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SAEA warns of big economic losses due to import restrictions on chemical fertilizers and pesticides

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In the absence of proper substitutes

The Sri Lanka Agricultural Economics Association (SAEA) has expressed some concerns on the appropriateness of the newly introduced regulation to restrict forthwith the import of chemical fertilizers and pesticides by the Gazette Extraordinary No 2226/48 of May 6, 2021, to achieve the broader development goal.

In a letter to President Gotabaya Rajapaksa, the SAEA, the professional body representing the Agricultural Economists of Sri Lanka, has predicted massive economic losses due to potential yield losses in the absence of proper substitutes for chemical fertilizers and pesticides with the implementation on the import ban on fertilizers and pesticides.

“The immediate adverse impacts on food security, farm incomes, foreign exchange earnings and rural poverty can be detrimental to achieving the cherished long-term goals”, it warned.

“Our membership endorses the government’s decision to adopt a Green Socio-Economic Model for development as we firmly believe that such a strategy would be critical to conserving the environment and improving human health. We agree that green approaches in crop cultivation contribute significantly towards achieving Sustainable Development Goals (SDGs)”, the professional organization noted in its letter to the President.

Moreover, SAEA is of the view that most of the current farming systems in Sri Lanka are unsustainable. Hence, the conversion of them into organic farming systems in the long run, would help promote health of the people and nurture integrity of the nation’s environment. It is well known that many countries currently take systematic and pragmatic approaches to achieve this long-term objective by first setting targets, standards, and subsequently, investing and promoting farmers to adopt best practices, it further said.

“Therefore, we would like to extend our appreciation to the government for taking such a valuable decision to adopt the green socio-economic model in Sri Lanka”.

Outlining its primary concerns and the less costly policy alternatives proposed by its members in place of the newly introduced import ban for the President’s consideration, the SAEA was of the view that the policy instrument identified by the government to promote organic farming is less appropriate due to potential economic losses and its incompatibility with other policy goals of the government.

Continuing, the professional body of Agricultural Economists, further opined: “When converting from conventional agriculture into organic farming, the government should weigh the technological, environmental and economic costs and benefits. The preliminary findings of the studies conducted by the SAEA on potential economic losses of the import ban and respective estimations are as follows:

 

(a) Agronomic studies reveal that the average yields from paddy can drop by 25% if chemical fertilizers are fully replaced by organic fertilizers. This loss in productivity could reduce the profitability of paddy farming by 33% and rice consumption by 27% if paddy is cultivated just with organic fertilizers with a complete ban on rice imports. In contrast, applying organic fertilizer with the recommended dosages of chemical fertilizers would improve the profitability of farming by 16%.

 

(b) Absence of chemical fertilizer would drastically reduce the productivity of the Vegetatively Propagated Tea (VPT). With a 35% productivity drop, the export volume of tea would go down from 279 to 181 million kg, causing an income loss of LKR 84 billion. The estate sector will likely incur significant losses compared to those of tea smallholders. These losses could further be aggravated due to increased cost of labour to apply bulky organic fertilizers.

 

(c) The coconut yields would go down by 30% if chemical fertilizers and pesticides are not applied. This situation will adversely impact fresh coconuts availability for the production of coconut oil, desiccated coconut and other coconut products. The loss in foreign exchange earnings can be as high as Rs. 18 billion, based on the assumption that only 26% of the total coconut extent is fertilized. When the additional cost for the importation of edible oils is considered, the loss of foreign exchange earnings will be even higher.

 

(d) The above results were derived considering the immediate effects on three agricultural sub-sectors. An analysis performed accommodating adjustments in the economy over the medium to long run reveals that a reduction in average agricultural productivity by 20% could cause a decrease in Gross Domestic Product (GDP) by 3.05% suggesting an overall contraction of the economy with the implementation of the import ban.

The proposed policy instrument is not compatible with the policy objectives stated in ‘Vistas for Prosperity and Splendor’. Given below are a few policy incompatibilities highlighted by the members of SAEA (Relevant statement from Vistas for Prosperity and Splendor shown in parenthesis).

 

(a) Modernization of agriculture

 

(International export business through various value-added products backed up by new technologies): The SAEA would like to propose that the government considers Sustainable Intensification of farming systems to feed the growing population with rising incomes, seeking safe and nutritious food, which are produced in environmentally sustainable farming systems, rather than converting all systems to fully organic agriculture, as its policy objective.

