Sri Lanka drought dents economic hopes, farmers' livelihood

It can reverse a recent trend of falling food prices

ANAMADUWA (Reuters) – HJM Seneviratne, 63, slices through yellowed paddy stems dried out by a drought that has destroyed over 95 per cent of his crop and is threatening crisis-hit Sri Lanka's summer rice harvest.

The island's economy was crushed last year by its worst financial crisis in over seven decades, caused by a severe shortage of foreign exchange reserves that triggered widespread unrest and ousted its former president.

Helped by a $2.9 billion bailout from the International Monetary Fund (IMF), Sri Lanka has slowly stabilised its economy since March, rebuilding its decimated reserves, moderating inflation and strengthening its currency.

But even before the country's agriculture sector could recover from skyrocketing prices of inputs from fertiliser to power, the rains failed.

"I've been a farmer for forty years but I've never experienced a harder time than this," Seneviratne said, standing in the middle of a dusty field near Anamaduwa, a town in north western Sri Lanka, clutching a fistful of straw-like paddy stems with hollow rice kernels.

"We haven't had enough rain since May. The harvest is so bad we don't even have seed paddy for the next season."

The southwest monsoon that farmers rely on for the Yala or summer harvest was scanty this year because of the El Nino weather pattern and the weather department estimates there will be no rains until October.

Typically, Seneviratne's four acres yield about 4.5-6 tons of paddy for the summer harvest but this time he predicts he will get only about 150 kg. All but one of the eight water tanks, large ponds in which rainwater is collected for irrigation, in the area have dried out, destroying about 200 acres of paddy.

The paddy loss could be as much as 75,000 acres, according to Agriculture Minister Mahinda Amaraweera while other experts say full losses could be even higher as estimates are yet to be completed. Sri Lanka planted 1.3 million acres for the summer harvest, according to the Agriculture Ministry.

"We have lost at least 80,000 metric tons of paddy as per the latest data and it could be more," said Buddhi Marambe, a professor of crop science at Sri Lanka's Peradeniya University. Last year, when the crop was decimated by a lack of fertiliser because of the economic crisis, the season produced 1.5 million tons of paddy.

The drought could reverse a recent trend of falling food prices, which dipped an annual 2.5pc in July after rising 94pc year-on-year last September.

Sri Lanka's central bank warned last week that the dry weather coupled with higher global oil and commodity prices could also "weigh on expected growth in the near term," as the island struggles to limit economic contraction to 2pc this year after shrinking 7.8pc in 2022.

Sri Lanka’s northern neighbour India is also expected to have the driest August in more than a century prompting it to restrict exports of certain categories of rice. Sri Lanka has previously imported rice from India to bridge production shortfalls.

Sri Lanka has so far ruled out rice imports this year, a statement from the president's office said, as regions that have escaped the drought have produced higher yields.

SO FAR, PRICES STABLE

Rice prices have remained largely unchanged at retail, edging up about 10 Sri Lankan rupees (about 3 US cents) to 220 rupees per kg from last month. So far, rice stocks have staved off any impact but prices could tick up in coming months with a scanty harvest.

Experts say they are worried that if Sri Lanka doesn't receive the rains it needs next March because of the continuing El Nino, the country will be left with scant reserve stocks and will have to resort to large-scale, expensive imports.

El Nino, a warming of water surface temperatures in the eastern and central Pacific Ocean, is linked to extreme weather conditions from tropical cyclones to heavy rainfall to severe droughts.

During the last El Nino in 2016-17, Sri Lanka suffered its worst drought in 40 years and rice output fell by nearly 50pc year-on-year to 2.4 million metric tons over both its harvests.

Rice is the staple food of the country's 22 million people and its biggest crop. According to government data, 2 million people in the country are rice farmers out of 8.1 million people engaged in fishing and agriculture in the largely rural economy.

To limit the El Nino impact, Marambe says farmers will have to plant early during the Maha paddy season that starts in October as rains next March and mid-year are uncertain.

"If rains fail in March, it will impact our main paddy season and we could have a very, very dry second season as well in the middle of 2024."

The drought has also wiped out the small chilli, peanut and banana plants Seneviratne's wife, WM Makamma, 62 grows to feed her family.

"Before the crisis we used to cook for all three meals but now it's only two," she said. "We've stopped buying eggs, chicken or fresh fish. Lunch is a cup of black tea.

"I feel like we have fallen completely and it’s very hard to get back up."