Sri Lanka’s decision to ban imports on chemical fertilizers was not backed by scientific evidence
There is consensus in the scientific community that organic agriculture could reduce crop yield. Quoting three global meta-data analysis, Meemkem and Qaim (2018) pointed out that on average, the yield reduction in organic agricultural systems could be 19-25%, depending on the crop and agro-climatic region. To switch to 100% organic agriculture, a country must have robust scientific evidence and a meticulously planned methodology along with targeted actions. Otherwise, it will plunge into a food crisis, if food security cannot be achieved by other means.
Organic agriculture is often perceived as more sustainable than conventional farming. In terms of environmental and climate change effects, organic farming is less polluting than conventional farming when measured per unit of land but not when measured per unit of output.
Organic farming, which currently accounts for only 1% of global agricultural land, is lower yielding on average. Due to higher knowledge requirements, observed yield gaps might further increase if a larger number of farmers would switch to organic practices.
Widespread upscaling of organic agriculture would cause additional loss of natural habitats and also entail output price increases, making food less affordable for poor consumers in developing countries.
Organic farming is not the paradigm for sustainable agriculture and food security, but smart combinations of organic and conventional methods could contribute toward sustainable productivity increases in global agriculture.
Organic mania
In May, Sri Lankan President Gotabaya Rajapaksa ordered a halt to importing chemical fertilizers to turn the island nation’s agriculture sector fully organic.
By that time, the Yala cropping season (May to August) had already started and farmers were using the agro-chemicals available in the market. However, no additional agro-chemicals were to be released in the market.
The government stated that if there is any yield loss as a consequence of this decision, the affected farmers would be compensated for it. It is unclear how the government was planning to separate yield loss related to lack of agro-chemicals from yield loss due to natural causes, farmers’ attitudes, and so on.
It is apparent now that when the Sri Lankan government took this policy decision, it had neither solid scientific information nor a clear action plan. It had taken half-baked advice from some opportunists who regularly state in public that only organic and traditional agriculture is safe to the environment and human beings.
Sri Lanka has been almost entirely reliant on its own rice production since the mid-2000s. Could it not have maintained this?
Unsurprisingly, even when the Maha season officially started on October 15, the country was well short of the required quantities of organic fertilizers.
As the most critical plant nutrient for higher yields in Sri Lanka is nitrogen (N), the authorities have estimated that for this Maha season, about 0.1 million tonnes of N is required for some major crops including paddy and tea.
This is equivalent to about 15 million tonnes of compost. The country produced only around 3 million tonnes of compost by the end of August 2021.
Realising that the required quantities of organic fertilizers cannot be produced within five months, the government attempted in September to import solid organic fertilizers.
According to the Plant Protection Act, No. 35 of 1999, no organic substance that has harmful organisms can be imported into the country. Moreover, Sri Lanka Standards (SLSI 1704) require all imported solid organic fertilizer to be devoid of any micro-organism.
A tender to supply about 0.1 million tonnes of solid organic fertilizer was offered to a Chinese fertilizer company. It was later revealed that two samples provided by this company did not pass the quality standards.
This message was conveyed by the authorities to the company. However, due to reasons unknown, the first load of that solid organic fertilizer is said to have come to Sri Lankan waters and is sailing around still looking for an opportunity to reach the shores of Sri Lanka.
Meanwhile, farmers started getting angry as there were no fertilizers to start cultivation. They began to protest, demanding fertilizers to be provided in all major agricultural areas and setting aside preliminary land preparation practices. They did not want to start commercial cultivation without any assurance from the government on the availability of the required fertilizers.Then, the government was advised to purchase a liquid nano-N fertilizer from the Indian Farmer Fertilizer Corporative Limited (IFFCO), which, some said, is organic and 100% efficient.
However, according to the IFFCO website, this liquid fertilizer is actually nano-urea and hence cannot be used in organic agriculture as it is chemical in nature. Given the urgency of the situation, the government ordered 3.1 million litres of nano-urea, which has only 4% N, from IFFCO.
The first quantity was air-lifted into Sri Lanka and distributed as Nano-Raja among paddy farmers. Farmers were advised to apply 2.5 L of Nano-Raja as a foliar spray.
Scientists are sceptical about the efficacy of this fertilizer as there has been heavy rainfall in Sri Lanka over the last few weeks. Nonetheless, even in India, there is limited large-scale evidence on the effectiveness of this product. Not much is known about the health concerns that might arise on long-term exposure to nano-particles.
Moreover, 2.5 L of Nano-Raja provides only 100g of N when at least 50kg of N is needed for the paddy crop. The farmers will at most get an additional 5-10kg of N through locally available compost. The quality of these composts, mostly produced using municipal solid wastes, cannot be guaranteed either, as there is no quality control mechanism in place.
Crop decline
Now, even over a month after the season started, only about 25-40% of farmers have started paddy cultivation in Sri Lanka. The distributed quantities of N fertilizers have not been adequate to achieve the expected yield target of the farmers (4-6 tonnes per hectare).
Therefore, reduction in national paddy production is an inevitability. The same would be true for other crop sectors as well. Therefore, the government must do something within a very short period of time to provide sufficient quantities of N fertilizer, at least to paddy farmers and tea-growers.
Failure to do so will reduce foreign exchange earnings from tea, increase food prices, create food shortage and lead to food imports. The government will have to import food from other countries — food that is produced using agro-chemicals because of the higher price of organic food. This would be ironical as food without agro-chemicals was one of the major policy objectives of the ban on the import of agro-chemicals.
The overarching policy document of the government titled ‘Vistas of Prosperity and Splendor’ promises to provide the nation with safe food and food security. However, the ill-advised policy of banning agro-chemicals, which was based on inadequate scientific evidence and false belief, hit the Sri Lankan agriculture and plantation crop sectors like a cyclone.
With a crippling economy thanks to COVID-19, this was uncalled for. On November 24, the Sri Lankan government announced that it would partially lift the ban on chemical fertilizers and permit the private sector to import these fertilizers. However, considerable damage has already been done, with farmers claiming that their crop production has declined, food prices rising, and a food crisis looming.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.