lobbying by pressure groups from the Sri Lankan Tamil diaspora.

These pronouncements notwithstanding, the Wickremesnghe government has been making inroads to the West as well as India and Japan, eager to obtain their assistance in seeing Sri Lanka through the ongoing crisis.

The island nation has entered into a preliminary agreement with the International Monetary Fund (IMF) for an extended fund facility of 2.9 billion dollars to be disbursed over a period of four years, subject to a successful debt restructure programme and structural reforms.

Much depends on whether or not China agrees to restructure Sri Lanka’s 7.4 billion dollar outstanding debt to the emerging superpower. Beijing’s apparent hesitance to go for a swift restructure prompted Tamil National Alliance MP Shanakiyan Rasamanickam to warn of possible “go home, China” protests in Colombo, similar to the wave of protests that forced the exit of former pro-China President Gotabaya Rajapaksa.

The TNA will be a key player in upcoming talks with the Wickremesinghe government on a solution to Sri Lanka’s ethnic issue. (Colombo/Dec09/2022)

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