 

(b) Food self-sufficiency drive (Make the country self-sufficient in the relevant products): Estimates reported in section A (a) indicate that a food deficit would be created in the country owing to yield losses. However, the current government policy on food self-sufficiency would not allow the policymakers to fill this deficit through imports. Such a situation could give rise to food price inflation, unrest, and starvation.

 

(c) Freedom (People-Centric Economic Development): The chosen policy instrument does not provide flexibility to farmers to determine their least-cost food production methods without harming the environment. This situation would violate the ‘people’s freedom’ policy of the government.

 

(d) Rural-urban migration (Linking the village development together with the regional development): Contraction of the rural economy due to reduced farm profitability will lead to increased migration from rural to urban areas. With limited capacity of the manufacturing sector to absorb migrants, this will result in urban congestion.

 

(e) Commitments with the WTO and other international relations (Friendly, Non-aligned, Foreign Policy): The policy instrument chosen is not compatible with commitments to the WTO.

Alternative policy instruments for making food systems more environmentally sustainable

In light of the above observations, members of SAEA suggest the government use more cost-effective instruments to achieve the stated health and environmental outcomes in place of the newly introduced import regulation.

Globally, the approach to environmental protection has been evolving from a regulation-driven approach to a more proactive approach involving voluntary and market-led initiatives. Accordingly, we wish to propose the following three-point policy package.

 

1. Incentivize organic cultivation using safe and environmentally friendly organic fertilizers and pesticides: Open up pathways towards encouraging organic fertilizer production, storage, distribution, etc. and promote Public-Private Partnership (PPP) models to achieve those.

 

2. Develop national standards for organic fertilizers and pesticides to ensure non-importation of substandard products to the country and domestic production meeting specified quality standards.

 

3. Improve awareness of various organic farming technologies among farmers through a strengthened extension system.

 

Institutionalize and make Good Agricultural Practices (GAP) a mandatory national standard.

 

Dis-incentivize use of chemical fertilizers and pesticides in an environmentally harmful manner: Revisit national standards for chemical fertilizers and pesticides to ensure non-importation of sub-standard products to the country.

 

Impose environmental taxes on selected inorganic fertilizers and pesticides.

 

Reduce and eventually eliminate the subsidy on chemical fertilizers. In phasing out the fertilizer subsidy, we wish to recommend the following steps:

 

* Prioritize subsidies according to characteristics such as fertilizer type, agro-ecological region, season and crop.

* For the targeted farmers, establish a voucher system that restricts farmers’ access to a lifeline amount [such as two bags] and require them to purchase the balance at market prices for a limited period.

 

* When the subsidy is lowered, introduce an output price support program to support the farm producers partially.

* Provide and support farmers to adopt site-specific fertilizer recommendations and integrated pesticide recommendations.

* Reduce and eventually eliminate protection provided to crops that are highly fertilizer intensive and erosive.

* Strengthen existing measures to improve awareness of the safe use of chemical fertilizers and pesticides.

 

Cross-cutting proposals to safeguard the poor and vulnerable and improve the policy process: Maintain a safety net for the poor recognizing the possible increase in food prices.

 

* Identify a harmonized financing mechanism. For example, finances of saved fertilizer subsidy and environmental taxes can be used to subsidize organic fertilizer production and application.

* In formulating the strategic roadmap, adopt a consultative process involving all stakeholders (policymakers, politicians, agriculturalists, environmentalists, and the private sector) and also considering economy-wide impacts (macro, meso and micro) and externalities.

Considering the economic loss, policy inconsistency, and counter-productive effects created by the regulation in the manner introduced and the availability of relatively superior alternative measures, the SAEA seeks to substitute the import ban on chemical fertilizers and pesticides with the set of alternative measures proposed above. The SAEA extends its professional support to establish a green-economic model for the agriculture sector of Sri Lanka.

The letter signed by Dr. Sampath Dharmadasa, President/SAEA and Dr. Shashika Rathnayaka, Secretary, has been copied to the Prime Minister, Ministers of Agriculture and Plantations, among others.



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Udaya issues ultimatum to govt: Unless it releases two Easter Sunday Carnage committee reports, he will publish them online next Monday

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Udaya

By Rathindra Kuruwita

Leader of the Pivithuru Hela Urumaya (PHU), Udaya Gammanpila, yesterday (14) called on the government to release two unpublished committee reports on the Easter Sunday attacks within a week.

Gammapila warned that should the government fail to release the reports, he would publish them online.

