Sri Lanka’s paddy farming solely depended on organic fertilizer many years ago but the use of chemical fertilizer is now on the rise and has become a much-discussed topic. Many argue that farmers use excessive chemical fertilizer, well above the recommended levels, as they receive the products at considerably subsidized rates.

However, the literature highlights that providing a fertilizer subsidy for paddy farming proves to be less efficient in increasing production. Researchers suggest that policymakers should focus on other input subsidies such as reduced prices on seed paddy, financial assistance towards mechanization and output subsidies such as guaranteed farm gate prices for paddy. Paddy farmers are currently given a guaranteed farm gate price. 

For the past three years, research at the Institute of Policy Studies of Sri Lanka (IPS) argued that the fertilizer subsidy should be gradually removed from paddy farming, suggesting that the subsidy be removed from the non-commercial paddy farming areas in the short run and from the commercial areas in the long run. Meanwhile, the 2016 Budget came with a surprise proposal to completely remove the fertilizer subsidy and introduced a coupon system. Now, a paddy farmer is entitled to a maximum of Rs.25,000 per hectare of paddy land in the form of a voucher or coupon.

This allows the farmer to buy fertilizer from private markets at a competitive rate, permitting private markets to develop. Whilst the argument made was for a smooth transition, the sudden removal of the subsidy raises more questions. Some burning questions are: can poor farmers face competitive market prices of fertilizer? Would the inability to purchase large quantities of fertilizer drive the farmers to use more organic fertilizer? Is organic fertilizer ready to take on the role of a substitute? While trying to answer these questions, this article explores additional measures to reduce fertilizer dependence in paddy farming. 


Increasing fertilizer prices will reduce the use of fertilizer - but at what cost?
IPS research points out that increasing fertilizer prices will significantly reduce its usage. The proposed coupon system might allow farmers to use fertilizer on the same proportions as the subsidy system. However, they now have to face the private market prices. If that happens, the dependence on fertilizer will not minimize. If the coupon does not cover the same quantity of fertilizer as before, then the farmer will have to find additional funding, limit fertilizer use or reduce the cultivation area. 

Seeking additional funding can drive poor farmers to deeper poverty, while reducing the area of cultivation can decrease the rice supply, threaten rice self-sufficiency and increase farm gate prices. The ideal solution would be to reduce chemical fertilizer use and substitute it with organic fertilizer. However, the million dollar question is whether the organic fertilizer market is ready to take on the demand?


Is organic fertilizer a better option?
Even today, organic paddy production is only around 5 percent of the country’s total paddy production. Unless the government provides a considerable subsidy on organic fertilizer, the farmers may not opt to utilize organic fertilizer. Added to that, there are other concerns. Organic paddy farming goes hand in hand with traditional paddy varieties. Though traditional paddy varieties have health benefits, the consumer preference towards these varieties is largely at debate. Many farmers rely on leafy and animal manure as their source of organic fertilizer, which is not sufficient at a commercial scale. Commercial organic fertilizer is hard to come by and mostly not affordable for farmers. 

Further, there are no price regulations for organic rice. While the urban consumers are willing to pay around Rs.90 – 120 for one kilogramme of organic rice, the average urban store price is between Rs.180-250. As a result, organic rice only attracts a high-income segment of society. Therefore, it is not ideal to rely on organic fertilizer to reduce chemical fertilizer dependence. It may reduce the chemical fertilizer use in the long run but it will take a national level policy intervention to strongly push the adaption of organic fertilizer in the short and medium terms.

The constraints in adapting to organic fertilizer are even visible through the analysis of empirical data. A recent IPS study shows that the demand for fertilizer is relatively inelastic with regard to the price of chemical fertilizer. This shows that organic fertilizer is still not fully ready to take on a substitution role. 


Would mechanization lead to less fertilizer use?
Labour is becoming less available. The increasing labour prices across the country are evidence of this. One way to reduce labour dependence is to introduce more mechanization to paddy cultivation. According to IPS research, an increase in labour prices leads to an increase in the use of chemical fertilizer. Therefore, it is essential to increase the level of mechanization in paddy farming so that less labour is required and chemical fertilizer use will reduce ultimately. 

