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Why agricultural value chains fail: Failure to commit to policy decisions?


Comments / {{hitsCtrl.values.hits}} Views / Friday, 2 March 2018 00:00


Introduction

It is with great difficulty that we as a country arrived at the decision to abolish the fertiliser subsidy. 

The fertiliser subsidy, as an economic instrument used to increase the efficiency of rice production, was successful in achieving its primary objective, which is increasing rice production and reducing the need to import rice. 

Sri Lanka became very close to achieving its status of rice self-sufficiency. However, there were many negative externalities. With a subsidy of almost 90%, farmers became heavily dependent on chemical fertiliser, nearly forgot about organic fertiliser and overused as well as misused the subsidy. 

As a result, paddy lands became fertiliser irresponsive, downstream water and ground water became polluted with washed-off chemicals, and paddy production went down (production did not increase unless lands were flooded with more chemical fertilisers, which increased the cost of production dramatically). Rice produce became toxic to consume and heavy emphasis was on organic produce. 

Organic paddy production became an attractive alternative in the eyes of negative environmental and health externalities. NCDs also played an active role in driving organic food demand. 

Moreover, the fertiliser subsidy became a significant burden on the national budget. In addition, economists and scientists argued the negative externalities of the fertiliser subsidy with research and evidence. Finally, the Government made a decision to abolish the fertiliser subsidy and move on to a coupon system. 

Within a very short span of time, the Government is making plans to reverse its decision. Several media news bytes spoke of the decision to implement the fertiliser subsidy fully. This is a very discouraging situation for most who worked on getting the fertiliser subsidy removed and promoted organic paddy cultivation all over the country. 

Being one of the economists who argued for the abolishment of the fertiliser subsidy, I was heavily disappointed by this discussion/direction by the Government. However, this is something that I did expect. My view on the Government’s decision to abolish the fertiliser subsidy in the first place was not very optimistic. There were shortfalls in the way it was implemented. This article explores answers to several major questions: 

1.Did we make the right decision in 

abolishing the subsidy? 

2.Why did the Government’s 

decision fail? 

3. Is this not possible at all? 

Did we make the right decision in fully abolishing the fertiliser subsidy?

There are plenty of case studies in the world that show best practices in abolishing economic instruments such as fertiliser subsidies. The fertiliser subsidy is one of the best and strong economic instruments that countries have used to improve cultivation of its staple crops. 

There are no arguments towards achieving its primary objective of increasing the fertiliser use and increasing the agricultural production and efficiencies. However, most countries which were successful in giving fertiliser subsidies had-long term plans. 

How much to subsidise, how long to continue with the subsidy, who would be the primary target group was carefully researched. Because of this evidence-based policy making, these countries were successful in introducing as well as removing the fertiliser subsidy before it yielded any significant negative externalities. However, we failed in most of these planning processes. 

The fertiliser subsidy was something that was heavily subsidised, it was continued for a very long time without a proper plan of transition, and it was administered towards commercial as well as subsistence paddy farmers. Therefore, one can argue that the fertiliser subsidy program was set towards a gloomy future from the beginning. However, there was plenty of time, advocacy, research and recommendations to manage most of the issues with the fertiliser subsidy program, but policy makers hardly listened. 

As a researcher who did his fair share of field engagements with chemical-based paddy farming, I have seen farmlands that have become infertile, water streams that were heavily polluted and ecosystems destroyed with heavy fertiliser applications. 

Most farmers became heavily dependent on the fertiliser subsidy, most of their lands were not responsive to fertiliser anymore and had to be revitalised with organic matter. Subsidised fertiliser was overused and misused by applying it to vegetable cultivation. At the end of the day agriculture produce was not safe to consume anymore. In addition, research by many economists showed that fertiliser subsidy was not making any statistical significance in improving the paddy production anymore. 

