Choices for SL narrow as Middle East crisis intensifies

Sri Lanka is edging toward a preventable agricultural downturn, and the warning signs are becoming increasingly difficult to ignore. The projection of a three-year slide in farming is not alarmist—it reflects a clear pattern that emerges when global shocks collide with insufficient domestic response.  
At the center of the risk is a tightening global fertilizer market, now further destabilized by the ongoing Middle East crisis.    Supply chains remain fragile, prices are rising, and access is becoming more uncertain. For a country heavily dependent on imported inputs, this is not a distant geopolitical issue—it is a direct threat to national food production.  
Sri Lanka has experienced a similar shock before. The 2021 fertilizer ban sharply reduced yields and exposed the structural vulnerability of the agricultural sector. While the current situation is externally driven, the potential consequences are just as serious—and possibly more prolonged.  
When fertilizer becomes expensive or scarce, farmers reduce application. Yields decline, incomes shrink, and reinvestment becomes difficult. Over time, debt accumulates, and many farmers are pushed out of production entirely
As energy costs rise, production becomes expensive, margins tighten, and food prices increase. The burden is shared across the system: farmers earn less, while consumers pay more. Without intervention, this imbalance becomes unsustainable.
Policy gaps in a time of crisis  
Sri Lanka does maintain fertilizer subsidy programmes, particularly for paddy and key crops. However, the scale and delivery of these subsidies have not kept pace with rapidly rising global prices and supply volatility. In practice, many farmers remain exposed to escalating input costs despite the presence of support schemes.   This gap between policy design and on-the-ground impact is where the real risk lies.  
Agriculture—especially smallholder farming—is not a sector where market forces alone can manage systemic shocks. Private capital retreats in periods of uncertainty; it does not stabilize them. Effective policy intervention is therefore not optional—it is essential.  
A contrast in leadership  
A useful comparison can be drawn from Kenya, where the Kenyan Government has moved to cushion citizens from rising living costs by cutting Value Added Tax on fuel from 16% to 8% for a three-month period. More importantly, the policy includes flexibility—Kenyan President have indicated it could be extended if global pressures persist.   The measure may be temporary, but it is decisive. It signals a willingness to act quickly, absorb short-term fiscal pressure, and adapt policy in response to evolving conditions.  
Sri Lanka, by contrast, appears more cautious—balancing fiscal discipline against economic urgency. The result is a slower, less targeted response at a time when speed and precision matter most.  
A fragile recovery at risk
This hesitation comes at a critical moment. Sri Lanka’s economic recovery remains fragile following the 2022 crisis, and agriculture continues to play a central role in both livelihoods and food security.  If fertilizer access tightens further and energy costs continue to rise without adequate adjustment in support mechanisms, agricultural output will decline. This will increase reliance on imports, widen trade imbalances, and add pressure to inflation.  The deeper consequence, however, is rural distress. When farm incomes fall, the impact extends beyond agriculture—affecting consumption, employment, and overall economic stability.  
It is ultimately a test of whether Sri Lanka has learned from recent experience. External shocks cannot always be avoided, but their domestic impact can be managed.
Existing subsidy frameworks, while important, are not yet sufficient to offset the scale of current global pressures. Without stronger, more targeted intervention—whether through enhanced input support, adaptive subsidies, or energy cost relief—the trajectory is clear: declining yields, shrinking farm incomes, and gradual erosion of the agricultural base.  The choice is narrowing. Act decisively now—or absorb long-term damage later.  
The writer Veluppillai Kananathan is former Sri Lankan High Commissioner to Kenya and several other African nations.