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Monday Dec 16, 2024
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By Asanga Wimalaratne
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| SLEA Council Member and Hon. Treasurer, and Sri Lanka Telecom Deputy General Manager – Finance Asanga Wimalaratne |
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| University of Peradeniya Professor in Agricultural Economics Jeevika Weerahewa |
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| Institute of Policy Studies of Sri Lanka Research Fellow Manoj Thibbotuwawa |
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| University of Colombo Professor in Economics Sirimal Abeyratne |
This article represents the views aired in the fifth seminar of a monthly seminar series organised by Sri Lankan Economic Association (SLEA), which was held on 25 June via Zoom platform. Two eminent
academics joined the webinar as resource personnel. Senior Prof. Jeevika Weerahewa (Professor of Agricultural Economics) attached to the University Peradeniya made the presentation on ‘Impending food crisis in Sri Lanka: Causes, consequences and solutions’. The discussant was Dr. Manoj Thibattuwa, a research fellow from the Institute of Policy Studies. The webinar session was moderated by Senior Professor Sirimal Abeyratne, Vice-president of SLEA. The views expressed in the article are those of the presenters and do not reflect views of SLEA.
The cascade of crises facing Sri Lanka – Causes
Sri Lanka faces unsustainable debt and significant balance of payments challenges. The economic outlook is highly uncertain due to the fiscal and external imbalances. This has inflicted a devastating impact on people’s lives and the economy’s smooth operation. Urgent policy measures are needed to address the high levels of debt and debt service, reduce the fiscal deficit, and restore external stability.
The causes for this cascade of crises that Sri Lanka faces can broadly be categorised into five major categories.
1. Twin deficit – Chronic issues in macro-economic management
2. Policy mistakes such as extensive money printing, hefty tax cuts, exchange rate fixing, ban of agro-chemical importation, restrictions on food importation and removal of price ceilings on essential food items, etc.
3. Rising world market prices of fuel, fertiliser, wheat, and upcoming world recession
4. Unfavourable climate conditions
5. Stocking-up of food, fuel, medicine, etc.
All above causes aggravated the current situation as well as the agri-food market in Sri Lanka. Whether Sri Lanka is in a food crisis due to the aforementioned causes is to be evaluated from a definitional point of view.
Food crisis – Concept and measurement
People generally say that food crisis is characterised by hunger and malnutrition. Food crisis is normally diagnosed with sharp rise in food prices. Accordingly, food crisis occurs when rates of hunger and malnutrition rise sharply. It would set-off by a shock to either supply or demand for food and often involves a sudden spike in food prices. There are three phases of food crisis as per the integrated food security phase classification (IPC).
During the first phase of crisis high or above usual acute malnutrition condition may prevail. By depleting essential livelihood assets or through a crisis coping strategies, general public are marginally able to meet their minimum food needs. Under the second phase of emergency phase, a very high acute malnutrition as well as high mortality rate may prevail. To meet minimum food needs, it is required to employ emergency livelihood strategies as well as asset liquidation initiatives. Under the third phase ‘Hunger’, evidence of starvation, death, destitution, and extremely acute malnutrition conditions may prevail. According to above classification, it is apparent that we are in the first phase ‘crisis’, and we should take maximum possible effort to avoid entering into an emergency phase.
Previous experience of Sri Lanka
There are few incidents recorded in the recent history in relation to the food crisis. The crisis during the 1972-1974 period was mainly due to oil price shocks in the Middle East market. To coup up with crisis, then government has imposed stringent import restrictions. Black markets and long queues for food and other essentials also prevailed. This incident had led to the political death of old left parties and to the opening of the economy in 1977. As per the research conducted by the Gavan and Chandrasekara (1979) calories and protein consumption were reduced by 8% between late 1960s and 1970s due to poor harvest, ration cuts and price escalations.
However, Sri Lanka faced a minimum consequence from the global financial and food crisis that prevailed during 2008/2009 although there was a substantial food price escalation. The agriculture sector was in good arms even during the pandemic period as Government had launched the ‘National Food Drive’ during that period, and we were able to have a good crop that mitigates the adverse impact from the crisis. The Government continued with its food self-sufficiency drive during the COVID-19 pandemic period. Also, seeds and fertilisers were distributed at highly subsidised rates before the organic agriculture policy was initiated.
