Sri Lanka rows back on chemical fertiliser ban, but yields may not rebound

COLOMBO (Reuters) -Sri Lanka rowed back on its goal to become the first country to fully adopt organic farming on Wednesday by removing the ban on the use and importation of chemical fertilisers after months of mass protests by farmers and a surge in food price inflation.

The government had completely banned chemical fertilisers when it unveiled a new agricultural policy in April.

Explaining the U-turn at a cabinet briefing, Agriculture Minister Mahindananda Aluthgamage said only the private sector would be allowed to resume imports, which would be expensive as a subsidy for chemical fertilisers would not be reinstated.

"As a country that is sensitive to the people, because farmers have asked us to do this, cabinet decided to voluntarily rescind the gazette notification banning imports," he added. 

The ban on all chemical fertiliser, pesticides, weedicides and fungicides was implemented on April 26, prompting thousands of farmers to protest and demand the government adopt a hybrid policy to allow organic and chemical fertiliser. 

The chemical fertiliser ban, combined with bad weather, led to falling crop yields and contributed to inflation hitting a 47-month high of 8.3% in October with food inflation at 11.7%.

Aluthgamage said yields of about 13,000 hectares of vegetables had been affected by bad weather but the government would provide compensation to farmers.

Sri Lanka has more than 2 million farmers and up to 70% of its 22 million people are directly or indirectly dependant on agriculture.

NO RESPITE

During the main rice cultivation season in 2019, Sri Lanka produced 3.5 billion kg of the grain. Agriculture experts predicted paddy output could fall as much as 43% this year due to the import ban.

Jeevika Weerahewa, an agricultural economist at Sri Lanka's Peradeniya University, said paddy yields could drop by 30% and maize by 50% even with the import ban reversed.

"This was an unnecessary experiment," she said. "The time for fertiliser application for rice is past and the crop will not recover. In addition, world market prices have more than doubled and there are no suppliers."

Weerahewa said Sri Lanka's weak foreign exchange reserves, which dropped to $2.27 billion at the end of October, would impede imports. She said rice yields were not expected to recover until at least the second quarter of 2022.

Namal Karunaratne of the All Ceylon Farmers Federation, the country's largest farmers group that is associated with an opposition party, said farmers would receive little respite from the policy reversal.

"With the refusal to give a fertiliser subsidy the government has set the stage for high prices. The only winner here are the private sector fertiliser import companies," he said.

(Reporting by Uditha Jayasinghe; Editing by Swati Bhat and Editing by Simon Cameron-Moore and Edmund Blair)

By Uditha Jayasinghe