As mentioned before, fertiliser subsidy was consuming a heavy portion of the Government budget as well. Therefore, evaluating all this, there is no doubt that the Government made the right decision by abolishing the fertiliser subsidy. However, the issue is whether we took the right approach in transition? My arguments next are based on this point.

Countries that moved away from fertiliser subsides did it gradually. There is a clear and proven reason for that. Once fertiliser subsides are given by the Government several things would happen:

1.Farmers depend on it over time and since it is by the Government, it can easily become mandatory 

2.Private fertiliser markets collapse 

3.Competitive prices would not exists and farmers become less sensitive to world market prices – this is important in our case since we import fertiliser 

Therefore, when transitioning from fertiliser subsidies, all these points have to be carefully evaluated. In our case, much resistance came from farmers in the beginning towards the abolishment of the subsidy, since farmers hardly expected the ruling Government to do it. 

Many expected the Government not to make any radical changes to fertiliser subsidies. Since the subsidy was extended to all paddy farmers including subsistent farmers as well, there was no clear need for a private fertiliser market. Therefore, once a subsidy is removed, it takes time for private fertiliser markets to develop. This is something that needed to be studied with properly planned research. 

One good example is the fertiliser subsidy scheme and its transition in Malawi. Within the first three years of the transition, a countrywide research study was executed to see the development of the private fertiliser markets using a farmer-household survey. The study highlighted the fact that even after three years, private fertiliser markets are not strongly competitive and there are shortages and larger fertiliser discovery costs to farmers. 

As explained earlier, with a heavy subsidy, farmers become less sensitive to world market prices. Once they are exposed to international prices, price shocks can easily become harmful. It will definitely take some time for farmers to adjust their fertiliser consumption by balancing their disposable income and production capacity. 

What all this mean is that farmers should have given more time and proper research should have been implemented to track the success in transitioning. 

Why did the Government’s decision fail?

Many things need to be carefully considered when important subsidies such as fertiliser subsidies are removed. One of the initial impacts in such situations would be the reduction in cultivation therefore a reduction in the production. Therefore, it is important to consider a gradual transition from the fertiliser subsidy. Several things are important in this regard: 

1.Who should face the removal of the subsidy first 

2.Is the private fertiliser market is strong enough to cater the fertiliser demand 

3.Are there close substitutes available 

4.Whether locally available storages are enough to meet any declines in production 

5.Whether there is a backup plan to import rice in case of shortages in local supply.

One of the steps suggested by my research work as well as some other economists is to execute a gradual reduction of the subsidy. What we proposed was to remove the fertiliser subsidy first from the ones who really do not need it. 

A large number of paddy farmers cultivate for their own consumption. They cultivate smaller land areas and their fertiliser requirements are not that large, and they can easily depend on organic fertiliser. Then within a span of five to 10 years, fertiliser subsidy can be fully removed from all. By this time, private fertiliser markets would have gained its competitiveness, and organic fertiliser would be available at competitive prices and in the required quantities. 

But this did not happen; the subsidy was removed from all. However, the Government proposed a coupon system. One would argue that the coupon system was the back up until farmers recover from the shock of subsidy removal. However, it was not a good solution and had many issues. 

The administration of the coupon system was not successful: there were many complaints by farmers about them not getting the money when needed. When the international prices kicked in, prices of privately sold fertiliser was not covered by the coupon money. 

To make things worse, fertiliser requirements had gone up significantly from the early days of recommendations and the coupons only could afford the early recommendations. Therefore, in my view, the coupon system did not do much good to paddy farmers.  

Private fertiliser markets were immature with only a handful of players. Prices were high and there were issues with availability. Farmers did adjust to prices a little bit by reducing the area of cultivation, therefore reducing the fertiliser requirement but at the end, the Government had to request fertiliser from other governments to meet the fertiliser demand by farmers. 

