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Opinion

Plantation sector and foreign exchange crisis

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by Dr. C. S. Weeraratna

csweera@sltnet.lk

It is common knowledge that there is a massive dollar crisis in Sri Lanka, causing a scarcity of many essentials such as fuel, LP gas etc. Governments, instead of implementing any effective plans, obtained loans from foreign sources to solve the foreign exchange crisis. As a result, we have a massive foreign debt burden of about US$ 52 Billion. The cost of debt servicing alone is about US $ 6 billion per year. Our foreign reserve which was around US $ 7 to 8 Billion is now down to well below US $ 1 Billion, If there are no dollars available in the banks in the country, it could result in an acute shortage of medicines and other essential items. Galle Face “Gota go home” and other such protests become the inevitable outcome.

According to Central Bank Annual reports the Trade Deficit ( TD), in Sri Lanka, during 2016-2021 as indicated in Table 1, has remained at high levels, The country has been taking loans to overcome TD but we cannot continue to do so. No country will continue to provide loans to a bankrupt economy. It is necessary that at least now we have an effective plan to reduce the trade deficit by increasing exports and reducing imports as much as possible. If Sri Lanka maintained a sound trade balance, which the present and previous governments should have done, the present exchange rate would not have gone down as we experience at present. If not for the factors such as remittances of migrant workers, tourists’ earnings etc. the exchange rate would be worse. See table 1.

The dire need to increase our export earnings to meet the severe financial crisis we are facing today has been emphasized by many. As indicated in Table 1, export income since 2016 has not increased by any substantial amount in spite of an Export Development Board and numerous other authorities. Increasing export income is of paramount importance to improve our economy. But what are we going to export? .

The contribution of the Plantation sector to export income is substantial. Around 800,000 ha are cultivated with plantation crops tea, rubber, coconut etc. and this sector, in the last few years earned nearly US$ 2.2 billion annually. However, as indicated in table 2, production of these major export crops do not show any substantial increase during the last five years and the contribution from this sector has remained at nearly 20% of the export income. Hence, strategies need to be implemented to increase the productivity of the plantation sector and hence FE earnings. There are many state sector organizations to implement such strategies. See table 2

As shown in Table 2 tea production has been fluctuating around 300 million kg per year during the last six years, in spite of several institutions such as Tea Board, Tea Research Institute and Tea Smallholders Development Authority assigned to the tea sector. The average tea yields are considerably lower than the potential yields. In the smallholder tea sector the average yield is around 1800 kg/ha and in the estate sector it is about 1200 kg/ha. The tea industry, which supports hundreds of thousands of people, also suffered from the controversial utterly foolish decision to ban agrochemicals as a health measure. Though later reversed, the ban has affected the tea sector to a great extent. In 2017 the export income from tea sector was 1.5 billion US$. During the following years it has decreased and in 2020 the corresponding value was 1.2 billion. Lengthy power cuts, fuel shortages too caused the industry to “near total breakdown”, Better management practices in the short term would increase the quantity and quality of the tea produced making it possible to increase FE earnings substantially from the current value.

Rubber is another important export crop. In 2017, it earned nearly US$ 39 million in foreign exchange but has decreased during the following three years. Based on Central Bank annual reports, the total Rubber production in 2017 was 152.9 million kg and by 2019 it has plummeted to 74.8 million kg. The corresponding average yields are 1561 kg/ha and 665 kg/ha respectively. These data related to rubber production by the Regional Plantation Companies and Small holder sector indicate that the productivity of the SH sector has decreased substantially compared to the RPC sector during the period 2010-2017, which may be attributed to poor management in this sector compared to that of the RPC sector. The recently-established Sri Lanka Rubber Secretariat of the Ministry of Plantation Industries came out with the Sri Lanka Rubber Industry Master Plan 2017 – 2026, A National Agenda for Rubber Industry Development of Sri Lanka. This master plan has 24 unrealistic projects which would require investments of approximately U$ 500 million (nearly Rs. 100 billion).

These figures indicate that the Sri Lankan rubber sector is ailing in spite of Rubber Development Dept and Rubber Research Institute assigned to promote rubber production in the country. With the current higher rubber prices it would be possible to earn more FE by increasing rubber production by implementing better management practices which would produce results in the short term. During the last few years the rubber sector has been affected by many factors one of which may be ineffective management.

