President Rajapaksa’s fertiliser ban wasn't the only factor behind Sri Lanka’s economic crash. But as Chelsea Follett and Malcolm Cochran explain in this guest post it's definitely part of this story -- and a a grim preview of what can result from distorting markets in the name of utopian priorities.
Sri Lanka Crisis Reveals the Dangers of Green Utopianism
by Chelsea Follett and Malcolm CochranOn Thursday morning, the New York Times published an episode of The Daily podcast discussing some of the forces behind the collapse. They outlined how years of irresponsible borrowing by the Rajapaksa political dynasty, combined with the damage caused by Covid lockdowns to Sri Lanka’s tourism industry, drained the country’s foreign exchange reserves. Soon, the country was unable to make payments on its debt or import essential goods like food and gasoline. Strangely, the hosts of the podcast, which reaches over 20 million monthly listeners, didn’t mention President Rajapaksa’s infamous fertiliser ban once during the entire thirty-minute episode.
Yet the fertiliser ban was, in fact, a major factor in the unrest. Agriculture is an essential economic sector in Sri Lanka. Around 10 percent of the population works on farms, and fully 70 percent of Sri Lankans are directly or indirectly dependent on agriculture. Tea production is especially important, consistently responsible for over ten percent of Sri Lanka’s export revenue. To support that vital industry, the country -- until recently -- was spending hundreds of millions of dollars every year to import synthetic fertilisers. But that was "until recently."
Because during his election campaign in 2019, Rajapaksa promised to wean the country off these fertilisers with what he said would be a ten-year transition to organic farming. He expedited his plan in April 2021 with a sudden ban on synthetic fertilisers and pesticides. He was so confident in his policies that he declared in a (since stealthily deleted and memory-holed) article for the World Economic Forum in 2018, “This is how I will make my country rich again by 2025.” It didn't. As the eco-modernist author Michael Shellenberger writes, the results of the experiment with primitive agricultural techniques were “shocking:”
Over 90 percent of Sri Lanka’s farmers had used chemical fertilisers before they were banned. After they were banned, an astonishing 85 percent experienced crop losses. Rice production fell 20 percent and prices skyrocketed 50 percent in just six months. Sri Lanka had to import $450 million worth of rice despite having been self-sufficient just months earlier. The price of carrots and tomatoes rose fivefold. … [Tea exports crashed] 18 percent between November 2021 and February 2022 — reaching their lowest level in more than two decades.Of course, Rajapaksa’s foolish policy wasn’t revealed to him in a dream. As Shellenberger points out, the ban was inspired by an increasingly Malthusian environmentalism led by figures like the Indian activist Vandana Shiva, who cheered the ban last summer. Foreign investors beholden to the same ideology also praised and rewarded Sri Lanka for “taking up sustainability and ESG (environmental, social and corporate governance) issues on its top priority.” ESG represents a trend (or lasting shift, depending on who you ask) in some investors’ priorities. Put simply, it is an attempt to move capital toward organisations that further a set of amorphous environmental and social justice goals instead of toward the enterprises most likely to succeed and turn a profit.
Proponents of ESG have been pushing for government mandates requiring enterprises to disclose detailed information related to environmentalism and other social goals. That distorts and harms the smooth functioning of the capital markets that keep modern economies running and, in some cases, incentivises nice-sounding but economically inefficient projects, like a return to primitive agriculture. “The nation of Sri Lanka has an almost perfect ESG rating of 98.1 on a scale of 100,” notes David Blackmon in Forbes, and “the government which had forced the nation to achieve that virtue-signaling target in recent years [has as a result] collapsed.”
Sri Lanka, in other words, offers a grim preview of what can result from distorting markets in the name of utopian priorities.
Consider a long-run perspective. Throughout most of human history, farmers produced only organic food—and food was so scarce that, despite the much lower population in the past, malnutrition was widespread. The long-term, global decline in undernourishment is one of humanity’s proudest achievements. Lacking any sense of history and taking abundant food for granted however, some environmentalists want to transform the global food system into an organic model. They see modern agriculture as environmentally harmful and would like to see a transition to natural fertilisers that would be familiar to our distant ancestors, such as compost and manure.
