Sri Lanka’s 2021 Fertilizer Ban: Causes, Fallout, and Reversal

In April 2021, Sri Lanka implemented a nationwide ban on the import of all chemical fertilizers, a move unprecedented globally. President Gotabaya Rajapaksa justified this "bold policy" as essential for planetary health and human sustainability. However, the ban proved too ambitious, leading to plummeting farm yields and soaring food inflation, and was ultimately reversed within the year.

Sri Lanka's Agricultural Landscape

Sri Lanka, an island nation south of India, is roughly the size of West Virginia. Its diverse topography includes sandy coastal plains suitable for coconuts and mountainous regions in the south-central area with favorable conditions for agriculture, though requiring terracing due to limited flat land. The climate is temperate with two annual monsoons: the Yala season (May-August) bringing rain to the southwest, and the Maha season (October-March) which is the primary growing season, providing stable wet conditions across the island.

Despite its agricultural potential, Sri Lanka's soils are generally poor. The island's geology, primarily ancient crystalline rock and a lack of volcanic activity, means frequent rains deplete soil nutrients without natural replenishment. Even the soils of the Jaffna Peninsula, while different, are not inherently richer. Productive, mass-scale agriculture in Sri Lanka necessitates some form of fertilizer.

The Importance of Agriculture to Sri Lanka

Agriculture, while contributing only about 7% to Sri Lanka's GDP, is a significant employer, engaging 20-30% of the population. It also plays a crucial role in the country's cultural identity and exports. Ceylon tea, for instance, is an iconic export worth $1.1-$1.2 billion annually, accounting for 12% of all exports. Rice is the most widely grown crop, providing 40% of the population's daily calories.

Historically, Sri Lanka has strived for self-sufficiency in rice production. In the early 1950s, rice yields were low, necessitating imports of nearly half the country's requirements. To boost production, the government implemented policies such as guaranteed rice prices (50% above market price in 1948) and fertilizer subsidies (up to 50% in 1951). These measures led to a significant "paddy boom" in the 1950s, with gross rice output increasing 2.5 times by 1960. Population growth, driven by improved health infrastructure and malaria eradication efforts (like DDT spraying), kept pace.

The introduction of high-yielding rice seeds during the Green Revolution in the late 1960s further boosted yields. By 1999, despite a population increase from 8 million in 1950 to 18.6 million, Sri Lanka only needed to import about 10% of its rice, a testament to a fourfold increase in domestic production. However, this success came at a cost: the government subsidized nearly half the market price of fertilizer, distributing 300,000 tons in 2019.

The Push for Organic Farming

A strong cultural emphasis on health, organic agriculture, and toxin-free food exists in Sri Lanka, particularly among the Sinhalese Buddhist majority. This nationalist sentiment often views pesticides and agricultural chemicals as "non-pure" and a colonial imposition. Consequently, the goal of transitioning to organic farming has long been politically popular.

Historical precedents also influenced this push. New Zealand's abrupt removal of fertilizer subsidies in the mid-1980s, which caused prices to jump 30-50%, led farmers to reduce chemical use and abandon marginal land, ultimately improving nitrogen runoff. While the sector eventually recovered, the transition took six years and severely impacted many farmers.

Another significant factor was the rise of Chronic Kidney Disease of Unknown Etiology (CKDU) in the 1990s, predominantly affecting rice farmers. While the causes of CKDU are debated, a 2014 paper linked it to glyphosate-based herbicides. Glyphosate, a widely used herbicide, was classified as "probably carcinogenic to humans" by the International Agency for Research on Cancer in 2015. This led to a nationwide import ban on glyphosate in Sri Lanka in 2015, the first country to do so. The ban, imposed without alternatives, led to illegal imports by tea farmers. It was partially lifted for tea and rubber exports after three years, and later for all crops except rice.

President Rajapaksa's Abrupt Ban

The 2015 glyphosate incident highlighted the need for a gradual transition to organic farming. When President Gotabaya Rajapaksa came to power in 2019, he initially seemed to favor a sensible, decade-long transition to domestically produced organic fertilizers, as outlined in his January 2020 policy speech and national policy framework.

