Massive organic fertiliser bill adds to SL’s cash flow issues
Cash starved government has partially reversed a hasty decision of ill-conceived national non-scientific experiment in organic agriculture compelling the treasury to pay billions of rupees for organic fertiliser stocks procured from local manufactures last year .
Organic fertiliser producers have demanded the finance ministry to pay Rs 14 billion for their supplies fulfilling 60 percent of the solid and 90 percent of liquid organic fertiliser requirement for the Yala season.
As a result of spending all most all the allocation of the agriculture sector for organic farming with no avail, the treasury was left with a meagre sum of Rs. 3.8 billion for the payment of organic fertiliser procurement to local producers although their bill was massive Rs 14 billion.
In 2021, the Government has allocated Rs. 50.7 billion on food crops such as paddy, maize, potatoes, big onions, vegetables and fruits including expenditure on organic fertiliser subsidy amounting to Rs. 35 billion.
Agriculture Ministry has announced compensation on the directions of the President for more than a million paddy farmers whose crops failed under an ill-advised scheme to become the world’s first 100-percent organic farming nation.
Therefore the treasury has released a sum of Rs. 40 billion to compensate farmers for the losses incurred during the Yala and Maha seasons 2021 due to the government’s policy of banning the use of chemical fertilisers, a senior official of the treasury said.
After this payment from Rs. 50.7 billion allocation only Rs. 10.7 billion was left with the treasury to make payments for organic fertiliser manufacturers and subsidies for other cultivators of maize, potatoes, big onions, vegetables and fruits, he disclosed.
At that time Sri Lanka was about to face adverse impacts on food security, agriculture industry revenue, foreign exchange earnings and rural poverty pushing the country into a serious crisis.
This was the direct result of shifting the existing local agricultural practices to organic farming without considering the technological, environmental, and economic costs and benefits, several treasury officials pointed out.
Further a sum of Rs. 3.8 billion was spent to purchase organic fertiliser from local producers during the Maha cultivation season last year, finance ministry data shows.
The cost to import nano nitrogen liquid fertiliser (Nano urea) from India was Rs. 9 billion while another sum of Rs.1.3 billion was paid to import 30,000 tonnes of potassium chloride fertiliser.
After settling this expenditure amounting to Rs 14.1 billion, the treasury has exhausted the allocation for the agriculture sector and there was no money for the payment to fertiliser manufacturers, senior official pointed out.
The local producers have supplied their stocks in accordance with proper tender requirements on the recommendation of Agriculture Director General and under the supervision of the national fertiliser secretariat, President of the Environment-Friendly Fertiliser Producers Association, Shammi Kirinde disclosed.
Although the total value of the stock was Rs 22 million in accordance with the tender documents, they have been able to supply fertiliser to the value of Rs 16 billion due to urgent need of farmers, he said adding that even after handing over the necessary documents to relevant authorities, only a sum of Rs 2.4 billion has been paid as a part payment.
A National Fertiliser Secretariat top official who wished to remain anonymous told the Business Times that a stock of organic fertiliser worth of Rs 12 billion has been distributed among farmers and Rs 2 billion has been paid due to financial constraints..
The treasury is releasing money on the basis of Rs 100 million per fertiliser manufacturer and the Secretariat has paid asum of Rs 2 billion to them up to now, he revealed.
The fertiliser stocks have been handed over to the authorities in accordance with the government tender and the agreement with the Lak Pohora Company and Colombo Commercial Fertilisers Ltd, Secretary of the Fertiliser Producers Association Shaminda Kankanamge claimed.
Although the payment should be paid within 28 days after handing over the stocks the authorities have so far failed to make their payments, he added.
He noted that several manufacturers have spent Rs 600-700 million for the organic fertiliser production and others had to bear Rs100-200 million and they had to pay hundreds of thousands of rupees for plastic container and bags suppliers and raw material suppliers.
These manufacturers have become destitute as most of them had borrowed money from banks for seed capital for their production plants , he said, claiming that around 500,000 direct and indirect employees engaged in the process are suffering without any payments at present.