Reference Date: 27-September-2022

Economic crisis causes sharp drop in agricultural production in 2022

The 2022 secondary “Yala” paddy crop, accounting for about 30 percent of the annual production, is currently being harvested, while the harvest of the 2022 main “Maha” paddy crop finalized in March. According to a recent joint FAO/WFP Crop and Food Security Assessment Mission (CFSAM) , the 2022 aggregate paddy production is forecast at 3 million tonnes, about 40 percent less than the 2021 output and the lowest level since the 2017 drought‑affected output. The poor performance is mostly due to low yields caused by reduced application of chemical fertilizers and pesticides. Between May and November 2021, an import ban on agrochemicals was in place aiming to transform the country’s agricultural sector into exclusive organic agriculture. Although the ban was lifted in late November 2021 following months of protests by farmers, severe economic challenges hampered import flows, resulting in a severe shortage and high prices of agrochemicals.

The output of maize, potatoes and millet, vegetables and annual fruits, as well as export crops, such as tea, rubber and coconut, is estimated to be sharply below the previous five‑year average mostly as a result of the limited application of chemical fertilizers and pesticides.

The livestock sector has been also severely affected in 2022, particularly the production of chicken meat and eggs, the main source of protein in the local diet. Shortages and high costs of inputs, including animal feed, electricity and fuel, have forced many poultry and egg production units to close. Similar factors affected the production of beef and mutton meat as well as cattle and buffalo milk in 2022, with fuel shortages and electricity cuts compounding the situation. Animal husbandry extension services have been interrupted, leading to limited vaccinations, treatments and artificial inseminations, with deterioration of animal health conditions. Difficulties in animal transportation and milk collection, coupled with power cuts, resulted in increased product losses and lower income to farmers.

Cereal import requirements in 2022 estimated above five‑year average

The total cereal import requirement in 2022 is estimated at 2.2 million tonnes. In the first six months of 2022, a total of 932 000 tonnes of cereals have already been imported (472 000 tonnes of rice, 425 000 tonnes of wheat and 35 000 tonnes of maize), leaving an outstanding import requirement of about 1.27 million tonnes of cereals for 2022. Given persisting macroeconomic challenges, particularly the very low level of foreign reserves, there is a serious risk that the full import requirement of cereals could not be met.

Prices of cereals and imported basic food products at high levels in August 2022

Domestic prices of most basic food items, including imported wheat flour, sugar, milk powder and onion, as well as locally‑produced chicken meat, eggs and coconut oil, have been on a steady increase since the last quarter of 2021 and were at elevated levels in August. Price increases were associated with tight market availabilities, after the economic challenges caused major decreases to agricultural production and had a negative impact on the country’s capacity to import. Severe fuel shortages disrupted the distribution of food supplies within the country, creating shortages in most markets and adding to the upward pressure on prices. Domestic prices of rice decreased last August for the first time since October 2021, with the start of the 2022 “Yala” harvest. However, prices remained more than two times higher than their year‑earlier levels. According to the Central Bank of Sri Lanka, in August 2022, the Consumer price index (CPI) was estimated at 64.3 percent, while the food component of the CPI increased by 93.7 percent compared to the previous year.

Acute food insecurity increases

According to the recently‑released CFSAM report, the food and nutrition security has deteriorated since the beginning of 2022, with over 6.2 million people (28 percent of the population) estimated to be moderately acute food insecure¹ while 66 000 are severely acute food insecure and in need of immediate food assistance. Large numbers of vulnerable households have been widely adopting food and livelihood‑related coping strategies, including cutting the number of meals consumed in a day, reducing meal sizes and purchasing food on credit The highest level of acute food insecurity is in the estate sector (tea production) and among female‑headed households, households with no education, Indian Tamil population and Samurdhi programme beneficiaries.

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¹ Acute food insecurity has been estimated based on WFP’s Consolidated Approach for Reporting Indicators of Food Security (CARI) Guidelines. According to the CARI standard methodology used to classify the household’s acute food insecurity, “moderately acute food insecurity” is an approximation of the Integrated Food Security Phase Classification (IPC) Phase 3 (Crisis), while “severely acute food insecurity” is an approximation of the IPC Phase 4 (Emergency) or above.

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