Although in recent years Sri Lanka has seen a boom in revenues from tourism and garment manufacturing, like many developing countries it is still also dependent on agriculture for both domestic consumption and exports from crops such as rice and tea.

The ongoing Ukraine-Russia conflict and the impact of Covid-19 before that both demonstrated the fragility and vulnerability of this small Indian Ocean island, with its dependency on global shipping and input supply chains, and price shocks leading a cash-strapped government to replace conventional fertilizer and pesticide imports with organic farming methods and biofertilizer imports from China.

There has been much focus on the quality of these biofertilizer imports, but in fact the seaweed-based products produced by QingdaoSeawin Biotech used in Sri Lanka conform to both well-established local and international standards and regulations. Sri Lanka has a long history of both organic and biodynamic farming for tea, and spices like cardamom, cinnamon, cloves, ginger, nutmeg and turmeric, for example.

The main issues were the rapid transition from the predominant mode of conventional agriculture applied to cash and food crops to organic agriculture, leading to rapidly falling yields and farm income in many cases, and resultant food shortages and declining farm incomes amid a severe economic crisis.

The Sri Lankan government should instead have adopted a four-year transition programme for the adoption of organic farming practices, as seen in the UK for example, and certified by the Soil Association. But it is extremely unlikely that it could have shifted its entire agricultural base long-term to organics and maintained existing yields and output.

Instead, the since-deposed Rajapaksa regime blamed the biofertilizers as a convenient scapegoat for its own policy failures and then unsuccessfully tried to renege on its agreement to pay the company for them, due to its own growing and self-induced economic problems.

There are wider lessons to be learned here, but it remains to be seen whether Sri Lanka can sufficiently recover its agricultural production levels and income in the short to medium-term under the new government, given the continuing civil instability and multiple crises largely of its own making it now has to resolve, with regional and international assistance.

Posted 01 August 2022 by Alan Bullion, Director of Special Reports & Projects, Agribusiness, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.