“None of these reports are incomplete, and none have gone missing,” he stated.

Gammanpila explained that part of the report by the Presidential Commission of Inquiry (COI) into the Easter Carnage had not been presented to Parliament in keeping with a COI recommendation.

“Opposition parties and the Catholic Church insisted that the withheld section contained details on the mastermind behind the attacks. Former President Ranil Wickremesinghe then allowed the Catholic Church to peruse the report,” Gammanpila said.

Gammanpila noted that the Catholic Church was now referring to the unpublished reports prepared by two probe committees headed by I.M. Imam and A.N.J. de Alwis.

In June 2023, Wickremesinghe established a Committee of Inquiry to investigate the actions and responses of the intelligence and security services.

Retired Judge A.N.J. de Alwis was tasked with investigating the conduct of the State Intelligence Service (SIS), the Chief of National Intelligence (CNI), and other relevant authorities.

At the time of the Easter Sunday attacks, Senior DIG Nilantha Jayawardena led the SIS, while retired DIG Sisira Mendis served as the CNI, a role previously held by intelligence veteran General Kapila Hendawitharana.

In September, Wickremesinghe appointed a three-member committee to investigate allegations made by Britain’s Channel 4 regarding the alleged involvement of military intelligence in the Easter Sunday attacks. The President’s announcement followed a denial issued by the Ministry of Defence on behalf of the government.

The Committee, chaired by retired Supreme Court Judge Syed Ishrat Imam, also included retired Air Chief Marshal Jayalath Weerakkody, a former Commander of the Sri Lanka Air Force (SLAF), and President’s Counsel Harsha Soza. Senior Assistant Secretary to the President Sarthanjali Maheswaran served as the Commission’s Secretary.

“I am calling on the government to release these two reports. If you do not do so within a week, we will publish them ourselves,” Gammanpila said.

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Debt-restructuring about to be completed, govt. proceeding towards 3rd review of IMF programme  – Vijitha

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Herath addresses Colombo-based diplomatic community

Foreign Minister Vijitha Herath yesterday (14) assured the Colombo-based diplomatic community that the new government was going ahead with the IMF-led debt restructuring programme.

The assurance was given at an interaction with them at the Ministry of Foreign Affairs.

Minister Herath said: “Earlier this month, we had productive discussions with the visiting IMF team who reiterated their support to Sri Lanka. We will work closely with then on the next phase relating to the Extended Fund Facility (EFF), and the related reform programme.

“Also in this month, the Official Creditor Committee (OCC) and the IMF confirmed that the agreements reached with Sovereign bond holders is in line with the ‘comparability of treatment’ requirements and debt sustainability targets, respectively. This in simple words means that the debt restructuring process is very near completion, enabling the government to proceed towards the third review of the IMF programme, further cementing economic stability, and reinforcing the foundation for sustainable, inclusive economic recovery and growth.

“In another positive step, the World Bank signed the agreement on the RESET (Second Resilience, Stability, and Economic Turnaround) Development Policy Operation (DPO) amounting to $200 million. This is aimed at implementing a reform programme, including economic governance, enhancing growth, and protecting the poor and vulnerable. As the programme is proceeding satisfactorily, this was the second operation to be disbursed of the two-part series.

“The Government is keen to ensure that these stabilization measures go hand in hand with improving the standard of living of all Sri Lankans and will implement practical programmes to alleviate the heavy economic burden faced by them. We are committed to ensuring that economic growth is truly inclusive, which will at the same time drive growth and investment, with the confidence of our private sector and business community.

“I believe that this meeting will provide me with an opportunity to brief you on the initial plans of the new Government and have some informal interaction. It is only after the Parliamentary Election is concluded in November, that the new Government will be able to fully focus on operationalizing its way forward, and we look forward to having more comprehensive engagements with each one of you at that stage on matters related to bilateral matters.

At the recently concluded Presidential Election, the people of Sri Lanka voted for a mandate for ‘change’ – a change that will bring all our citizens together in a new ethical political culture.

As the President mentioned in his inaugural address to the nation, this change entails many steps, and one of the most important is to reinforce stability and confidence in the economy and stimulate growth, while prioritizing welfare and alleviating the hardships of the people.

“The President has also placed high emphasis on ethical governance, elimination of corruption, efficiency in public service and fostering a new political culture that embodies the rule of law, accountability and integrity. We believe that economic success must be accompanied by these supportive pillars.