Coconut production too has declined during the last five years as shown in Table 2. The total extent under coconut in Sri Lanka is around 400,000 ha and about 325,000 ha are small holdings. Annual production of coconut has been fluctuating around 3,000 million nuts, (app. 6000 nuts/ha. If the production of the existing coconut lands is increased by 1000 nuts/ha/year by better management, and applying organic and inorganic fertilizers the total production can be increased by a substantial number within a year which will increase the export income from coconut.

This appalling situation in the plantation sector can be attributed to many factors. If the productivity of this sector is raised, by implementing better management practices it would be possible to increase foreign exchange earnings from this sector. Most of these practices would produce results in the short term.

There are 24 agro ecological zones, each characterised by specific climate and soils. This makes it possible the cultivation of different types of exportable crops such as spice crops, tuberous crops, horticultural (fruit crops) and floricultural crops, medicinal herbs.

Sri Lanka is famous for spices. The most sought-after spice crops are cinnamon, pepper, cloves, cardamoms, nutmeg mace and vanilla which grow in abundance mainly in the wet and intermediate zone. In 2020, the county earned nearly US$ 200 million by exporting spice crops.

Cinnamon is the most important spice. In 2019, it earned around 160 million US$ in FE. The production of cinnamon has been fluctuating around 20,000 t per year during the last few years. Sri Lanka received its first ever Geographical Indication (GI) certification when the European Union (EU) Commission on 02 February,2022 granted GI status to Ceylon Cinnamon and this would make a higher demand for Sri Lanka cinnamon.

Pepper is the second important commodity among spices. It is grown in the wet and intermediate zones mostly as a mixed crop. The Sri Lankan Pepper has higher piperine content which gives it a superior quality and pungency. Annual Production of pepper too has remained stagnant at around 20,000 kg.

Other spices such as cloves, cardamom, nutmeg and mace have the potential to earn a substantial amount of FE. With the increase of international demand for natural products, and the island’s focus on enhancing and evolving its value added range, spices and the essential oils extracted from these crops will continue to earn more FE.

Dehydrated food is another agricultural product which has a potential to earn much wanted FE. During some months there is a glut of fruits and exporting dehydrated/canned fruits would bring in an appreciable amount of FE.

In any programme/plan to increase foreign exchange earnings from the agricultural sector, agro-industries have to be given much emphasis. A large number of crops cultivated in Sri Lanka have considerable potential in various agro-industries. However only rubber, coconut and a few fruit crops are used in industries. Crops such as cassava, horticultural and floricultural crops, medicinal herbs, cane, bamboo, sunflower, castor , Ayurvedic herbs, etc., have a considerable industrial/export potential but are not cultivated to any appreciable extent. Development of agro-industries will also increase export income and will have a tremendous impact on the economy of the country and also provide employment opportunities among rural people. Private sector can be involved in such projects for which appropriate technical assistance need to be given by the relevant public organizations. Although there are many organisations such as the Ministry of Industry and Commerce, Export Development Board, Industrial Development Board, etc., there appears to be no proper long-term plan to develop agro-industries. There are only some ad-hoc projects. The Ministry of Industry and Agriculture should implement an effective Agro-Industrial Development Programme, which undoubtedly would help increase our exports, improve employment opportunities and incomes in the rural areas.



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Opinion

Recent political violence and its consequences

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A house of an SLPP politician on fire after a mob attack

By Dr Laksiri Fernando

The government was directly involved in instigating political violence against peaceful protestors on 9 May, consequences of which had to be reaped within hours even those who are not directly involved in such action from the government side. Given the economic crisis and foreign exchange difficulties the country is facing at present, the consequences of these violent events that would badly affect the image of the country and the people. Sri Lanka has emerged as a violent country among foreign observers and critiques.

There were instances in the past that some ministers were involved particularly in attacks on ethnic minorities (1983). There was election violence where almost all parties were involved. The country is also notorious for a longstanding separatist movement with political violence as the main mode of operation. In 1971, there was a youth insurrection which reemerged in the late 1980s in a more sectarian manner. In April 2019, Sri Lanka became a target of Islamic State, with both local and international roots.

Reasons for Increasing Violence

During the initial years of independence, Sri Lanka was a peaceful country. Even the independence movement was characteristically peaceful without going into extremes. Except some incidents, related to worker’s strikes, the country was by and large peaceful and appreciated by many observers and commentators overseas. The situation dramatically changed in late 1960s giving rise to a strong leftwing organisation, the JVP. Even if the old-left parties were advocating ‘class struggle,’ no organisation had any military wing or anything like that.