When you are importing fertiliser in dire need, there is very little room for the country to look for competitive markets. In such situations, fertiliser had to be imported regardless of the prices, and this has a direct impact on the prices that farmers face. This is major evidence towards the failure of the Government in keeping up to its policy decisions. 

Through our research, another important thing that we pointed out was the limitations in the organic fertiliser supply. Clearly, organic fertiliser was the next best alternative to chemical fertiliser. However, there were many issues. Organic fertiliser goes hand in hand with traditional paddy varieties. Chemical fertilisers were towards new improved varieties. 

Many commercial farmers did cultivate new improved varieties and they could not achieve their optimal yields with organic fertilisers (this is in addition to the fact that organic fertilisers were put on to lands that were used to heavy doses of chemical fertiliser). Organic fertiliser was needed in larger amounts, the per acre fertiliser requirement was high. Therefore, it was not a viable solution for most commercial paddy farmers. 

There were several organic fertiliser mixtures available in the market but the prices were high and the availability was low. But the biggest issue was the certifications of these commercially available fertilisers. Farmers were exposed to these for the first time and they were not clear whether proper certifications were obtained by the manufacturers or not. This is still an issue. 

Some attempt has been made by Government authorities to introduce certified organic fertiliser mixtures, but prices, availability and proof of efficiency is still a problem. 

Sri Lanka’s rice market is manipulated by several major suppliers. They buy in bulk at a cheaper price and store. They have the ability to control the market prices with their higher storage capacities. I am in doubt whether economists who proposed the coupon system did anticipate a reduction in production therefore a reduction in the supply. If they did, they should have drawn a proper plan to meet the market demand for rice with storage, and also a backup plan for importation. 

While it is clear that there wasn’t a plan to manage the storage, but the Government was very keen on importing and also removing the price control function from their mandate. Therefore, the Government did not have a plan to meet the sudden drops of paddy production with the removal of the fertiliser subsidy. Therefore, from all these fronts, Government failed to sustain with its policy decision to remove the fertiliser subsidy. 

It is also important that I reflect on the crop insurance program at this point. The crop insurance program for paddy was tied to the fertiliser subsidy. This is a bad idea to begin with, but it was implemented and sustained to a certain extent. This was abolished when the subsidy was removed, but to a certain extent it allowed the private insurance market to evaluate the possibility of a crop insurance program. 

We talked about different crop insurance programs and many research studies suggested the importance of an index-based insurance scheme. The 2018 budget proposed an index-based insurance scheme for several crops, which really showed some progress in developing an efficient and strong private sector-oriented crop insurance program. 

However, as suggested by the media and some key political figures, the crop insurance for paddy will be again tied on to the fertiliser subsidy. If this happens, all the hard work and progress towards establishing a competitive and effective crop insurance program will fail. 

Is this not possible at all?

Fertiliser subsidies are economic instruments. But I don’t think this holds true for Sri Lanka anymore. In my view, fertiliser subsidy has become a political-economic instrument. Though it looks and sounds like an economic instrument, it operates as a political instrument. 

Recent activities by policymakers suggest that fertiliser subsidy has a direct link to rural votes. In fact, this is evident during the whole time period since the 1960s where fertiliser subsidy was a major topic at discussion during and after budget proposals. 

The Budget 2018 was regarded as a “greener budget” compared to others. It carried many initiatives which showed the Government’s interest in promoting a greener and sustainable environment. Promoting chemical-free organic agriculture was one its major proposals. 

Several Government-led agriculture initiatives were proposed by the 2018 Budget to implement organic agriculture in paddy, vegetable and fruit cultivations. New agriculture value chains were proposed such as Good Agriculture Practices (GAP) value chain and export-oriented organic value chains to promote and encourage the use of organic fertiliser. 

The private sector also got on the bandwagon in promoting organic agriculture by initiating many programs to support the adoption of organic fertiliser. Now, all this have to be evaluated and will be questioned as to see how they can sustain when farmers are given the fertiliser subsidy back. 

