Sri Lanka is facing an economic crisis that has severely impacted many sectors, with the government's incorrect and arbitrary decisions being blamed for the situation. The country's agriculture sector has also been hit hard, with farmers bearing the brunt of poor decision-making.
The crisis in the agriculture sector began on April 27th, 2021, when the Import and Export Control Department banned the imports of fertilizer and agro-chemicals. Farmers were severely affected by this move, and their cultivation went to waste, leading to street protests demanding the import of fertilizer.
Here is a look back at the gradual decline of the agricultural sector that followed this decision:
August 5th, 2021
Cabinet approval was granted to import 99,000 metric tons of organic fertilizer produced using seaweed, from China's Qingdao Seawin Biotech Group. The consignment was valued at 63.6 million US dollars.
September 2021
The ship, 'Hippo Spirit,' carrying 20,000 metric tons of Chinese fertilizer left the Qingdao Port.
August 2021
The National Plant Quarantine Service detected harmful bacteria in Chinese fertilizer samples, and experts warned that importing fertilizer containing harmful bacteria could affect the agriculture sector.
October 2021
The Agriculture Minister said that the samples were not brought in line with safety conditions and called for another test.
29th October 2021
The second test confirmed the presence of harmful bacteria, leading to the suspension of the consignment's importation. Sri Lanka's state-run fertilizer companies went to court, and the Colombo Commercial High Court issued an order preventing People's Bank from paying for the shipment.
The ship carrying the Chinese fertilizer shipment reached Sri Lankan waters, but it continued to travel around the country by changing its name. The fertilizer shipment remained in Sri Lankan waters for more than 70 days, and the Chinese company announced that it would go for arbitration in Singapore. Amidst all this, Sri Lankan farmers held protests demanding the rejection of the Chinese fertilizer shipment.
26th October 2021
The Chinese company sent a letter of demand, warning of legal action against Sri Lanka's National Plant Quarantine Service. The samples were then re-tested in a lab agreed by both parties, and the results did not indicate the presence of harmful bacteria. The Hippo Spirit ship left for Singapore, and both parties reached a settlement, leading to the Court lifting the order preventing payments.
January 7th, 2022
Sri Lanka paid 6.9 million US dollars for the fertilizer shipment, and the Hippo Spirit ship remained in China. The Agriculture Minister then assured that fertilizer would be imported under proper standards by the same Chinese company after placing a 5 million USD guarantee. He assured that the ship would go back, and new samples would be sent, which would be tested by the National Plant Quarantine Service.
As a result of poor decision-making, the government had to pay 6.9 million US dollars, which is equal to about 2.5 billion rupees today.
Liquid Nitrogen
The government then took steps to import liquid nano nitrogen fertilizer from India, which was imported at twice or thrice the cost of the market value of the product. However, it was revealed in Parliament that 290 million rupees had been deposited into a personal bank account during this transaction, and a selected few profited as the agriculture sector fell deeper into crisis.
All these actions led to farmers facing massive losses as their harvests declined due to the fertilizer shortage.
By Polito
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