Then, what went wrong since the 1970s? ‘Frustration-aggression’ theory could be one explanation. This is also the case in recent events beginning with farmers’ protests opposing the fertiliser ban. There were more broader reasons than ‘frustration’ or ‘relative deprivation.’ When it came to long queues and shortages in cooking gas, petrol, kerosene, diesel, medicine, and other basic amenties, the ‘relative deprivation’ turned into a ‘absolute deprivation.’ Most devastating was power cuts. All these happened within a context of high inflation where the value of people’s salaries and income became absolutely depreciated.

There were broader social reasons. Population explosion with young people becoming large both in numbers and as a proportion, widespread graduate and educated unemployment, dysfunctional education, the gap between rural and urban areas widening both in economic and social terms are some of them. Constitutional instability with amendments like 18A, 19A, 20A, back and forth, also contributed immensely for the youth to join militant political organisations and trade/student unions.

Can any of the reasons, however, justify political violence that became unleashed in the country in the recent past or before? Perhaps it is a common dilemma in many countries that human beings have a propensity to violence, ranging from mild verbal aggression to physical violence and vicious murder and everything in between. Aggression patterns, however, vary from country to country, age to age, and male to female. It is a fact that women are less violent than their male counterparts.

From PM’s Office

It was a Monday. Background was for the Prime Minister Mahinda Rajapaksa to resign, given the increasing protests and because of obvious failures. With the organization of MP Johnston Fernando and others, hundreds of people were rallied around the PMs official residence, the Temple Trees. Soon the PM asked the people to come in and addressed them in an aggressive manner.

The PM asked whether he should resign, and the crowed shouted ‘No.’ They were shouting, ‘Whose power, Mahinda’s power.’ ‘That means I don’t need to resign,’ he replied. He has further said “You know in politics I have always been on the side of the country. On the side of the people … I am willing to make any sacrifice for the people’s benefit.”

Johnston Fernando, the government’s whip, was more aggressive and violent. “Let’s start the fight. If the President can’t handle the situation, he should hand over power to us. We will clear Galle Face.” The crowd cheered. Another person who was closely involved was Namal Rajapaksa, Mahinda Rajapaksa’s eldest son.

Some of the people who were prominently involved in organising the meeting were Johnston Fernando, Sanath Nishantha, Milan Jayathilake, Pavithra Wanniarachchi, Sanjeeva Edirimanna, Saman Lal Fernando, Mahinda Kahandagama, Dan Priyasad, and their supporters. Western Province DIG Deshabandu Tennakoon was clearly involved as an accomplice.

The objectives of the gathering were extremely clear. It is difficult to believe that Mahinda Rajapaksa was unaware. During the apparent lack of interference of the police at Galle Face, his intervention was very clear on the side of the attackers.

SLPP goons wreaking havoc on the Galle Face protest site

Attacks and Counter Attacks

There were two sites that were particularly attacked. While there are different names, the most popular being ‘Gota-Go-Gama’ and ‘Mina-Go-Gama.’ Apart from around 200 people who were brutally attacked, their platforms, tents, placards, and flags were destroyed. Some people were thrown into the Beira-lake. Whatever the extremes of their slogans and demands, the above protest sites were prominent as peaceful protests.

It is strange to see, however, within hours of the above incidents, over 40 houses of the government supporters, including MPs, were attacked, and burnt down destroying some of the personal valuables. Ten people were killed in the incidents. Below is one incident that Al Jazeera reported.

“Earlier in the day, legislator Amarakeerthi Athukorala from the ruling party shot two people – killing a 27-year-old man – after being surrounded by a mob in Nittambuwa, about 40 km (25 miles) from Colombo, police said. CCTV footage showed the MP and his security officer fleeing into a nearby building. They were later found dead.”i

Of course, there are contradictory and different interpretations of the incidents. However, it is difficult to deny the involvement of some form of political activists. Who are they? Geetha Kumarasinghe narrated her ordeal in the following manner in Parliament.

“When they were attacking my home, I was trembling in fear and was hiding in a corner of a room. What wrong have I done? I have never hurt anyone. I have sacrificed everything to engage in politics and serve my people. I slogged and slaved in cinema and won many awards through sheer dedication and hard work. They destroyed all my trophies and awards. Why? Why did these young people do this to me? I can never get my awards and trophies back. You all have mothers, I am also a mother, why did you do this to me?” she sobbed.

