Can you imagine that the mediocre pesticides and fertilizers will become the main reason for the collapse of Sri Lanka's economic system and the bankruptcy of the country?
I hadn't seen it before, and I simply thought that the butterfly effect was just a very mysterious concept, but this time the Sri Lankan state bankruptcy really made me realize the horror of the butterfly effect.
From 2010 to 2021, Sri Lanka's tourism economy is probably like that, as one of Sri Lanka's largest pillar industries.
At its peak, in 2018, total annual revenue was $4.38 billion. At its lowest, in 2021, total annual revenue was $261 million, less than half of what it was in 2010.
As a result, unsurprisingly, Sri Lanka declared bankruptcy.
It became the first country to be crushed under the influence of the epidemic, and the first time it suffered a state bankruptcy after independence in 1948.
State bankruptcy
But the bankruptcy of Sri Lanka is not quite the same as the bankruptcy of the country I know.
Conceptually, the so-called state bankruptcy is actually that the state's external assets are less than the external liabilities and cannot be repaid, so a process of government bankruptcy and debt restructuring is needed.
To put it bluntly, it is to spread all the debt to the people's livelihood and slowly repay it at the expense of the people's happiness index, which is usually very slow. It is not like a business bankruptcy.
For example, in Greece, the US subprime mortgage crisis broke out in 2008, resulting in a sovereign debt crisis in many European countries. Greece is also one of them.
In October 2009, Greece suddenly announced that the Greek government's fiscal deficit had reached 12.7% of GDP, and the proportion of public debt had reached 113%, far exceeding the 3% and 60% ceilings set by the European Union, and the country was bankrupt.
But if you look at Greece now, although the standard of living has dropped a lot, the country is still there.
But looking at Sri Lanka, when bankruptcy was declared, the national reserves were only $2.31 billion, and the foreign exchange reserves were only $50 million.
At least 90% of the country's 22 million people are hungry, and the most basic needs for food, medicine and other necessities cannot be met.
Since June 27, the sale of fuel to the general public has been suspended.
Public transport was also almost completely eliminated, and overnight, it was back to the days when we were all on our legs.
Education, which is generally attached to modern countries, has been suspended indefinitely since April, and many schools have announced indefinite closures due to lack of ink, examination papers, lack of oil, lack of electricity and other reasons.
It can almost be said that the whole social system has simply stopped.
If the name Sri Lanka is still there, I believe you directly say that the country collapsed.
Sri Lanka has a significant agricultural ratio
But the crux of the matter is that Sri Lanka is not a purely touristy country, and agriculture is another pillar of its economy. At least 70 per cent of the country's population depends directly or indirectly on agriculture for their livelihoods.
Don't look at him small, the total land area is only 65,000 square kilometers, but 61% of the total land area of his land is arable land, and the per capita cultivated land is 2.72 mu.
This point is even stronger than ours, you must know that our per capita arable land is only 1.4 acres.
Generally speaking, the ability of agriculture to avoid danger should still be enough, to put it bluntly, even if the country is gone, as long as there is agriculture, the people will have no problem achieving self-sufficiency.
Our per capita arable land is 1.4 mu, and the self-sufficiency rate has reached 100%. Coupled with national reserves, even if it is completely isolated from external exchanges and closed to the country, it will not have much impact on our people's livelihood.
So why is Sri Lanka just a country bankrupt, strictly speaking, a government bankruptcy, but the people's livelihood reaction is so violent? At least 90 percent of the 22 million people are hungry, and the entire state apparatus has come to a complete standstill.
This is illogical.
My first thought was that the industrial structure was irrational, because Sri Lanka's food self-sufficiency rate was only 80%.
Combined with Sri Lanka's production and export volume, it can maintain the world's top black tea, spices, rubber, coconut and other agricultural products all year round.
At one point I doubted that I had discovered the truth about the bankruptcy of the Sri Lankan state.
It is because Sri Lanka has abandoned traditional agriculture in order to increase foreign exchange and develop economic agriculture.
For example, tea, which is the largest proportion of Sri Lanka's agricultural exports, has remained above 40% all year round since 12 years.
In addition, there are spices, rubber, coconuts and other agricultural products. The proportion is not small.
But then I realized that something was wrong.
The output is large, does not mean that people really plant tea or the whole people plant rubber, take tea and rubber as an example, which is the largest proportion of agricultural exports.
Among them, the planting area of tea is only 230,000 hectares, the rubber planting area is 130,000 hectares, and there are coconuts, the yield is decent, but the planting area is not small, and it has reached 400,000 hectares.
You can simply calculate what the combined area of this land is only 760,000 hectares, but the total arable land area in Sri Lanka is 4 million hectares.
Even excluding these, the remaining arable land per capita can reach 2.2 acres.
Per capita 2.2 acres, self-sufficiency rate is only 80%, people's soil quality is not worse than ours, is this reasonable?
Strange agricultural policies
Following this line, I thought again whether it was because of agricultural policy.
Then I saw a policy that was so strange that I felt that the current human world should not be possible for the time being.
In April 2021, Sri Lanka demanded a total ban on the use of modern agrochemicals, including fertilizers, pesticides, herbicides, etc., during domestic agricultural production, and resolved to make Sri Lanka the world's first fully organic agricultural country.
My first feeling when I saw this policy was outrageous, and organicization was correct, but have you ever seen ancient agriculture harvesting well?
Although the level of modern science and technology has gone up, but the United States agriculture is so developed, no one dares to do so.
