Agriculture seen as hitting arid patch with fertilizer subsidy removal move

By Hiran H.Senewiratne

The government's recent budget proposals would put the agriculture sector in a crisis as a result of converting the fertilizer subsidy into an annual cash grant of Rs 25,000. This will not serve any purpose for farmers because fertilizer prices tend to go up to unbearable levels, farmers complained.

"Under the 2016 budget, the government's proposal to convert the fertilizer subsidy into a grant Rs 25,000 per year, targeted at small farmers from next year, will put the entire agriculture sector into a crisis because fertilizer prices tend to increase many fold with the removal of subsidies, agriculturist S.M. Karunaratne of Naththandhiya, when interviewed by The Island Finacial Review, said.

The cash grant will not be matching the ever fluctuating global fertilizer prices, a prominent economist added.

Paddy cultivation is a major source of livelihood in Sri Lanka, providing more than 1.8 million people with employment opportunities. The fertilizer subsidy was the only consolation for them to be in the sector, many farmers believe.

Under the "Mahinda Chintana" of the previous regime, steps were taken by former President Mahinda Rajapaksa in his first budget itself to provide fertilizer to farmers at a subsidized rate of Rs. 350 per 50 kg bag.

But now the government will be under constant pressure to continue with the subsidy scheme because the majority of farmers cannot afford to pay the new prices with the removal of the subsidy. Furthermore, the subsidy has become a politically sensitive issue, since paddy farmers have a high share of the voter base in Sri Lanka.

With the removal of the agriculture subsidy majority of farmers will be affected because this new cash grant will not be sustainable with the ever increasing fertilizer prices, Karunarathna said.

He added that those days he purchased a 50 kg fertilizer bag at Rs 350 but now he will have to pay more than Rs 2000 per pack. This will not be satisfactory for farmers to engage in agriculture in the future.

Another farmer from Pollonnaruwa said that they were quite comfortable with the previous regime because fertilizer was available at an affordable price. But now the new system will affect them badly with the price fluctuations, he said.

The government should have a sustainable system as an alternative to the subsidy to make agriculture more business driven in the future, he said.

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