However, this begs the larger question on how committed is the Government in promoting organic agriculture. It is interesting to ask why the Government is trying to turn back. One possible hypothesis is the recent Local Government election. It was clear that the majority of the rural paddy farming based communities voted against the current Government. 

One of the reasons that rural paddy-based farmers were not happy was the way that the Government removed the fertiliser subsidy. While they appreciated the Government’s intention towards organic agriculture, they to a greater extent realised the practice issues of transition process from chemical-based farming to organic farming. Therefore, there is a strong possibility that they were not happy with the current Government. 

The Government made several policy decisions after the election and giving the fertiliser subsidy and tying up the crop insurance program to it was a major one. Therefore, I argue, it is possible to say that the Government wants to win the hearts of the paddy farmers by issuing them free fertiliser. 

This justifies my point, where the fertiliser subsidy is rather a political-economic instrument.  But I still strongly propose that the removal of the fertiliser subsidy is a possible and necessary thing.

What we should have done – or what 

can we do since we are going back 

to square one

This brings back to one of my main arguments that agriculture policies in Sri Lanka are not evidence-based policies. Rather they are politically motivated. Evidence-based agriculture policies are long-term oriented, they are implemented to the betterment of the majority and they are not politically motivated. If all the research work was carefully considered the Government would not have removed the fertiliser subsidy overnight and would not have removed it from all at the same time. 

If they are interested in evidence-based policymaking at all, they would have implemented several research to study to see how the transition happens from chemical fertiliser to organic fertiliser over time. If they are really interested in the sustainability of the agriculture policy, they would not try to go back to square one. 

Now we are in a real dilemma. When the subsidy is given back, can the Government still preach about its motive towards sustainable agriculture and green agriculture? When the fertiliser subsidy was removed, policy makers made it clear that they did it to promote toxin-free agriculture in the country. 

In fact, this gave birth to one of the major initiatives by the Government to promote organic paddy farming in the country by the Sustainable Enterprise Management Authority (SEMA). Programs like these reached the rural farmers and encouraged them to go for organic agriculture. 

This was an uphill battle since they had to persuade farmers to invest on something for the betterment of the society by doing organic agriculture, rather than focusing on private benefits by engaging in chemical-based agriculture. 

Now, it is important to think carefully whether bringing the fertiliser subsidy back will have a significant impact on these national efforts. If so, a proper plan is needed to retain farmers who converted themselves in to organics over the past few years. 

In my view, we should not go back to the fertiliser subsidy. I do not think this will do any good to the environment, agriculture production, safe food consumption, farmers’ wellbeing or the national policy agenda. Rather this shows the weakness of the Government in making major agriculture policies. 

Now that they want to go back, policymakers need to carefully evaluate all the past research so that they realise the things that they did not consider in abolishing the subsidy overnight and introducing an inadequate coupon system. However, they should never step down from promoting organic agriculture. Rather, twice the effort is needed to promote organic agriculture. 

Use of fertiliser is a private decision, so when the subsidy is back, farmers will start using it. But policymakers must make sure this has to be a temporary policy decision. They need to be ready with a better transition plan (backed by ongoing research), better substitute (organic fertiliser) and a backup option for initial reduction in the supply. 

No one would be so naïve to imagine the Government would take back its decision to provide the fertiliser subsidy again. But please let’s hope this is temporary so that we have enough pride left to talk about sustainable agriculture in Sri Lanka. 

(The author is an agriculture and environment economist. He can be reached at chatura_rodrigo@yahoo.com and +94 76 35 99 243.)Introduction

It is with great difficulty that we as a country arrived at the decision to abolish the fertiliser subsidy. 

The fertiliser subsidy, as an economic instrument used to increase the efficiency of rice production, was successful in achieving its primary objective, which is increasing rice production and reducing the need to import rice. 