However, on April 27, 2021, the government abruptly announced a ban on imports of chemical fertilizers, insecticides, and herbicides. Agriculture Minister Mahindananda Aluthgamage stated that the ban would apply from the upcoming Maha season (starting September), with the government promising to provide organic fertilizer and compensate farmers for any losses. This sudden shift, giving only four to five months to overhaul decades of agricultural practices and supply chains, was met with skepticism.

Consequences and Backlash

Opposition parties quickly questioned the motives behind the abrupt ban, suspecting it was a desperate measure to address Sri Lanka's economic crisis and severe US dollar shortage, exacerbated by high fiscal deficits and the COVID-19 pandemic's impact on tourism. The chemical fertilizer subsidy was costing $400 million annually in foreign exchange, making the ban an attractive, albeit risky, solution.

Concerns were also raised about the feasibility of organic farming on a national scale. Organic fertilizers have lower nitrogen content than synthetics, meaning significantly larger quantities would be needed. Globally, only a small percentage of farmland was organically farmed in 2021, mostly in rich European countries or for grassland. The example of Sikkim, India, which achieved 100% organic farming, involved a gradual 13-year transition and a pre-existing culture of organic fertilizer use in a sparsely populated state, unlike densely populated, lower-middle-income Sri Lanka.

Farmers immediately faced difficulties finding sufficient organic fertilizer. The combined capacity of Sri Lanka's 200 registered organic fertilizer manufacturers could only cover a fraction of the cultivated land. This led to hoarding of remaining chemical fertilizers and price gouging. The government's attempts to mobilize state and military factories for domestic fertilizer production and implement farmer education programs appeared to be a "mad scramble" rather than a thoughtful plan.

A survey in July 2021 revealed that while two-thirds of farmers supported the idea of organic agriculture, 78% believed it was impossible within a year, and 64% within two years. Over half anticipated a crop yield loss exceeding 40%.

The Qingdao Seawin Debacle

In September 2021, a tender for 99,000 tons of organic fertilizer was awarded to China's Qingdao Seawin Biotech. However, Sri Lankan quarantine authorities found the fertilizer contained Erwinia, a microorganism, violating Sri Lankan import laws requiring sterile organic fertilizers. Qingdao Seawin vehemently protested the findings. The dispute escalated when Sri Lankan banks withheld payment, leading the Chinese Embassy to intervene, demanding third-party testing and threatening to blacklist Sri Lankan banks. Given China's status as Sri Lanka's second-largest trading partner and biggest fertilizer supplier, China ultimately prevailed, and Seawin received payment, resulting in a significant financial loss for Sri Lanka. The agriculture minister at the time, Aluthgamage, was later remanded for allegedly facilitating this transaction.

Reversal and Economic Devastation

Farmers protested the fertilizer and pesticide shortages throughout 2021, with a large wave of protests in October. The government quietly began backtracking, ordering limited amounts of Indian potassium chloride and "nano nitrogen liquid fertilizer" in October, which arrived in November. These were quickly identified as urea-based and far from organic. Despite initial attempts to spin the imports as not contradicting the organic policy, the government officially lifted the import ban on November 24, 2021, citing the long-term goal of a "green Sri Lanka" as merely experiencing a "speed bump."

The ban's economic damage was severe. Sri Lanka lost $138 million in exports due to declining crop yields. The tea industry saw a nearly 25% decline in March 2022 compared to the previous year. Rice yields dropped by 20-30% in 2022, forcing the country to import 800,000 tons of rice, a first in a long time. The cost of these imports far exceeded the $400 million supposedly saved by not importing chemical fertilizers.

This agricultural crisis, combined with steep tax cuts and "white elephant projects," contributed to Sri Lanka's worst economic crisis in its independent history. Food inflation reached 94.9% year-over-year in September 2022, and over 30% of the population became food insecure. The loss of an estimated $600 million in foreign currency earnings led to severe shortages of medicines, fuel, and food, sparking widespread protests and clashes.

President Rajapaksa, facing immense political pressure, eventually fled to Singapore and resigned via email in July 2022. In March 2023, Sri Lanka secured a $3 billion loan from the International Monetary Fund, a crucial step in addressing the crisis.