Who Indulged in Violence?

One side is very clear. Mahinda Rajapaksa, Johnstone Fernando, and Namal Rajapaksa were clearly on one side. But who were on the other side?

The JVP General Secretary, Tilvin Silva, recently admitted or claimed that “Our party has been there right from the beginning. We have our youth, cultural, student and women wings, at the Galle Face.” Of course, there were other groups and more independent ones. Silva’s attitude towards politics and other parties also became clear when he referred to heckling of the Leader of the Opposition, Sajith Premadasa, when he visited the Galle Face protest site. Silva said the following.

“Everybody should be careful. People hate to see politicians travelling in luxury cars with security contingents. People detested the politicians’ attitude of trying to stay above them. The Opposition Leader went there in his luxury vehicles with his security guards and henchmen. So, he had to face the wrath of the people.”

Anura Kumara Dissanayake, in Parliament, denied any involvement of the JVP in house attacks and counter violence. He may be true to his conscience. There is a possibility that within the JVP itself that there are two wings operating. Tilvin Silva’s words remind us of the JVPs aggressive and violent past.

Dilemma of Violence

Violence appears to continue. There was a recent incident of people or groups attacking and burning a house of an owner of a fuel station. Undoubtedly there are extreme grievances on the part of the people due to fuel shortages and high prices of consumer items, including essential medicine. However, none of these reasons could justify political violence unleashed by the government or the opposition politicians.

There may be deep seated reasons why people in the country are extremely violent. Some of the reasons may go to the educational system and the way students are taught in schools and universities. Some reasons may be rooted in the family institution or even religion. Political culture in the country does appear to be extremely distorted or lopsided and change of which should come from all sectors of the political society. What might be important in the meanwhile are:

Deplore strongly political violence of all forms.

Request the new national government to ameliorate people’s economic grievances.

Punish those who have involved or instigated violence without discrimination.

Establish rule of law and impartiality of the public and security services.

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Opinion

21A and Ranil

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It is no secret that Prime Minister Ranil Wickramasinghe is adept at “buying time” when confronted with any important issue. He appoints committees for that purpose. Unlike most politicians, he treads very cautiously until the time is conducive for an apparent solution.

Hence one should not be surprised if the draft 21A Amendment receives the same response at the first meeting of the new Cabinet scheduled for T24 May. Already the foremost item vis-a-vis stripping the President of executive authority has been put on the shelf. And taking into consideration that among those to be discussed is the provision for dual citizenship, one could see that the need for a committee to study deeper into it is a foregone conclusion.

Sri Lanka has a reputation of putting off for tomorrow what should be done today.

WILLIAM OPP

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Opinion

No business as usual for interim government

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By Jehan Perera

The government’s intention to appoint a full complement of Ministers and State Ministers, and the jostling for positions amongst them, seems to suggest an attitude of business as usual.  This is quite astonishing as it was just two weeks ago that no government member felt safe from the wrath of mobs that formed themselves very swiftly and, apparently, spontaneously, to attack their homes and properties.  Last week they overrode the Opposition’s demand for time to debate the motion of censure against President Gotabaya Rajapaksa for having led the country to disaster.  They also scuttled efforts to nominate a female legislator to the post of Deputy Speaker, disregarding the request of Prime Minister Ranil Wickremesinghe, which could have sown the seeds for consensual governance. They gave priority to their own personal concerns of getting compensation from the State for their losses.

It is unsurprising, in this context, that anger against the government continues to boil within the country.  There are roadblocks and demonstrations by the members of the public in places where petrol is either not being provided or has been pumped to private vehicles by officials and politicians.  The lines for petrol and diesel, and for cooking gas, are longer than ever before, despite announcements that ships have begun unloading these fuels.  The lines stretch for over a kilometer in the case of petrol and diesel meant for vehicles. Videos circulate on social media providing vivid images of the frustration of those who have waited in line for hours and hours only to find out that stocks have run out before they could get access to the fuel.

The three-wheel taxi, that took me to the Aragalaya protest site, opposite the Presidential Secretariat, charged me nearly three times the regular fare that prevailed before the economy collapsed.  He justified his high rate on the basis that he had spent the whole of the previous day trying to fill his vehicle tank with petrol.  The Aragalaya site, on Saturday evening, was not as busy as it had been the previous week and nowhere near as crowded as it was two weeks ago.  But the spirit of the Aragalaya lives in the hearts and minds of people everywhere. The physical presence of protestors may be only a fraction of the turnouts that made the government want to put an end to it, through thuggery, a fortnight ago. Even those who are protestors have to live their daily lives and earn their daily bread.  But special occasions will bring them back in large numbers.