Sri Lanka became very close to achieving its status of rice self-sufficiency. However, there were many negative externalities. With a subsidy of almost 90%, farmers became heavily dependent on chemical fertiliser, nearly forgot about organic fertiliser and overused as well as misused the subsidy. 

As a result, paddy lands became fertiliser irresponsive, downstream water and ground water became polluted with washed-off chemicals, and paddy production went down (production did not increase unless lands were flooded with more chemical fertilisers, which increased the cost of production dramatically). Rice produce became toxic to consume and heavy emphasis was on organic produce. 

Organic paddy production became an attractive alternative in the eyes of negative environmental and health externalities. NCDs also played an active role in driving organic food demand. 

Moreover, the fertiliser subsidy became a significant burden on the national budget. In addition, economists and scientists argued the negative externalities of the fertiliser subsidy with research and evidence. Finally, the Government made a decision to abolish the fertiliser subsidy and move on to a coupon system. 

Within a very short span of time, the Government is making plans to reverse its decision. Several media news bytes spoke of the decision to implement the fertiliser subsidy fully. This is a very discouraging situation for most who worked on getting the fertiliser subsidy removed and promoted organic paddy cultivation all over the country. 

Being one of the economists who argued for the abolishment of the fertiliser subsidy, I was heavily disappointed by this discussion/direction by the Government. However, this is something that I did expect. My view on the Government’s decision to abolish the fertiliser subsidy in the first place was not very optimistic. There were shortfalls in the way it was implemented. This article explores answers to several major questions: 

1.Did we make the right decision in 

abolishing the subsidy? 

2.Why did the Government’s 

decision fail? 

3. Is this not possible at all? 

Did we make the right decision in fully abolishing the fertiliser subsidy?

There are plenty of case studies in the world that show best practices in abolishing economic instruments such as fertiliser subsidies. The fertiliser subsidy is one of the best and strong economic instruments that countries have used to improve cultivation of its staple crops. 

There are no arguments towards achieving its primary objective of increasing the fertiliser use and increasing the agricultural production and efficiencies. However, most countries which were successful in giving fertiliser subsidies had-long term plans. 

How much to subsidise, how long to continue with the subsidy, who would be the primary target group was carefully researched. Because of this evidence-based policy making, these countries were successful in introducing as well as removing the fertiliser subsidy before it yielded any significant negative externalities. However, we failed in most of these planning processes. 

The fertiliser subsidy was something that was heavily subsidised, it was continued for a very long time without a proper plan of transition, and it was administered towards commercial as well as subsistence paddy farmers. Therefore, one can argue that the fertiliser subsidy program was set towards a gloomy future from the beginning. However, there was plenty of time, advocacy, research and recommendations to manage most of the issues with the fertiliser subsidy program, but policy makers hardly listened. 

As a researcher who did his fair share of field engagements with chemical-based paddy farming, I have seen farmlands that have become infertile, water streams that were heavily polluted and ecosystems destroyed with heavy fertiliser applications. 

Most farmers became heavily dependent on the fertiliser subsidy, most of their lands were not responsive to fertiliser anymore and had to be revitalised with organic matter. Subsidised fertiliser was overused and misused by applying it to vegetable cultivation. At the end of the day agriculture produce was not safe to consume anymore. In addition, research by many economists showed that fertiliser subsidy was not making any statistical significance in improving the paddy production anymore. 

As mentioned before, fertiliser subsidy was consuming a heavy portion of the Government budget as well. Therefore, evaluating all this, there is no doubt that the Government made the right decision by abolishing the fertiliser subsidy. However, the issue is whether we took the right approach in transition? My arguments next are based on this point.

Countries that moved away from fertiliser subsides did it gradually. There is a clear and proven reason for that. Once fertiliser subsides are given by the Government several things would happen:

1.Farmers depend on it over time and since it is by the Government, it can easily become mandatory 

2.Private fertiliser markets collapse 

3.Competitive prices would not exists and farmers become less sensitive to world market prices – this is important in our case since we import fertiliser 

Therefore, when transitioning from fertiliser subsidies, all these points have to be carefully evaluated. In our case, much resistance came from farmers in the beginning towards the abolishment of the subsidy, since farmers hardly expected the ruling Government to do it. 

