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.
Globally, around 80% of wastewater flows back into the ecosystem without being treated or reused, according to the United Nations.
This can pose a significant environmental and health threat.
In the absence of cost-effective, sustainable, disruptive water management solutions, about 70% of sewage is discharged untreated into India’s water bodies.
A staggering 21% of diseases are caused by contaminated water in India, according to the World Bank, and one in five children die before their fifth birthday because of poor sanitation and hygiene conditions, according to Startup India.
As we confront these public health challenges emerging out of environmental concerns, expanding the scope of public health/environmental engineering science becomes pivotal.
For India to achieve its sustainable development goals of clean water and sanitation and to address the growing demands for water consumption and preservation of both surface water bodies and groundwater resources, it is essential to find and implement innovative ways of treating wastewater.
It is in this context why the specialised cadre of public health engineers, also known as sanitation engineers or environmental engineers, is best suited to provide the growing urban and rural water supply and to manage solid waste and wastewater.
Traditionally, engineering and public health have been understood as different fields.
Currently in India, civil engineering incorporates a course or two on environmental engineering for students to learn about wastewater management as a part of their pre-service and in-service training.
Most often, civil engineers do not have adequate skills to address public health problems. And public health professionals do not have adequate engineering skills.
India aims to supply 55 litres of water per person per day by 2024 under its Jal Jeevan Mission to install functional household tap connections.
The goal of reaching every rural household with functional tap water can be achieved in a sustainable and resilient manner only if the cadre of public health engineers is expanded and strengthened.
In India, public health engineering is executed by the Public Works Department or by health officials.
This differs from international trends. To manage a wastewater treatment plant in Europe, for example, a candidate must specialise in wastewater engineering.
Furthermore, public health engineering should be developed as an interdisciplinary field. Engineers can significantly contribute to public health in defining what is possible, identifying limitations, and shaping workable solutions with a problem-solving approach.
Similarly, public health professionals can contribute to engineering through well-researched understanding of health issues, measured risks and how course correction can be initiated.
Once both meet, a public health engineer can identify a health risk, work on developing concrete solutions such as new health and safety practices or specialised equipment, in order to correct the safety concern..
There is no doubt that the majority of diseases are water-related, transmitted through consumption of contaminated water, vectors breeding in stagnated water, or lack of adequate quantity of good quality water for proper personal hygiene.
Diseases cannot be contained unless we provide good quality and adequate quantity of water. Most of the world’s diseases can be prevented by considering this.
Training our young minds towards creating sustainable water management systems would be the first step.
Currently, institutions like the Indian Institute of Technology, Madras (IIT-M) are considering initiating public health engineering as a separate discipline.
To leverage this opportunity even further, India needs to scale up in the same direction.
Consider this hypothetical situation: Rajalakshmi, from a remote Karnataka village spots a business opportunity.
She knows that flowers, discarded in the thousands by temples can be handcrafted into incense sticks.
She wants to find a market for the product and hopefully, employ some people to help her. Soon enough though, she discovers that starting a business is a herculean task for a person like her.
There is a laborious process of rules and regulations to go through, bribes to pay on the way and no actual means to transport her product to its market.
After making her first batch of agarbathis and taking it to Bengaluru by bus, she decides the venture is not easy and gives up.
On the flipside of this is a young entrepreneur in Bengaluru. Let’s call him Deepak. He wants to start an internet-based business selling sustainably made agarbathis.
He has no trouble getting investors and to mobilise supply chains. His paperwork is over in a matter of days and his business is set up quickly and ready to grow.
Never mind that the business is built on aggregation of small sellers who will not see half the profit .
Is this scenario really all that hypothetical or emblematic of how we think about entrepreneurship in India?
Between our national obsession with unicorns on one side and glorifying the person running a pakora stall for survival as an example of viable entrepreneurship on the other, is the middle ground in entrepreneurship—a space that should have seen millions of thriving small and medium businesses, but remains so sparsely occupied that you could almost miss it.
If we are to achieve meaningful economic growth in our country, we need to incorporate, in our national conversation on entrepreneurship, ways of addressing the missing middle.
