ECONOMYNEXT – Sri Lanka’s government will buy paddy at prices higher than a guaranteed price and sell at current prices to consumers if a ban on chemical fertilizer reduces yields, President Gotabaya Rajapaksa had said.
Sri Lanka has said chemical fertilizer will be banned to save 400 million dollars in foreign exchange spent on imports and about 50 billion rupees of fertilizer subsidies will be saved, which can be re-directed to farmers as subsidies.
“The President said that the government is ready to buy paddy for a higher price than the guaranteed price if there is any reduction in the yield due to the use of organic fertilizer,” President Rajapaksa had told a meeting on creating a ‘green’ economy, his office said.
“Therefore, he said the farmers should not have any fear in the initiative.
“The President said that the government is ready to bear the cost to ensure that the consumers can purchase rice for existing prices.”
President Rajapaksa had been addressing a ‘Presidential Task Force on Creating a Green Sri Lanka with Sustainable Solutions to Climate Change’ this week.
President Gotabaya Rajapaksa said that the decision to start using organic fertilizer was taken towards endowing a healthy future generation to the country.
Under ‘Vistas of Prosperity and Splendour’ President Rajapaksa’s election manifesto had said “agricultural sector of the country should be transformed to use organic fertilizers entirely”, the statement said.
An earlier winning election manifesto had proposed subsidized fertilizer for farmers at a time when the Federal Reserve was printing money and pushing up commodity prices in the run up to a massive housing and commodity bubble which ended in the ‘Great Financial Crisis’.
The Fed is again printing money and driving up commodity prices.
Sri Lanka has also been printing money after tax cuts in December 2019 for a ‘fiscal stimulus’ led to a collapse in state finances which was worsened by a Coronavirus pandemic and imposed the worst import controls since the 1970s.
Money printing creates forex shortages. In 2020 Sri Lanka ran a 13.9 percent fiscal deficit. (Colombo/May14/2021)