Sri Lanka economic crisis: Unprecedented poverty grips nation

More and more Sri Lankans are eating less — and eating less nutritious food — as the island nation shrinks further into poverty. Experts say the unending economic crisis has sharply upped the poverty graph in a country once compared with Singapore.

The poverty rate in Sri Lanka had been falling steadily over the past two decades despite a terrible separatist war that consumed tens of thousands of lives and ate up vast amounts of national resources to feed the military machine.

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The share of the population below the poverty line in 2019 was 14.3 per cent, far below the 46.8 per cent reported in 2002, when Colombo and the Liberation Tigers of Tamil Eelam (LTTE) signed a peace pact.

“The poverty line has increased dramatically over the past few months,” said Professor Buddhi Marambe, head of the department of Crop Science in the Faculty of Agriculture, University of Peradeniya, and a respected authority on Sri Lanka’s agriculture sector.

According to him, most of the poor live in rural areas and are predominantly concentrated in the districts of Nuwara Eliya (Central Province), Badulla and Monaragala (Uva Province), Ratnapura (Sabaragamuwa Province), and Mannar and Vavuniya (Northern Province). Nuwara Eliya is home to Sri Lanka’s famed tea estates and the “Indian Tamil” population.

As for the urban poor, large numbers are said to live in the districts of Colombo and Gampaha, both in the Western Province.

A third of the population hungry

The Food and Agriculture Organisation (FAO) and the UN World Food Programme (WFP) have also painted a grim picture of low incomes and poverty in Sri Lanka.

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The two organisations say that an estimated 6.3 million people — a little less than a third of the population — are facing moderate to acute food insecurity and the situation is expected to worsen because the economic crisis shows no signs of ending soon.

Abdul Rahim Siddiqui, the WFP Representative and Country Director in Sri Lanka, said that after months of the crippling crisis, entire families are running out of options and appear exhausted. “More than 60 per cent of families are eating less, and eating cheaper, less nutritious food. This comes at a time when financial constraints have forced the government to scale back on nutrition programmes, such as school meals and fortified food to mothers and undernourished children,” he said.

Both experts and political activists admit the food security situation is serious. The issue has cropped up in Parliament, and anti-government protests are again beginning to resume in a scattered way.

Another uprising looming?

On September 25, Anura Kumara Dissanayake, who heads the Janatha Vimukthi Peramuna (JVP or People’s Liberation Front), Sri Lanka’s most influential leftist group, warned that another popular uprising was only a matter of time. “Already, more than 100,000 people have lost their jobs,” he said. “Businesses have collapsed. Police and public service workers are in debt and starving.”

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Former Sri Lankan Army chief, Field Marshal Sarath Fonseka, who, like the JVP leader, is a prominent MP but with the main opposition party SJB, has been repeatedly warning of another mass uprising, the like of which forced then President Gotabaya Rajapaksa to flee Sri Lanka in July.

Sri Lankans say that prices of even essential foods have skyrocketed. Some vegetables and fruit, as well as food items like high-quality rice and cereals, are beyond the reach of not only the traditional poor but also those who have slid into poverty in recent months. Teachers say that many students now bring less nutritious food for lunch. Many families in the country have reduced the portions of whatever food they now get to eat.

Agriculture sector hit hard

Professor Marambe said the Sri Lankan economy has contracted by 1.6 per cent and 8.4 per cent in the first and second quarters of 2022. The worst hit is the agriculture sector, which was growing at +6.4 per cent and +11.2 per cent during the first and second quarters of 2021.

The Department of Census and Statistics states that shortages in supply of fertilisers and chemicals have made conditions destructive for agriculture, especially cutting the paddy yield by a whopping 37 per cent in the main cultivating season (Maha season 2021-22) compared to the previous 2020-21 season.

According to the Ministry of Agriculture, apart from paddy output, the production of maize has drastically dropped due to the ban on the use of chemical fertilisers, further increasing the risk of food and nutrition insecurity in Sri Lanka. The production of milk, eggs, and poultry meat has taken a huge hit due to lack of maize needed to produce animal feed.

Sri Lanka has already stopped using locally produced or imported rice for animal feed. On the face value, said Marambe, this seems a good decision. “However, in a crisis where animal feed also becomes a scarce commodity, such decisions can also escalate ‘hidden hunger’, the protein malnutrition…With unaffordable nutritious food, the irreversible impact of malnutrition will only be seen in years to come,” he said in an email response from Sri Lanka.

The production of tea fell by 34.7 million kg during January-July 2022, an 18.8 per cent loss compared to the same period in 2021. Tea exports reduced by 9.77 per cent in January-July 2022, a loss of 14.77 million kg compared to a year ago. The foreign exchange earnings from tea fell by $70.4 million in January-June 2022 — at a time when every dollar counts in Sri Lanka. The daily egg production has slipped from 700,000-800,000 to about 400,000.

Impact of irrational policy

Experts say the country is paying the price for an irrational policy decision made in April 2021 to ban the import of synthetic fertilisers and pesticides, virtually converting the whole country into an experimental field for organic agriculture. 

“The results distressingly illustrate the severity of the damage to the agricultural economy in less than one year of imposing an unfortunate, hasty decision. The agriculture sector is headed towards a man-made disaster at a massive cost to the society and irreversible negative impacts,” said Marambe.

The severe macroeconomic crisis has caused acute shortages and exorbitant increases in the prices of essential products, including medicines, food, agricultural inputs, and fuel. This has resulted in major disruptions in overall economic activities. Prices of most food items have been on a steady increase since the last quarter of 2021, with food inflation now touching nearly 85 per cent. The central bank has told external creditors that runway inflation is expected to remain as high as 29 per cent throughout 2023.

The saving grace

About one in four households have adopted crisis or emergency livelihood coping strategies, such as selling productive assets, reducing essential healthcare expenses, and withdrawing children from school — unprecedented in Sri Lanka.

The saving grace is that the government now listens to scientists and academics. The agriculture ministry has prioritised the crops to supply fertilisers; fuel stations have been designated to meet the needs of the farming community. Fearing curtailed paddy output, Sri Lanka imported 536,000 tonnes of rice by July 2022.

The interim budget approved by Parliament in August recognizes the need to tackle food insecurity. It suggests developing a National Food Security Programme, adopting a National Food Security Bill, ensuring input supply, supporting value chain development, food packaging and food transport, promoting export-oriented agriculture, and more to stabilise the economy and facilitate growth.

But all that is in the long-term. For now, Sri Lankans are suffering a crisis they did not bargain for and facing poverty levels they never even imagined they would endure one day.