ABOLISH KINGSHIP

Galle Face is the site of the passion and commitment of a younger generation of Sri Lankans to the eradication of corruption and mis-governance foisted on them by the old. The young people know they are being monitored by state CCTV systems and are vulnerable to being picked up on a later date to be done away with, as happened in the past.  Hundreds are currently being arrested for the attacks that took place against the homes and properties of government members on May 9.  But only a few of those government members, who streamed out of the Prime Minister’s residence, with iron rods and other improvised weapons, after being instigated by the Prime Minister’s men, are being arrested.

Those who are powerful because they are in the government are glibly denying what is plain to be seen on social media.  This is a continuation of past practices which gives impunity to the powerful, whatever they do, which needs to end.  At the Aragalaya site, on Saturday, l listened to speakers who described the hardships of the economic crisis, of the mother whose gas cylinder exploded, due to inappropriate mixing of gases by the government, and of the parents who saw their infant die because they could not get petrol for their vehicle to take their child to the hospital in time.  These were educated young people who spoke and there were many who listened to them to become message-bearers to the larger population that was not present at the site.  They were all brave or had lost their sense of fear. I was also given a private lecture by a regular visitor to the Aragalaya site.  He explained to me why the diminished numbers that day did not mean that support for the cause was diminishing.  He had a vision for what the Aragalaya should achieve, which he summarized in four short points.

 First, he said, an all-party interim government needed to be appointed for a temporary period to provide the cohesion needed for political stability that would give the government the credibility to raise the necessary economic resources from abroad. Second was the need to repeal the 20th Amendment and to replace it with the 21st Amendment that would reduce the power of the presidency.  Third was to conduct general elections in a new system that would depart from the present 100 percent proportional representation to one in which first-past-the-post constituency system would account for at least 70 percent of the seats to make the parliamentarians accountable to their electorates. Fourth was to abolish the presidency that catered to the traditional ethos of relying on the saviour king rather than on the empowerment of people exemplified by the Aragalaya youth.

ARAGALAYA

PROMISE

Prior to the appointment of Prime Minister Ranil Wickremesinghe, when the power of the Aragalaya protest caused the entire Cabinet to step down, President Gotabaya Rajapaksa pledged to set up an all-party interim government for a temporary period.  This has now taken on a distorted form in the wooing and horse-trading of members of other political parties, without the consent of their party leaderships.  Both the SJP, which is the largest opposition party, and the SLFP, which is the government’s largest coalition partner, have suffered defections to the new government.  This display of power play is not a positive sign of stability which is necessary if the government is to deal with the difficult economic issues the country confronts. It is not possible to justify how those who resigned from office due to a failure of government can be part of a new Cabinet, as if the failure had nothing to do with them.

Prime Minister Wickremesinghe has made a comparison of the predicament he is currently facing in the government by comparing his situation to the famous play by Bertolt Brecht, the Caucasian Chalk Circle.  The Prime Minister has brought credibility to the government through his ability to deal with the international community and his understanding of the macro economic situation of the country in relation to the world.  The 21st Amendment to the Constitution that will be brought to Parliament this week, if passed, will strengthen the Prime Minister’s powers still more. Unless circumstances, and the balance of political forces, within Parliament, permit him to chart a new course of governance that is consensual and transparent, the present government will also fail.

Much is at stake. Unless the economy improves fast the possibility of violence that can suddenly erupt, as it did on May 9, cannot be ruled out.  As Sri Lanka’s closest neighbour, India has been extremely generous now with its latest gift of Rs 2 billion worth of essential commodities, gifted by the Tamil Nadu state.  The challenge will be to persuade the more distant, but wealthier Western countries, Japan and China, to be equally generous.  The stability of the government that is brought about by the willing participation of the opposition political parties will be extremely important in demonstrating to the world, and to the Sri Lankan people, that the government, led by President Gotabaya Rajapaksa, and Prime Minister Ranil Wickremesinghe, really intend to chart a new path.  The holding of elections, within six months, and a new leadership, can be an example to other countries with similar broken down systems and government leaders who step aside as statesmen for the new generations to take over.

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