Sri Lanka: An Unnecessary Tragedy

by | Jul 28, 2022

Sri Lanka’s collapse reveals the painful consequences of ignoring the fundamental realities that govern energy, food production, and human civilization.

The fall of an old political dynasty. Millions threatened by famine. The storming and sacking of a grand palace. An entire nation brought to its knees by misguided ambition. These are not vignettes ripped from some ancient Greek tragedy. Instead, they are the very modern and very real consequences of Sri Lanka’s disastrous foray into so-called “green” agriculture.

In April 2021, then-president Gotabaya Rajapaksa – whose brother was also president from 2005 to 2015 – declared that Sri Lanka would become the first all-organic country in the world. A ban on the use and importation of agrochemicals (synthetic fertilizer and pesticides) soon followed. The results were immediate and devastating: crop yields plummeted, food shortages proliferated, and the economy all-but collapsed. Now, Sri Lanka teeters on the edge of becoming a failed state, and the well-being of millions of people has been put at risk.

This turn of events, while dramatic, was also entirely avoidable. As far as developing nations go, Sri Lanka was dealt a strong geographic hand. Its plentiful rainfall, arable soil, and tropical climate makes it an ideal place to grow food and lucrative cash crops, especially rice, tea, and cocoa. As an island, it sits right next some of the busiest trade routes in the world, giving these products easy access to regional and global markets.

By 2009, Sri Lanka’s 26-year-long civil war had finally come to an end, allowing it to redirect its energy towards development. It did so with gusto. Within a decade, Sri Lanka had risen to upper-middle-income status, was earning a per-capita GDP that was almost double that of India’s, and – with the use of modern agrochemicals – was practically self-sufficient in rice production as early as 2005. Shortly before the current crisis, Sri Lanka was seen as a model developing country, held up as a roadmap that others could follow out of economic malaise and civil conflict.

It is difficult to overemphasize the role that farming played in this initial success. Agricultural exports – especially rice, tea, and cocoa – were one of the primary sources of foreign exchange for the government and of income for its many farmers. That inflow of foreign currency enabled the state to import key commodities that Sri Lanka could not produce on its own, especially fuel, medicine, and foodstuffs. In one sense, Sri Lanka’s economy hinged on its ability to sell its high-demand, specialized commercial crops abroad to places like Europe.

To understand how all of this fell apart, one must keep in mind the fundamental physical realities that dictate food production. Food is an energy output: a bundle of calories and nutrients that, when burned, allow the human body to function. That output, naturally, depends on a corresponding input of energy and nutrients, which, in agriculture, comes from both solar radiation and nutrients found in the soil. For most of human history, the only way to increase that input was to increase the amount of land used for farming, giving growers more access to soil and sun.

Ted Nordhaus and Saloni Shah, writing for Foreign Policy magazine, illuminate the key limitation to this age-old food production system:

“As recently as 200 years ago, more than 90 percent of the global population labored in agriculture. The only way to bring additional energy and nutrients into the system to increase production was to let land lie fallow, rotate crops, use cover crops, or add manure from livestock that either shared the land with the crops or grazed nearby. In almost every case, these practices required additional land and put caps on yields.”

That labor-intensive system guaranteed most farmers only had spare hands enough to produce what they needed to eat, with only some left over for sale in domestic markets. For an island country like Sri Lanka, this problem is exacerbated, as the land that can be given over to crop production is physically limited. Synthetic fertilizer and pesticides, however, fundamentally changed that equation.

By vastly increasing the number of soil nutrients that would otherwise occur naturally, they caused crop yields to spike. This – combined with improvements in machinery, irrigation, and seeds – allowed for much higher levels of production on less land with less labor. The widespread adoption of this new energy input was a world-historical turning point. Modern farming techniques substituted mass labor and led to industrialization with all its trappings: a higher quality of life, urbanization, a middle class, universal education, and widespread food security on a scale incomprehensible just a few generations earlier. Today, this new, energy-intensive, high-yield agricultural system feeds some 8 billion people around the globe.

Sri Lanka followed this path of economic development, and modern farming techniques became its economic lifeline. Millions moved farm labor to the wage economy, and the remaining farmers made a much better living selling their produce on global markets. Incomes grew – as did the middle class – and Sri Lanka, despite its very real economic problems, climbed the ladder out of poverty.

Unfortunately, this success story was systematically undermined by a crippling debt crisis that lies at the core of today’s collapse.

Over the course of several decades, Sri Lanka’s government racked up an impressive sovereign debt. Some of this was the natural blowback of rapid economic development;  The Rajapaksa brothers borrowed liberally from foreign creditors like Europe, the U.S., and China to shore up their political base, bloating the national bureaucracy to an unnatural size – 1.4 million state employees in a nation of 22 million – and financing unsustainable campaign promises ranging from tax cuts to subsidized bread. When borrowing became unfeasible, these endeavors and more were paid for by a scale of money printing that would make even the most fanatic devotees of modern monetary theory blush. Any economist could have predicted what happened next: the currency devalued, creditors downgraded bonds, Sri Lanka began missing its debt payments and finally defaulted in May.

A vicious cycle soon ensued. Inflation accelerated, depleting the treasury and making it much harder to import needed commodities. By then, the COVID-19 pandemic the major sources of Sri Lanka’s foreign currency reserves: expat remittances, tea exports, and the apparel industry. The all-important tourism industry also took a serious hit, just as it was beginning to recover from the Easter Sunday terror attacks of 2019. Then, another stroke of bad luck: many visitors to Sri Lanka came from Russia and Ukraine, but the war broke out just as the industry was once again beginning to recover.

Still, things may have been salvaged, but President Rajapaksa’s blind commitment to a global green agenda ensured that would never happen.

The ill-timed agrochemical ban caused agricultural production to fall, depending on the crop in question. The government was then forced to import more rice and other foodstuffs to feed the population. As food is much more expensive to import than fertilizer, the state fell even deeper into the financial hole. Food shortages broke out, and fuel imports became all-but impossible. While Rajapaksa reversed the fertilizer ban only a few months later, it was too late. The damage was done. Sri Lanka collapsed.

What happened next is well-documented and need not be recounted here. Suffice to say that millions took to the streets and eventually stormed the presidential palace, forcing Gotabaya Rajapaksa and his family to flee for their lives. Sri Lanka is now in economic freefall, and an interim government is struggling to piece together some sort of relief package that could put an end to the crisis.

While this tragic story should serve as a cautionary tale for any who might be considering adopting a radical green agenda in their own country, the proponents of organic farming who cheered on the fertilizer ban are already circling the wagons. Organizations like the UK-based Soil Association point to any reason save the obvious for Sri Lanka’s woes. Ironically, the country still holds one of the highest Environmental Social and Governance (ESG) ratings in the world by some metrics. This alone should be enough to demonstrate that the modern green movement is little more than an ideological crusade, a far cry from the sober, science-based policy solution to real problems that it claims to be.

At the end of the day, Sri Lanka’s collapse starkly reveals the painful consequences of ignoring the fundamental realities that govern energy, food production, and human civilization. What impresses the elite attendees of the World Economic Fourm and UN General Assembly meetings has little relation to realities on the ground. Tragically, those intellectuals, activists, and politicians who helped lay the groundwork for this failure will not have to live with the consequences of their advocacy. That bill will be picked up by millions of Sri Lankans who will suffer for years to come.

Made available by IER.

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Thomas Wackman is an expert at the Institute for Energy Research.

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