Mismanaged agro-chemical use, reinforced by weak policy, can have severe economic as well as environmental and health consequences. The argument is that, with a subsidy or allowance in place farmers may tend to use excessive chemical fertilizer, above recommended levels because fertilizer comes cheap to them. And this is exactly the case with regard to fertilizer subsidy policy intervention and fertilizer use.
Limiting the subsidy to urea between 1997 and 2004 proved to be a misguided policy decision, as during this period farmers opted to use urea extensively. The application of fertilizer in correct proportion is essential to obtain high yield. This indicates that a price balance in all three types of fertilizer is vital to maintain appropriate fertilizer use. In ‘The Impact of ‘Kethata Aruna’ Fertilizer Subsidy Programme on Fertilizer Use and Paddy Production in Sri Lanka’, Herath HMKV observed a direct correlation between fertilizer application and fertilizer price. He claims that fertilizer subsidies encourage the use of fertilizer in correct proportions, but more often fertilizer subsidies are known to encourage over-use.
Farmers started using imported chemical fertilizer such as urea, ammonium sulphate, Triple Super Phosphate (TSP), since the 1950s in a bid to enhance crop yields. In fact today farmers and even the crops themselves have become so dependent on chemical fertilizer that both cannot do without it.
CS Weeraratna in ‘Fertilizer use in Sri Lanka with special reference to Chronic Kidney Disease of unidentified etiology’ points out that some 600,000 tons of solid fertilizer and 250,000 liters of liquid fertilizer are imported annually.
Weeraratna points out that there is a direct correlation between areas where CKDu is more pronounced and provinces where extensive fertilizer is used. Fertilizer use is quite extensive in North Central and North Western Provinces and CKDu cases are mostly reported from these provinces. A WHO-led study found the prevalence of CKDu among 15 to 70 year olds to be at 15.1 percent in Anuradhapura and 20.6 percent in Polonnaruwa, both districts of the North Central Province (Phosphate fertilizer is a main source of arsenic in areas affected with chronic kidney disease of unknown etiology in Sri Lanka by Channa Jayasumana, et al).
Fertilizer such as urea and ammonium sulphate, are Nitrogen-based while Triple Super Phosphate (TSP) contains phosphorus. Fertilizer also contains trace elements of heavy metals such as aluminum, chromium, nickel, cadmium, lead and uranium. Jayasumana observes that continuous application of fertilizer during the past fifty years, since the green revolution, may have contributed to increase heavy metals and metalloids in the soil and groundwater aquifers All, few of these in combination or even any one of these could be the cause of CKDu. In fact the latest theory is that arsenic in fertilizer is the leading cause of CKDu. Arsenic and another element believed to cause CKDu, Cadmium, are found mostly in phosphate-based fertilizer. The kidney is the organ directly affected by chronic Cd exposure and the main organ for long term Cd accumulation. Cadmium accumulates in the kidney over the entire lifetime and the renal dysfunction progresses in severity with age.
WHO studies indicate that although such elements are well within normal limits elements tend to accumulate in kidney over 30 to 40 years and therefore could probably be a factor responsible for CKDu.
According to WHO classification, pesticides with arsenic is highly hazardous. Arsenic containing pesticides have been banned in Sri Lanka since 1995. Although this is a good policy decision, using arsenic to increase potency of agrochemicals is a potential way to increase sales.
The fertilizer subsection of the National Agricultural Policy formulated by the Ministry of Agricultural Development and Agrarian Services (2008) states as its main objectives: To promote the production and use of organic and biofertilizers and gradually reduce the use of chemical fertilizers through integrated plant nutrition; ensure timely availability of chemical fertilizers in sufficient quantities while providing soil and plant-testing facilities for their rational use through site-specific fertilizer application; promote the manufacturing of fertilizers using locally available raw materials and take appropriate actions to prevent the misuse of the fertilizer subsidy.
Although this looks fine in print, this is a failed policy. From 2008 to date the Agriculture Ministry has failed to reduce demand for chemical fertilizer. Although the policy statement assures soil and plant-testing facilities for their ‘rational use’ of chemical fertilizer through site-specific fertilizer application, chemical fertilizer is over-applied by farmers countrywide unchecked.
The fertilizer subsidy is a highly politicized policy intervention. With the power to make or break governments, the fertilizer subsidy is an integral part of every government’s manifesto. Initiated in 1962, at the onset of the Green Revolution, the fertilizer subsidy program is one of the longest lasting, most expensive and most politically sensitive policies implemented to promote paddy cultivation. Initially introduced to encourage farmers to switch from traditional rice varieties to high yielding varieties of genetically modified paddy that require chemical fertilizer, successive governments were forced to continue the subsidy despite budgetary constraints, in fear of losing votes. This is where the agricultural policy has failed in that it is driven by political agenda.
