Sri Lanka to ban grain imports in neo-illiberal high

ECONOMYNEXT – After years of taxing basic foods to keep prices artificially high and fatten the profits of an inefficient but political powerful farming lobby an administration led by Sri Lanka’s United National Party is planning to ban several cereals outright.

"We have already decided to ban importing Green gram from this year," Minister P. Harrison said in Parliament on Wednesday.

He said that importing black-eyed peas, Kurakkan, Soy beans, Urad, Paddy and Chilly seed will also be banned.

The grain ban plan comes shortly, after the current administration nationalized film distribution in a neo-illiberal move, using a 1971 law.

Harrison belongs to Sri Lanka’s United National Party, which in 1978, overturned a ‘self-sufficient’ economy where all efforts were directed at import substitution, bringing malnutrition to the poor and beggars scrabbled in trash dumps looking edibles.

The 1970s ‘closed economy’ came in the wake of a 1971-73 collapse of the Bretton Woods system of soft-peg, where money printing produced severe ‘foreign exchange shortages’.

But critics say from 2015, when the party came back to government a series of neo-illiberal measures including retrospective taxes and were slapped worsening from the pre-2015 administration, discouraging foreign investment and slowing growth, while monetary instability worsened.

You may also read:

What went wrong; Sri Lanka’s illiberal economics and unsound money : Bellwether

In recent years Sri Lanka’s food prices have been kept higher than the world for years with import taxes to protect special interests of farmers, maize collectors and politically powerful import license holders.

But there had been no outright ban on grain imports.

The food taxes have come despite Sri Lanka government giving free fertilizer for farmers at the expense of tax payers.

The current administration also came to power on a free trade economic platform.

Even now there is protein malnutrition among poorer children. Sri Lanka has been keeping maize and soya bean, which has brought poultry prices down across developing countries and free trading East Asia artificially high, pushing up meat costs in addititon to taxing pulses.

"Despite the inflated price of pulses at the retail level, one gram of protein in pulses is much more affordable when compared to one gram of protein from animal-source foods," a Food and Agricultural Organization study said.

"Furthermore, the affordable price of pulses in terms of protein source is particularly relevant for the estate sector in Sri Lanka, as household expenditure on pulses is higher than any other animal-source and higher than expenditure in rural and urban areas, signifying a reliance of pulses in this sector."

According to the household income survey of Sri Lanka’s statistics office in 2016, stunting below the age of 5 was 17 percent, peaking at 34 percent in Nuwara Eliya.

The national prevalance of wasting (below normal weight for age) is 15.1 percent, peaking at 25.4 percnet in Moneragala.

In countries like Vietnam, with free trade an entire generation of kids are growing up taller than their parents after free trade (Vietnamese too short) and a stronger currency, analysts say.

Vietnam abandoned self-sufficency and socialist agriculture starting from 1984 under its doi moi economic rewakening program, and dramatic results including poverty were seen from the late 1990s following currency reforms (Vietnam remarkable agriculture progress after Doi Moi). In Vietnam, below normal weight for kids under 5 years of age fell from around 47 percnet in 1984 at the start of Doi Moi to around 13 percent by 2018.

But in Sri Lanka profits of farmers who cannot produce food at international prices and the ideology of economic nationalists had been placed before than of malnourished children, critics say.

However, Harrison said that Sri Lanka wanted to ban grain imports because farmers could produce them, echoing the words of economic nationalists.

“Sri Lanka has the potential to produce enough for the consumption of the country and stop importing from abroad,” he said.

“It is sad to say as an agriculture based country we are importing these crops for consumption. In the last year only we have imported 10,000 metric tons of green grams to the country.”

He said that local research will allow Sri Lankan farmers to boost yields of cereal crops.

“Because of the positive results of the researches done by the research institute of the Agriculture Department, we now have the potential to produce the necessary quantity to sustain the country and also to export," Harrison said.