Spread out across India’s small towns and cities, this is a class of entrepreneurs that have been hit by a triple wave over the last five years, buffeted first by the inadvertent fallout of demonetization, being unprepared for GST, and then by the endless pain of the covid-19 pandemic.
As we finally appear to be reaching some level of normality, now is the opportune time to identify the kind of industries that make up this layer, the opportunities they should be afforded, and the best ways to scale up their functioning in the shortest time frame.
But, why pay so much attention to these industries when we should be celebrating, as we do, our booming startup space?
It is indeed true that India has the third largest number of unicorns in the world now, adding 42 in 2021 alone. Braving all the disruptions of the pandemic, it was a year in which Indian startups raised $24.1 billion in equity investments, according to a NASSCOM-Zinnov report last year.
However, this is a story of lopsided growth.
The cities of Bengaluru, Delhi/NCR, and Mumbai together claim three-fourths of these startup deals while emerging hubs like Ahmedabad, Coimbatore, and Jaipur account for the rest.
This leap in the startup space has created 6.6 lakh direct jobs and a few million indirect jobs. Is that good enough for a country that sends 12 million fresh graduates to its workforce every year?
It doesn’t even make a dent on arguably our biggest unemployment in recent history—in April 2020 when the country shutdown to battle covid-19.
Technology-intensive start-ups are constrained in their ability to create jobs—and hybrid work models and artificial intelligence (AI) have further accelerated unemployment.
What we need to focus on, therefore, is the labour-intensive micro, small and medium enterprise (MSME). Here, we begin to get to a definitional notion of what we called the mundane middle and the problems it currently faces.
India has an estimated 63 million enterprises. But, out of 100 companies, 95 are micro enterprises—employing less than five people, four are small to medium and barely one is large.
The questions to ask are: why are Indian MSMEs failing to grow from micro to small and medium and then be spurred on to make the leap into large companies?
At the Global Alliance for Mass Entrepreneurship (GAME), we have advocated for a National Mission for Mass Entrepreneurship, the need for which is more pronounced now than ever before.
Whenever India has worked to achieve a significant economic milestone in a limited span of time, it has worked best in mission mode. Think of the Green Revolution or Operation Flood.
From across various states, there are enough examples of approaches that work to catalyse mass entrepreneurship.
The introduction of entrepreneurship mindset curriculum (EMC) in schools through alliance mode of working by a number of agencies has shown significant improvement in academic and life outcomes.
Through creative teaching methods, students are encouraged to inculcate 21st century skills like creativity, problem solving, critical thinking and leadership which are not only foundational for entrepreneurship but essential to thrive in our complex world.
Udhyam Learning Foundation has been involved with the Government of Delhi since 2018 to help young people across over 1,000 schools to develop an entrepreneurial mindset.
One pilot programme introduced the concept of ‘seed money’ and saw 41 students turn their ideas into profit-making ventures. Other programmes teach qualities like grit and resourcefulness.
If you think these are isolated examples, consider some larger data trends.
The Observer Research Foundation and The World Economic Forum released the Young India and Work: A Survey of Youth Aspirations in 2018.
When asked which type of work arrangement they prefer, 49% of the youth surveyed said they prefer a job in the public sector.
However, 38% selected self-employment as an entrepreneur as their ideal type of job. The spirit of entrepreneurship is latent and waiting to be unleashed.
The same can be said for building networks of successful women entrepreneurs—so crucial when the participation of women in the Indian economy has declined to an abysmal 20%.
The majority of India’s 63 million firms are informal —fewer than 20% are registered for GST.
Research shows that companies that start out as formal enterprises become two-three times more productive than a similar informal business.
So why do firms prefer to be informal? In most cases, it’s because of the sheer cost and difficulty of complying with the different regulations.
We have academia and non-profits working as ecosystem enablers providing insights and evidence-based models for growth. We have large private corporations and philanthropic and funding agencies ready to invest.
It should be in the scope of a National Mass Entrepreneurship Mission to bring all of them together to work in mission mode so that the gap between thought leadership and action can finally be bridged.