“In line with the commitments made by us on zero tolerance for bribery and corruption we have already commenced investigations into certain key matters. The Bribery Commission has already expedited action relating to cases of alleged corruption.

“Another key objective of this Government is to end the era of division based on race, religion, class and other differences and build a nation that respects diversity. We are ready to bring in the necessary constitutional, economic, and political reforms towards this end.

“The Government will protect democracy and human rights of all citizens, including addressing past issues. As directed by the President, investigative authorities have already announced a redoubling of investigation into a number of clearly identified accountability cases that were pending from the past.

“On all these fronts, the Government is encouraged by the support that it has received from the countries and the organizations you represent. We look forward to working closely with all of you as partners, and seek your continued support for our efforts to advance sustained economic growth and social well-being of all our citizens.

“I have been active in the recent weeks on a number of matters on the foreign affairs front:

*Sri Lanka has decided to apply for the membership of the BRICS and the New Development Bank. HE President and myself – we are unable to attend the Outreach BRICS Summit to be held in Kazan, Russian Federation, from 23-24 October 2024, due to the upcoming elections.  Secretary/Foreign Affairs will represent Sri Lanka and place on record our request for membership.  I have already addressed letters to my counterparts in the BRICS member states seeking support.

* We consider BRICS to be an effective partnership to realize aspiration for mutually beneficial cooperation, peace and development, through strengthened and inclusive multilateralism within the framework of the UN Charter.

* On 9 October 2024, the government made a statement at the Human Rights Council in Geneva. In our statement to the Council, we highlighted our commitment to have credible and independent domestic mechanisms and processes on reconciliation that enjoy the people’s trust. We have already initiated action to move forward on this front.

* Despite our rejection of the resolution that was tabled at the Council, we will continue to engage constructively with the Council and its regular UN human rights mechanisms. As you are well aware Sri Lanka opposes the resolution which establishes an external mechanism on human rights issues.

* We thank the countries that took helpful and principled positions in support of Sri Lanka in Geneva and a number of countries also spoke in support of the progress made by Sri Lanka at the interactive session.

* On Sri Lanka’s chairmanship of the Indian Ocean Rim Association (IORA), we would like to inform you that, due to the upcoming Parliamentary Elections, we are compelled to postpone the meeting of the IORA Council of Ministers till next year. The timeframe is to be decided in consultation with IORA Members and the Secretariat.

* On the international front, we continue to remain highly concerned about the current global situation, particularly in the Middle East region. The humanitarian situation in Gaza is turning dire by the day, and recent developments that have an impact on wider regional dimensions, in particular in Lebanon, are most concerning. We continue our call for an immediate ceasefire and unrestricted humanitarian access to Gaza and a sustainable two-state solution that includes the establishment of an independent sovereign and viable State of Palestine, based on the 1967 borders, in line with relevant UN resolutions, as well as ensuring the security of Israel.

* We deeply regret the attacks that injured two of our peacekeepers in the United Nations Interim Force in Lebanon (UNIFIL). We are proud of our peacekeepers who serve in several challenging UN Missions and it is important that the obligation of all parties to respect UN personnel and UN premises is respected.”

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Floods claim three lives

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Navy relief teams distributing cooked meals yesterday among people affected by floods and adverse weather in Colombo.

More than 158,000 affected in 12 districts

Floods have claimed at least three lives and affected more than 158,000 people in 12 districts, as of yesterday evening, according to the Disaster Management Centre.

Heavy rains over the weekend wreaked havoc, flooding homes, fields and roads and damaged 240 houses and forced nearly 7,000 people out of their home.

Rainfall above 100mm was expected in Sabaragamuwa, Western, Northwestern and Northern Provinces as well as in the Galle, Matara and Trincomalee districts today (15), the Met Department said, warning that showers or thundershowers would occur at several places elsewhere during the evening or night. It requested the public to take adequate precautions to minimise damag caused by temporary localised strong winds and lightning during thundershowers.

The Ministry of Education has instructed the Provincial Chief Secretaries, Provincial Secretaries and the Directors of Education to decide whether to open schools in areas affected by the prevailing adverse weather.

The Education Ministry communicated this in a statement issued pertaining to the matter yesterday afternoon (14).

All government schools in the Gampaha, Kelaniya, Kolonnawa and Kaduwela educational zones will remain closed today (15).

Emergency situations can be reported by contacting the Disaster Management Centre’s hotline 117 or by calling 0112136136, 0112136222, and 0112670002.

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