ECONOMYNEXT – Sri Lanka will ban import and use of fertilizer, insecticide and weedicide on which hundreds of millions of dollars and give subsidies to farmers for cross losses, according to President Gotabaya Rajapaksa, a statement said.
Though massive amounts are spend on chemical fertilizer, weedicide and insecticide there is no qualitative growth in agriculture, President Rajapaksa had said at a meeting
Sri Lanka will ban chemical fertilizer, insecticide and weedicide but will give financial support to boost organic fertilizer.
“The use of chemical fertilizers and pesticides pollutes rivers and streams and poses a serious challenge to quality drinking water supply,” the President was quoted as saying.
“The Government expenditure with regard to a number of non-communicable diseases, including kidney disease and cancer, is rising every year.
“The loss of livelihoods of the people living in rural areas, deteriorating health conditions and the declining of people’s productivity have become challenges the country is facing today.
“Reduced yields as a result of infertility of soil and the destruction of biodiversity can be witnessed.”
The government the money spent on fertilizer subsidies to cover any crop losses of the farmers. About 50 billion rupees was spent on fertilizer subsidies a year.
“Farmers may assume that giving up on chemical fertilizers will reduce the yield,” the statement said.
“If it does, the President guaranteed that the Rs. 50 billion spent annually on chemical fertilizers will be used to recover their loss.”
Sri Lanka has spent 221 million US dollars on fertilizer imports in 2019. With the rise in oil prices the cost of imported fertilizer could rise to 300 to 400 million US dollars the statement said.
The entire state machinery should be mobilized the population for this objective, President had said.
There could be objections from farmers as it was a sensitive matter for most engaged in agriculture.
Basil Rajapasksa, the head of the Presidential Task Force for Economic Revival had noted that the goal could be “easily accomplished through the contribution of religious leaders, organizations affiliated to farmers, professionals, researchers, government officials, the media and all other relevant parties.”
Sri Lanka is facing foreign exchange shortages in the wake of unprecedented money printing under so-called Modern Monetary Theory.
Sri Lanka has faced forex shortages from shortly after a Latin America-style central bank with a soft-pegged exchange regime was set up in 1950 allowing money to be printed for open market operations or to finance the budget deficit.
From then on most economic programs have failed as policy was directed to ‘save foreign exchange’.
When money is printed to push up domestic credit imports exceed dollar inflows and it is no longer possible to hold the exchange rate.
The soft-peg has made the rupee vulnerable Federal Reserve money printing (rising commodity prices) as money is printed to subsidize oil or other commodities, and also to eventual Federal Reserve tightening as domestics rates are not raised in step, analysts have shown.
The Fed is now printing money driving up commodity prices.
Analysts and economists have called for laws to restrain discretionary domestic operations of the central bank and control its discretionary powers so that it cannot trigger monetary stability and it is possible to engage in ordinary economic activities.
Sri Lanka’s monetary instability started to worsen from around 2015 with ‘flexible’ inflation targeting and a ‘flexible’ exchange rate involving fully discretionary policy, critics have said. (Colombo/April30/2021)