As a result, large tracts of farmland were abandoned, rice production was reduced by more than 50 percent, and the actual grain self-sufficiency rate was far below 80 percent. At the same time, because of the epidemic factors, as well as the world food crisis that was boiling over some time ago.
Many countries have restricted food exports, resulting in the blockade of channels for Sri Lanka to replenish market demand.
Feedback to the people's livelihood, is the market food shortage, prices soared, as of May 22, Sri Lanka officially reported the inflation rate of 45.3%, but some economists pointed out that the actual inflation rate should be much higher than this number, can reach 128%.
Regardless of whether this data is true or not, because in Sri Lanka today, the currency has lost its meaning, that is, money may not be able to buy food.
There is no food in the market.
Go to the sea to fish, there is no oil, no electricity, this is because of the conflict between the two mao, the international energy price soared, oil prices rose by more than 80%.
If you want to bite the teeth to import, foreign exchange reserves are not enough, because Sri Lanka is a purely agricultural country and has no scarce mineral resources.
But because of that strange organic policy, it is impossible to export agricultural products.
It's just stuck in an endless loop.
The people want to eat, there is no grain, import grain, no foreign exchange, export grain, or no grain, the productive forces are not up to standard, go to the sea to fish instead of grain, and there is no oil, imported oil, no foreign exchange, export grain for foreign exchange, and there is no grain.
It seems that the only way left in Sri Lanka is to ask for outside assistance.
However, it has been found that the root cause of all the problems in Sri Lanka is mainly because of the "lack of food".
The root cause of the lack of food is because of that strange agricultural policy.
Bizarre policy sources
So the question is, what is the reason that made Sri Lanka come up with such a strange policy.
To say that an agrarian country does not understand agriculture is certainly impossible.
The reason I can think of is the lack of money, and the second is the lack of fertilizers and pesticides.
First of all, the lack of money, which is greatly affected by the epidemic factors,
At the beginning, it was said that sri Lanka's main economic pillar, in addition to agriculture, as well as tourism, his industrial base is not good, he can get his hands on it, that is, the textile industry, but in fact, the proportion is not large, and the jobs that can be provided are also very limited, which has killed six hundred thousand.
It is basically impossible to develop the secondary or tertiary industry around agriculture.
So for Sri Lanka, the economic role that agriculture can provide is very limited, mainly for hedging, and if you really want to generate income, you have to rely on tourism.
However, because of the epidemic, $4.38 billion in 18 years was the peak, and then it was a sharp decline, until 21 years, only $261 million was left.
The negative impact on Sri Lanka is not just tax revenue, but also a lot of unemployment.
If the taxes are not enough, there is no money.
Of course, for other countries, there is no money can still be borrowed, but for Sri Lanka, it must be able to borrow.
Since 1948, Sri Lanka has had a problem of "Tamils", with constant conflict with the local Sinhalese and a long period of intense physical exchanges.
Although the problem of the Tamils has been solved as of 2009, sri Lanka's development opportunities have also been missed. The industrial base is seriously backward. What can develop rapidly and have obvious benefits is tourism.
It is also thanks to the beautiful scenery of Sri Lanka, otherwise even tourism would not have developed.
But then the Indian Ocean tsunami in 2004, the serial terrorist attacks in 19 years, and the epidemic after that.
Sri Lanka was not given a chance to breathe.
To put it bluntly, sri Lanka has actually been running wild on the road to borrowing money in recent years, and as of 21 years, the total external debt has reached 51 billion US dollars, but the total fiscal revenue in 21 years is only 14.6 billion US dollars.
Such a big risk, for no reason, which country is willing to borrow it.
So the problem is, Sri Lanka has no money, the international oil price has soared by 80%, the fuel necessary to keep the state apparatus running can not afford, and what to buy pesticides and fertilizers.
Let's talk about not being able to buy fertilizers and pesticides.
This point is greatly affected by the world food crisis some time ago.
At that time, it was not only the international food price that rose, but also the agricultural necessities such as pesticides and fertilizers that rose in the same period, and it doubled.
Take our country, as a large industrial production capacity, the manufacturing industry is the first in the world, but the price of urea can double. Do you dare to imagine other countries?
Take Europe, for example, in 21 years, when the world food crisis had not yet emerged, the price of a ton of potash fertilizer was 200 US dollars, and after the emergence of the food crisis, 800 US dollars directly quadrupled.
Crucially, many countries are restricting exports.
Sri Lanka, as a weak industrial country that has to buy refined oil for fuel oil, not to mention whether it can afford to buy fertilizer, it must also be able to buy it.
If pesticides and fertilizers cannot be bought, what will the Sri Lankan government say internally?
He will directly say that because you can't buy it, then everyone should simply stop using it?
Wouldn't that be an indirect admission that the government is incompetent, and what will the people think of his government?
It can only be a compromise, not that I can't buy it, it's that I don't want to buy, just find a reason, such as developing organic agriculture, temporarily flickering, waiting for the borrowed money, or when the epidemic is over, the tourism economy picks up, and then find a way to cancel the policy.
The only thing I didn't expect was that because there were no pesticides and fertilizers, the chain reaction would be so fast and so fierce that it would directly become the main reason for Sri Lanka's economic collapse.
Want to remedy it in time, and suddenly found that Sri Lanka's animal husbandry is not good, GDP accounted for only 0.7%, organic fertilizer is not enough.
There was no way but to watch the debt default and the country go bankrupt.