Many expected the Government not to make any radical changes to fertiliser subsidies. Since the subsidy was extended to all paddy farmers including subsistent farmers as well, there was no clear need for a private fertiliser market. Therefore, once a subsidy is removed, it takes time for private fertiliser markets to develop. This is something that needed to be studied with properly planned research. 

One good example is the fertiliser subsidy scheme and its transition in Malawi. Within the first three years of the transition, a countrywide research study was executed to see the development of the private fertiliser markets using a farmer-household survey. The study highlighted the fact that even after three years, private fertiliser markets are not strongly competitive and there are shortages and larger fertiliser discovery costs to farmers. 

As explained earlier, with a heavy subsidy, farmers become less sensitive to world market prices. Once they are exposed to international prices, price shocks can easily become harmful. It will definitely take some time for farmers to adjust their fertiliser consumption by balancing their disposable income and production capacity. 

What all this mean is that farmers should have given more time and proper research should have been implemented to track the success in transitioning. 

Why did the Government’s decision fail?

Many things need to be carefully considered when important subsidies such as fertiliser subsidies are removed. One of the initial impacts in such situations would be the reduction in cultivation therefore a reduction in the production. Therefore, it is important to consider a gradual transition from the fertiliser subsidy. Several things are important in this regard: 

1.Who should face the removal of the subsidy first 

2.Is the private fertiliser market is strong enough to cater the fertiliser demand 

3.Are there close substitutes available 

4.Whether locally available storages are enough to meet any declines in production 

5.Whether there is a backup plan to import rice in case of shortages in local supply.

One of the steps suggested by my research work as well as some other economists is to execute a gradual reduction of the subsidy. What we proposed was to remove the fertiliser subsidy first from the ones who really do not need it. 

A large number of paddy farmers cultivate for their own consumption. They cultivate smaller land areas and their fertiliser requirements are not that large, and they can easily depend on organic fertiliser. Then within a span of five to 10 years, fertiliser subsidy can be fully removed from all. By this time, private fertiliser markets would have gained its competitiveness, and organic fertiliser would be available at competitive prices and in the required quantities. 

But this did not happen; the subsidy was removed from all. However, the Government proposed a coupon system. One would argue that the coupon system was the back up until farmers recover from the shock of subsidy removal. However, it was not a good solution and had many issues. 

The administration of the coupon system was not successful: there were many complaints by farmers about them not getting the money when needed. When the international prices kicked in, prices of privately sold fertiliser was not covered by the coupon money. 

To make things worse, fertiliser requirements had gone up significantly from the early days of recommendations and the coupons only could afford the early recommendations. Therefore, in my view, the coupon system did not do much good to paddy farmers.  

Private fertiliser markets were immature with only a handful of players. Prices were high and there were issues with availability. Farmers did adjust to prices a little bit by reducing the area of cultivation, therefore reducing the fertiliser requirement but at the end, the Government had to request fertiliser from other governments to meet the fertiliser demand by farmers. 

When you are importing fertiliser in dire need, there is very little room for the country to look for competitive markets. In such situations, fertiliser had to be imported regardless of the prices, and this has a direct impact on the prices that farmers face. This is major evidence towards the failure of the Government in keeping up to its policy decisions. 

Through our research, another important thing that we pointed out was the limitations in the organic fertiliser supply. Clearly, organic fertiliser was the next best alternative to chemical fertiliser. However, there were many issues. Organic fertiliser goes hand in hand with traditional paddy varieties. Chemical fertilisers were towards new improved varieties. 

