Back to ABCD?

Saturday 30th October, 2021

A meeting between President Gotabaya Rajapaksa and the leaders of the SLPP constituents ended inconclusively on Thursday. Among the participants were Prime Minister Mahinda Rajapaska and Finance Minister Basil Rajapaksa. Nobody expected any positive outcome of the meeting because the government has crossed the point of no return where its questionable energy deal with New Fortress is concerned. Claiming that some more agreements remained to be signed as regards the Yugadanavi power plant as well as the proposed LNG project, the government leaders have asked SLPP MPs to submit their suggestions for consideration. It has put the cart before the horse/bullock. The government MPs’ views should have been sought before the signing of the controversial agreement. The government has also sought to pull the wool over the eyes of the public; it says that if the LNG deal goes through, it will be able to reduce the price of electricity by 20%! If it thinks the people are suckers, and its claim will help assuage public anger, it is mistaken.

Electricity is likely to be the least of Sri Lankans’ problems if what Minister of Trade Bandula Gunawardena told the SLPP leaders, at Thursday’s meeting, is anything to go by. Making a presentation, he said food prices were rising in the world market and there had been a decrease in global food production due to Covid-19. This is a realistic assessment of the situation, but the pandemic is only one of the causative factors.

The World Bank (WB) has, in a recent brief titled, Food Security and Covid-19, pointed out that the number of countries grappling with increasing levels of acute food insecurity is on the rise, and this situation will reverse years of development gains. It has revealed that even before the pandemic, reductions in incomes, disruptions to supply chains, and chronic and acute hunger were increasing owing to various factors including conflict, socio-economic conditions, natural hazards, the climate emergency, and pests. The impact of Covid-19 has caused severe and widespread increases in global food insecurity, which will continue into 2022 and possibly beyond, the WB says. This is a frightening proposition.

In Sri Lanka, food insecurity will be particularly severe owing to the current fertiliser shortage and attendant problems, which have driven many farmers to let their fields lie fallow, not to restore the fertility of the agricultural lands, but to avoid losses. Traders of the Manning market have said there has been a noticeable reduction in the vegetable supplies over the past several weeks, and it could be due to the fertiliser crisis.

Meanwhile, Sri Lanka’s sovereign rating downgrade by Moody’s could not have come at a worse time. The Central Bank of Sri Lanka has put forth several arguments against the downgrade, and they sound convincing despite their political tenor. But foreign investors go by Moody’s ratings as they take all precautions when they park their money overseas, and this will make the task of attracting investment or obtaining foreign loans even more difficult for Sri Lanka.

Thus, at this rate, the day may not be far off when we find ourselves in a situation where there is no forex to pay for imports; food cannot be imported owing to a global shortage even if funds are available, and the local food production has decreased for want of fertiliser.

The government has undertaken to compensate farmers for crop losses that may be caused by its organic fertiliser experiment, but this course of action will not be a solution to the problem at hand; more money will be printed to pay compensation, increasing inflation, but the domestic food production will remain low. The solution is to increase the local agricultural output substantially so that the country will be able to absorb shocks from a severe global food shortage. It is not advisable for Sri Lanka to rely on food imports because other countries will cut down on their exports if they experience domestic shortages.

One only hopes that the government will wise up to the need for an urgent course correction and do everything in its power to increase the domestic food production lest the country should become dependent on ABCD—ala, bathala, cos and del—yams, sweet potatoes, jackfruit and breadfruit, as was the case in the 1970s.