Nevertheless, the present ongoing crisis is unprecedented. The economic crisis is predictable, and it was precisely predicted by the economists (Weerakoon and Jayasuriya in 2019). The crisis in the agri-food markets is also predicted by the agriculturists. Unlike in the case of 2008/2009 crisis, causes for current crisis is identifiable.
Consequences: High food inflation
Food inflation has reached up to 57% by May 2022 which is far above the general inflation level of the country. Individual commodity prices are also increased at different rates due to different reasons. Different causes for different food markets are then observed. For some food items, YOY price change between May 2021 and May 2022 is more than 80%. As per the recent UN Reports, 5.7 million people in Sri Lanka need humanitarian assistance, 4.9 million people face food insecurity, People In Need (PIN) when it comes to the agriculture is 3.45 million people and 2.43 million people when it comes to the nutrition. UN reports further indicated at least 56,000 children under the age of 5 years with acute malnutrition. 73% of households experienced a negative income and 70% of the population reduced their food consumption.
Solutions for the food crisis
Deans of all eight agriculture faculties of universities have submitted their proposals to the Government. Various institutions such as SLEA, AMSA, SASA and SLIAg have submitted their proposals outlining various strategies to address food crisis during the recent past. However, it is required to conduct a full-fledged economic cost benefit analysis to rank those different proposals and pick the best suited solutions. Emergency preparedness focusing on food distribution and quick earning through exports, revitalising agricultural sector by expansion of resource base, improving productivity of resource usage, connecting farmers to local and international markets are important solutions to address the impending food crisis.
Under emergency measures, it is sine qua none to in place a food ration scheme back with the objective of bailing out the poor and vulnerable communities. A universal food ration scheme should cover the essential food items such as rice, dhal and wheat. Programs such as school meal, thriposha distribution and Poshana malla could be conducted as targeted nutritional assistance programs. Maintaining adequate buffer stock and avoiding food hoarding are also important.
Community based interventions such as community gardens, school gardens, and community kitchens play a vital role in addressing this issue. However, there are some challenges in the process of developing food security. Acquiring food items from foreign sources, covering both investment and opportunity cost of resources, and allocating among beneficiaries are few such challenges which need to be addressed. As per Prof. Weerahewa’s computation, likely import bill for rice and wheat is approximately $ 1.5 billion per annum if there is a 50% drop in paddy harvest.
Attracting more resources to the agricultural sector is very vital to revitalise the sector. Popular programs such as home garden cultivation, urban farming, roof gardening, weekends farming, vertical gardens, and cultivations in abandoned lands could be used to revitalise the agriculture sector. Improving technical efficiency is another way of revitalising the agriculture sector. New technologies to improve agricultural productivity, reduce post-harvest losses and food waste, targeting delivery of scarce resources to high productive sectors, innovation in substitutes such as solar energy, bio energy and use of digital technologies to the agricultural activities are proposed under ‘improvement of technical efficiency’ initiatives.
Improving allocating efficiency through connecting farmers to markets is another vital strategy for revitalising the agriculture sector. Exploiting gains from trade is also important in revitalising the agricultural sector. Supporting downstream segments (vessel clearing, fuel for food processing machines) in the food value chain, connecting to global value chains, export promotions, trade facilitation at the borders, contractual agreements with super star exporters are essential to exploit the gains from the trade.
Needs of the hour
All in all, the following initiative is sine qua none in order to avoid food insecurity among Sri Lankans.
The discussant opined these types of solution-based strategies required to be implemented in order to address the food crisis as short-term and long-term policy level initiatives. He also emphasised the multi-dimensional nature of the food crisis. He further elaborated on the requirement of ensuring food availability, food access, food stability and food utilisation in order to avoid food insecurity in the country.
(The writer is a Council Member and Hon. Treasurer of Sri Lanka Economic Association (SLEA), and Deputy General Manager – Finance at Sri Lanka Telecom PLC.)
