Is organic farming to blame for Sri Lanka’s crisis? (Politico)

Politico published an article that looks at organic farming as a possible culprit for the dramatic implosion of Sri Lanka’s economy.  While Rajapaksa’s abrupt ban on chemical fertilizers did jolt farmers, senior research fellow David Laborde says yields didn’t fall so precipitously that it would have dented exports that much. The bigger issue is that COVID-19 sent droves of overseas workers home to Sri Lanka. Money sent home by Sri Lankans working abroad normally totals about $6 billion per year, well above the $1.2 billion that comes from tea, the country’s largest cash crop. “The remittances shock is several orders of magnitude bigger than the worst scenario we can imagine about tea,” Laborde said. Without the remittances and tourism dollars, Sri Lanka had to spend more of its own currency on imports and interest on debt, which combined with inflation sent it into the spiral that led to its economic collapse.

“The thing that is pretty evident is that there was macroeconomic mismanagement in Sri Lanka for months, if not years. They didn’t want to spend their foreign currency on fertilizer,” he said. “That was already a kind of reverse causality.” Laborde ended by saying, “We should not draw any generalities or conclusions out of the Sri Lanka situation, except that bad macroeconomic policy can destroy your country and destroy your farm system. That’s the only lesson I really want to draw about Sri Lanka.”