However, in their defence the government is not solely to blame. Social attributes also contribute to failure of this particular policy. Farmers believe that the government is responsible for providing agricultural inputs, fertilizer in particular, at low cost, despite the fact that a substantial number of public servants who cultivate paddy on a part-time basis also benefit from the subsidy.
Although the National Agricultural Policy assures to take appropriate action to prevent the misuse of the fertilizer subsidy, fertilizer obtained through the subsidy are used on non-paddy crops and in lands without legal ownership, in violation of subsidy eligibility criteria. Inefficiencies in the distribution process have also resulted in pilfering of fertilizer by government officials. It’s clear that there is no monitoring mechanism in place to keep such corruption at bay.
In 2009 it was made compulsory to sell 500 kgs of paddy to the government if farmers are to be eligible for the subsidy. However, in certain instances corrupt officials have been reported to have rejected the harvest delivered by some farmers who failed to pay bribes, citing quality issues. Consequently it’s clear that the fertilizer subsidy policy interventions have many loopholes that have escaped the attention of policy makers.
Although the fertilizer subsidy has been introduced to help farmers cut production costs, it is reported that farmers who have bought fertilizer at subsidized rate resell them to vegetable farmers at higher prices. This is not only environmentally damaging but could also hasten the spread of CKDu in non-paddy cultivating areas. In fact studies suggest that approximately 20 percent of the fertilizer provided under the subsidy program leak out according to Weerahewa in his Jeewika Weerahewa et al in ‘The Fertilizer Subsidy Program in Sri Lanka of the program: ‘Food Policy for Developing Countries: The Role of Government in the Global Food System.’
The subsidy makes up 2.24 percent of total government expenditure, a massive burden on the Treasury. Not only has the prevailing fertilizer subsidy policy created a health problem of epidemic level, it has also forced policy makers to make allowances, from a budget already constrained by the subsidy, for health expenditure necessary to combat CKDu.
Subsidies were not provided between 1990 and 1994 but were reintroduced in 1995 for all three types of fertilizers, namely nitrogen, phosphorus and potassium-based fertilizer. The subsidy was limited to urea between 1997 and 2004. The fertilizer subsidy was re-expanded to cover all three types since 2005.
It is interesting to note that the fertilizer subsidy is often used as a tool to gain political headway, favored by certain governments in a bid to preserve its voter base. Statistics suggest that the fertilizer subsidy was favored by SLFP-UPFA governments and discouraged by the UNP. Between 1990 and 1994, when the subsidy was withdrawn, the ruling government was the UNP. Between 1995 to 1997 when it was reintroduced for all three types of fertilizers, the ruling government was the SLFP (Coalition) government and between 1994 and 2001 the ruling government was the UPFA. Between 2001 and 2004 although it was a UNP government, the head of state was Chandrika Bandaranaike Kumarathunga, the same president of the previous government.
This goes to show that policies change according to changing governments and their political agendas. This could be attributed to the lack of economic vision in SLFP-UPFA policy makers or their reluctance to make an unpopular policy decision for fear of losing votes. However, the decision to provide money for the farmers instead of providing fertilizer may go a long way if the state policy further pushes for a total, gradual phasing out of chemical fertilizer.
Economists argue that regulators can curtail the ability of the market to operate freely. This is common policy failure in the field of agriculture. Take for example the Agricultural Policy that allows for the fertilizer subsidy, doled out at a huge cost to the government. Any subsidy for that matter stimulate over consumption, which has adverse environmental and in the case of fertilizer subsidy, health repercussions. Such regulatory policies have not worked in the favour of the government, consumers or the environment.
This is referred to as policy myopia or search for a quick fix and can result in long term adverse repercussions. Decisions to subsidize fall into this category and economists argue that subsidies ‘distort the proper functioning of the economy and create inefficiencies. For example the fertilizer subsidy will not reap the expected results since some agricultural products are produced at a cheaper rate in India and China on a much larger scale.
On the other hand subsidizing creates dependency, with the general public as well as farmers coming to believe that the government is duty-bound to provide agro chemicals at subsidized prices. Moreover, these concessions often fail to reach their target group, subject to misuse and corruption in the process of distribution. In fact farmers find it more lucrative to re-sell the fertilizer at higher prices because the global market price of fertilizer (US$9.23–11.54) is more than triple the subsidized price (US$3.23) according to Weerahewa. In reality the fertilizer subsidy policy intervention has failed to be of any benefit to the target group while also incurring huge budgetary constraints.