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Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

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Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#31

Post by kumarvvr »

soldehierro wrote: post #22
kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

Believe me, the organic transition had nothing to do with agricultural practices and all to do with economics, with the logic being that fertilizer was an expensive import, and by banning fertilizer they could hemorrhage foreign exchange reserves a little less. Of course, they also earned a lot less because the bone-headed transition lead to a marked reduction in yield, only worsening the forex problem the ban of agr…

I guess that makes sense, initially, on paper. I would guess some organic farming fanatic put put the numbers that fertilizers import can be reduced XX%, and the dollar signs in the eyes of the ruling family lit up (All those dollars not spent on imports can be embezzled)

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#32

Post by lanstin »

kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

The Rajapaksa family gave out jobs based on nepotism not expertise, and weren’t the sharpest knives in the drawer. It is completely insane policy, as was flatly running out of currency before doing anything about it. It will be a long road to recovery. At least they have kicked out the family from the government, and have a pretty solid plan to reverse the authoritarian sections of the constitution put in place by the Rajapaksas a few years ago. And the movement to oust the Rajapaksas has brought the whole populace toghether in a way that Sri Lanka sorely needs, Sinhala, Tamil and Musliam all working together non-violently can only be good.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#33

Post by asciiresort »

tlear wrote: post #25
asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

Population grew. In Japan agriculture is heavily subsidized, in particular rice production. Stuff that is not heavily subsidized focuses on high margin premium. They can't compete on volume/price but can on quality. After eating expensive apples or grapes there nothing really compares anywhere else

That’s my point about Japan.

Rice, unlike tea, is a defensive measure for times of crisis. Even as Japan imports food, the point is whether the country can quickly mobilize and ramp up to essential food crops. The point is having options and a hedge, which allows you leverage during economic negotiations for other things.

The percentage of imports you can have should be bounded by the runway and time horizon you have.

It seems Sri Lanka went all in on one crop without a hedge, and it would infeasibly take years to convert.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#34

Post by asciiresort »

aetherson wrote: post #19
asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

Sri Lanka's population is 2x what it was in 1965. https://www.macrotrends.net/countries/LKA/sri-lanka/populati... Japan imports about 60% of its food. https://www.merlofarminggroup.com/agri-view-japan%E2%80%99s-...

I am well aware that Japan imports food.

The point is not about whether a country imports at all, but whether it can mobilize domestic production of essential food crops in times of crisis.

Even China import and has rice reserves. There is a reason these government have and subsidized rice reserves rather tea reserves.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#35

Post by JetAlone »

shigawire wrote: post #13
anonymousiam wrote: post #6

Quoted post unavailable.

What is the "take" here? That "global elites" purposefully crashed the economy in Sri Lanka to get people to eat bugs? Or that they are incompetent? Also what does this have to do with what appears to be a climate change denial YouTube channel?

>global elites purposefully crashed the economy in Sri Lanka to get people to eat bugs

>they are incompetent

These possibilities are not mutually exclusive. I believe they're failing upwards, like a cabal of back-seat pilots who think they can get away with flying straight up, but in actuality are stalling their private jet.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#36

Post by jmilloy »

bergenty wrote: post #17
duxup wrote: post #12

Earlier quoted context omitted.

You would hope that someone wanting to switch to organic agriculture would encourage it … rather than just flip a switch…

Organic agriculture is where it belong. Mom and pop farms sold in stores where it costs 3x as much for no particular increase in nutritional value. Fertilizers are tangentially bad for the environment but not directly, only in that it causes algal blooms in water bodies. Pesticides are bad yes but the research should concentrate on finding pesticides that work well with the environment. We got close with glyphosate b…

Plants grown in healthy soil that does not require short term synthetic inputs are more resistant to pests. The organic fertilizers and composts that build up suitable topsoil are literally the "pesticides that with well with the environment" that you are looking for.

No one is expecting bumper crops without any nutrient inputs. Synthetic fertilizers are not the only possible nutrient inputs.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#37

Post by walrus01 »

asciiresort wrote: post #34
aetherson wrote: post #19

Earlier quoted context omitted.

Sri Lanka's population is 2x what it was in 1965. https://www.macrotrends.net/countries/LKA/sri-lanka/populati... Japan imports about 60% of its food. https://www.merlofarminggroup.com/agri-view-japan%E2%80%99s-...

I am well aware that Japan imports food. The point is not about whether a country imports at all, but whether it can mobilize domestic production of essential food crops in times of crisis. Even China import and has rice reserves. There is a reason these government have and subsidized rice reserves rather tea reserves.

I think Japan is well aware it couldn't feed the whole island chain even if it absolutely needed to, but it also has a robust domestic manufacturing and high tech industrial exporting sector which continually acquires funds for foreign currency and food. Totally unlike Sri Lanka.

To put it crudely Japan doesn't need to grow all its own food because people send it money for Toyotas and Mitsubishi cargo trucks and such, and it uses that to buy whatever food it wants.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#38

Post by asciiresort »

walrus01 wrote: post #27
asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

> Has Sri Lanka’s fish been pillaged The fishermen can no longer afford or acquire fuel for their boats to go out and catch the fish. Due to the non fish related economic disaster outlined in the article.

They need fuel because they need boats that go far. They need to go far because the supply of fish has decreased.

Fishing is not a modern activity. Rafts existed long before people rode horses.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#39

Post by ktaylora »

kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

There's a premium that can be exacted from switching to organic agriculture that isn't be discussed in this article. Sri Lanka has a limited land mass available for food production and they mostly export commodities to other countries. We're talking ~25,000 sq-mi. For context, the US state of Kansas is ~82,000 sq-mi. If you cannot physically expand the footprint of agriculture in Sri Lanka to boost revenues, the thinking in government was probably to try to switch to organic to fetch a higher price for exports. The mistake is that you can't just flip a switch and transition to organic production. That kind of change requires a generational change in farmers to pull off, and you will still fetch far lower yields in the interim.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#40

Post by nostromo »

kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

This is a common feature of dictatorships: a boneheaded decision from a central government wreaks havoc on the people in the field that would know better.

It reminds me of Mao ordering all sparrows be killed because they eat agriculture seeds.

This of course caused a much bigger crisis with insects destroying crops - because everyone knows sparrows also eat lots of insects.

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