However, a majority of paddy farmers in Sri Lanka are small farmers that cultivate average lands of 0.5-2 acres. Therefore, most of these farmers cannot afford large-scale machinery, as they simply lack economies of scale. To this date, only basic machinery is used to plough the land and threshing of paddy. However, a majority of small-scale farmers still use labour for a large part of land preparation, seed sowing, planting and harvesting. 

Paddy cultivation in Sri Lanka has little room to introduce a higher level of mechanization due to land size and scale of operations. A rational farmer will not be persuaded to spend more money to introduce mechanization just to reduce the use of fertilizer, unless mechanization is financed by an external source. Therefore, while increased mechanization may reduce the use of chemical fertilizer, it shows little promise in achieving the objectives unless the government facilitates mechanization.


Pesticides-free paddy farming – A first step?
The next complementary input in paddy farming is pesticides. Intensified pest attacks overtime have made pesticides essential for paddy farming. Farmers regularly apply pesticides to reduce the pests from spreading in a large area of cultivation within a short period. There are chemical as well as biopesticides. According to research, when applied, chemical pesticides have the ability to remain in the plant material and create health issues in the long run. Furthermore, application of chemical pesticides without proper safety equipment can create respiratory illnesses. 

While application of chemical fertilizer is harmful, the application of pesticides creates far worse health and environmental issues. In the case of excess chemical fertilizer application, the affected parties are basically the consumers. However, the use of excess pesticides will have a direct impact on the farmers who apply the product. Furthermore, chemical fertilizer destroys many micro and macro fauna and flora that are useful for paddy farming, while harming valuable ecosystem goods and services. However, the use of biopesticides does not have the same impact. 

It would be easy to convince a rational farmer to reduce the use of pesticides where it is harmful for him and the consumers, rather than asking him to give up chemical fertilizer straight away, which is given under a heavy subsidy. Once farmers are convinced and practice giving up pesticides, it will be easy for them to understand the harmful effect of any chemical use in paddy cultivation. This could drive them to reduce the use of chemical fertilizer in the long run. This is called non-pesticidal management (NPM), which has been practiced in many parts of the world and is heavily popularized in India. 

The ecological and economic problems of pests and pesticides in agriculture gives rise to several eco-friendly innovative approaches, which do not rely on the use of chemical pesticides. These innovative approaches are sometimes country specific but many are universal. Use of biopesticides and traditional practices were common during the early stages of cultivation in Sri Lankan history. However, with the increasing popularity and accessibility of chemical pesticides, farmers have switched to these methods. Although chemical pesticides are costly and are not subsidized, almost all farmers, apart from organic farmers use them at a high rate. 


What should Sri Lanka do?
The impact of the coupon system is yet to be known. It may take several cultivating seasons to see how farmers adjust to increase in fertilizer prices. It is clear that organic fertilizer would not stand up to the challenge as a substitute in the short run unless the government provides a major subsidy. However, the government can support small farmers by increasing the level of mechanization and this can be through loans for capital investments and training programmes. 

However, it is a long shot. Allowing the market system to determine the level of fertilizer consumption is a more economically sound approach. Farmers who can afford will keep on applying chemical fertilizer while others will reduce their consumption but that could have serious consequences on the price and increasing the production of rice. Therefore, additional efforts are essential.  One promising way to reduce chemical fertilizer dependence is to adapt NPM approaches and gradually reduce chemical fertilizer application. It may require strong efforts in terms of education, extension and demonstration of best management practices. However, a farmer who understands and believes in the harmful effects of chemical pesticides will be more willing to give up chemical fertilizer gradually. An important thing to remember is that these initiatives take time and it is impossible to adapt to zero application of chemical fertilizers. There should always be a sustainable mix of chemical and organic fertilizers that does not threaten health and the environment. 

(Chatura Rodrigo is a Research Economist at the Institute of Policy Studies of Sri Lanka. To view this article online visit IPSClimateNet: http://climatenet.blogspot.com/)