However, conventional farming is not only necessary to produce a sufficient amount of food to feed humanity (a point that cannot be emphasized enough—as the writer Alfred Henry Lewis once observed, “There are only nine meals between mankind and anarchy”) but in many ways it is also better for the environment. According to a massive meta-analysis by the ecologists Michael Clark and David Tilman, the natural fertilisers used in organic agriculture actually lead to more pollution than conventional synthetic products.This is partly because fertilisers and pesticides also allow farmers to farm their land more intensively, leading to ever-higher crop yields, which allows them to grow more food on less land. According to HumanProgress board member Matt Ridley, if we tried to feed the world with the organic yields of 1960, we would have to farm twice as much land as we do today.
Consider a long-run perspective. Throughout most of human history, farmers produced only organic food—and food was so scarce that, despite the much lower population in the past, malnutrition was widespread. The long-term, global decline in undernourishment is one of humanity’s proudest achievements. Lacking any sense of history and taking abundant food for granted however, some environmentalists want to transform the global food system into an organic model. They see modern agriculture as environmentally harmful and would like to see a transition to natural fertilisers that would be familiar to our distant ancestors, such as compost and manure.
However, conventional farming is not only necessary to produce a sufficient amount of food to feed humanity (a point that cannot be emphasized enough—as the writer Alfred Henry Lewis once observed, “There are only nine meals between mankind and anarchy”) but in many ways it is also better for the environment. According to a massive meta-analysis by the ecologists Michael Clark and David Tilman, the natural fertilisers used in organic agriculture actually lead to more pollution than conventional synthetic products.This is partly because fertilisers and pesticides also allow farmers to farm their land more intensively, leading to ever-higher crop yields, which allows them to grow more food on less land. According to HumanProgress board member Matt Ridley, if we tried to feed the world with the organic yields of 1960, we would have to farm twice as much land as we do today.
Despite successfully feeding more people than every before, the amount of land used globally for agricultural has peaked and is now in decline. So long as crop yields continue to increase, more and more land can be returned to natural ecosystems, which are far more biodiverse than any farm. Smart agriculture allows nature to rebound.
In wealthy countries, conventional farming is becoming ever-more efficient, using fewer inputs to grow more food. In the United States, despite a 44 percent increase in food production since 1981, fertiliser use barely increased at all, and pesticide use fell by 18 percent. As the esteemed Rockefeller University environmental scientist Jesse Ausubel noted, if farmers everywhere adopted the modern and efficient techniques of U.S. farmers, “an area the size of India or the USA east of the Mississippi could be released globally from agriculture.”
Most importantly, it must be re-stated, conventional agriculture feeds the world. Since the Green Revolution of the 1950s and 60s, world agricultural production has exploded, causing the per-capita global food supply to rise from barely over over 2,000 kcal per day in 1961, to reach nearly 3,000 in 2017. And this even as the world population itself exploded. While hunger is now making a comeback, that is not any lack of the ability to produce enough food -- it is wholly due to war, export restrictions, and the misguided policies of leaders like Rajapaksa his environmental (and "ethical investment") mentors.
To be sure, the fertiliser ban itself was not the only factor behind Sri Lanka’s economic crash. Much of the damage was also caused by the hastiness of the ban, and the difficulty of obtaining enough organic alternatives. However, the idea that organic farming can produce enough food for the world is an unreachable fantasy based on the naturalistic fallacy — the baseless notion that anything modern, such as agriculture incorporating non-natural components produced by the ingenuity of man, must be inferior to the all-natural precursor.
As Ted Nordhaus and Saloni Shah from the Breakthrough Institute point out, “there is literally no example of a major agriculture-producing nation successfully transitioning to fully organic or agroecological production.” We must never take the relative rarity of starvation in modern times as a given, nor romanticise and seek to return to farming’s all-organic past. Unfortunately, the delusion seems to be spreading, helped along by the global shift toward ESG. Last Sunday, Narendra Modi, the prime minister of India, praised “natural farming” during a speech in Gujarat, calling it a way to “serve mother earth” and promising that India will “move forward on the path of natural farming.”
Let’s hope not.
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Chelsea Follett
Chelsea Follet works at the Cato Institute as a Researcher and Managing Editor of HumanProgress.org.
Malcolm Cochran
Malcolm Cochran is a research associate at HumanProgress.org.
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