Many commercial farmers did cultivate new improved varieties and they could not achieve their optimal yields with organic fertilisers (this is in addition to the fact that organic fertilisers were put on to lands that were used to heavy doses of chemical fertiliser). Organic fertiliser was needed in larger amounts, the per acre fertiliser requirement was high. Therefore, it was not a viable solution for most commercial paddy farmers. 

There were several organic fertiliser mixtures available in the market but the prices were high and the availability was low. But the biggest issue was the certifications of these commercially available fertilisers. Farmers were exposed to these for the first time and they were not clear whether proper certifications were obtained by the manufacturers or not. This is still an issue. 

Some attempt has been made by Government authorities to introduce certified organic fertiliser mixtures, but prices, availability and proof of efficiency is still a problem. 

Sri Lanka’s rice market is manipulated by several major suppliers. They buy in bulk at a cheaper price and store. They have the ability to control the market prices with their higher storage capacities. I am in doubt whether economists who proposed the coupon system did anticipate a reduction in production therefore a reduction in the supply. If they did, they should have drawn a proper plan to meet the market demand for rice with storage, and also a backup plan for importation. 

While it is clear that there wasn’t a plan to manage the storage, but the Government was very keen on importing and also removing the price control function from their mandate. Therefore, the Government did not have a plan to meet the sudden drops of paddy production with the removal of the fertiliser subsidy. Therefore, from all these fronts, Government failed to sustain with its policy decision to remove the fertiliser subsidy. 

It is also important that I reflect on the crop insurance program at this point. The crop insurance program for paddy was tied to the fertiliser subsidy. This is a bad idea to begin with, but it was implemented and sustained to a certain extent. This was abolished when the subsidy was removed, but to a certain extent it allowed the private insurance market to evaluate the possibility of a crop insurance program. 

We talked about different crop insurance programs and many research studies suggested the importance of an index-based insurance scheme. The 2018 budget proposed an index-based insurance scheme for several crops, which really showed some progress in developing an efficient and strong private sector-oriented crop insurance program. 

However, as suggested by the media and some key political figures, the crop insurance for paddy will be again tied on to the fertiliser subsidy. If this happens, all the hard work and progress towards establishing a competitive and effective crop insurance program will fail. 

Is this not possible at all?

Fertiliser subsidies are economic instruments. But I don’t think this holds true for Sri Lanka anymore. In my view, fertiliser subsidy has become a political-economic instrument. Though it looks and sounds like an economic instrument, it operates as a political instrument. 

Recent activities by policymakers suggest that fertiliser subsidy has a direct link to rural votes. In fact, this is evident during the whole time period since the 1960s where fertiliser subsidy was a major topic at discussion during and after budget proposals. 

The Budget 2018 was regarded as a “greener budget” compared to others. It carried many initiatives which showed the Government’s interest in promoting a greener and sustainable environment. Promoting chemical-free organic agriculture was one its major proposals. 

Several Government-led agriculture initiatives were proposed by the 2018 Budget to implement organic agriculture in paddy, vegetable and fruit cultivations. New agriculture value chains were proposed such as Good Agriculture Practices (GAP) value chain and export-oriented organic value chains to promote and encourage the use of organic fertiliser. 

The private sector also got on the bandwagon in promoting organic agriculture by initiating many programs to support the adoption of organic fertiliser. Now, all this have to be evaluated and will be questioned as to see how they can sustain when farmers are given the fertiliser subsidy back. 

However, this begs the larger question on how committed is the Government in promoting organic agriculture. It is interesting to ask why the Government is trying to turn back. One possible hypothesis is the recent Local Government election. It was clear that the majority of the rural paddy farming based communities voted against the current Government. 

One of the reasons that rural paddy-based farmers were not happy was the way that the Government removed the fertiliser subsidy. While they appreciated the Government’s intention towards organic agriculture, they to a greater extent realised the practice issues of transition process from chemical-based farming to organic farming. Therefore, there is a strong possibility that they were not happy with the current Government. 

The Government made several policy decisions after the election and giving the fertiliser subsidy and tying up the crop insurance program to it was a major one. Therefore, I argue, it is possible to say that the Government wants to win the hearts of the paddy farmers by issuing them free fertiliser. 

This justifies my point, where the fertiliser subsidy is rather a political-economic instrument.  But I still strongly propose that the removal of the fertiliser subsidy is a possible and necessary thing.

What we should have done – or what 

can we do since we are going back 

to square one

This brings back to one of my main arguments that agriculture policies in Sri Lanka are not evidence-based policies. Rather they are politically motivated. Evidence-based agriculture policies are long-term oriented, they are implemented to the betterment of the majority and they are not politically motivated. If all the research work was carefully considered the Government would not have removed the fertiliser subsidy overnight and would not have removed it from all at the same time. 

If they are interested in evidence-based policymaking at all, they would have implemented several research to study to see how the transition happens from chemical fertiliser to organic fertiliser over time. If they are really interested in the sustainability of the agriculture policy, they would not try to go back to square one. 

Now we are in a real dilemma. When the subsidy is given back, can the Government still preach about its motive towards sustainable agriculture and green agriculture? When the fertiliser subsidy was removed, policy makers made it clear that they did it to promote toxin-free agriculture in the country. 

In fact, this gave birth to one of the major initiatives by the Government to promote organic paddy farming in the country by the Sustainable Enterprise Management Authority (SEMA). Programs like these reached the rural farmers and encouraged them to go for organic agriculture. 

This was an uphill battle since they had to persuade farmers to invest on something for the betterment of the society by doing organic agriculture, rather than focusing on private benefits by engaging in chemical-based agriculture. 

Now, it is important to think carefully whether bringing the fertiliser subsidy back will have a significant impact on these national efforts. If so, a proper plan is needed to retain farmers who converted themselves in to organics over the past few years. 

In my view, we should not go back to the fertiliser subsidy. I do not think this will do any good to the environment, agriculture production, safe food consumption, farmers’ wellbeing or the national policy agenda. Rather this shows the weakness of the Government in making major agriculture policies. 

Now that they want to go back, policymakers need to carefully evaluate all the past research so that they realise the things that they did not consider in abolishing the subsidy overnight and introducing an inadequate coupon system. However, they should never step down from promoting organic agriculture. Rather, twice the effort is needed to promote organic agriculture. 

Use of fertiliser is a private decision, so when the subsidy is back, farmers will start using it. But policymakers must make sure this has to be a temporary policy decision. They need to be ready with a better transition plan (backed by ongoing research), better substitute (organic fertiliser) and a backup option for initial reduction in the supply. 

No one would be so naïve to imagine the Government would take back its decision to provide the fertiliser subsidy again. But please let’s hope this is temporary so that we have enough pride left to talk about sustainable agriculture in Sri Lanka. 

(The author is an agriculture and environment economist. He can be reached at chatura_rodrigo@yahoo.com and +94 76 35 99 243.)


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The evolution of CSR towards Creating Integrated Value

Thursday, 21 June 2018

Creating Integrated Value (CIV), a term that I coined in 2014, is a concept and practice that has emerged from a long tradition of exploring the role of business in society. It has roots in what many today call corporate (social) responsibility or CS


Let’s educate ourselves for change!

Thursday, 21 June 2018

Ordinary Level Examinations are over. Results are in. What should I be doing at Advanced Level? Science, Commerce or Arts? And what subject combinations? This always is a burning question for some and also for parents. This question is usually answe


Waluka teledrama and Yahapalana political drama

Thursday, 21 June 2018

There are several Sinhala teledramas telecast these days with passing political or social messages both constructive and humorous. The ongoing ‘Ape Ardare’ (Our Love) and ‘Sanda Eliya’ (Moonlight) may stand out, exposing the dubious nature of


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