by Garvin Karunaratne

The Background

Sri Lanka is facing a severe recession . During the reign when Ranil Wickremasinghe ruled as the President from mid 2022 to November 2024, with the majority in Parliament supporting him the foreign debt ballooned from $ 56 billion in 2022 to as much as $ 100 billion when the NPP took over. In this period of two years and four months, following the dictates of the IMF experts, the foreign debt has almost doubled.

Yet we follow the same path. Where will it all end.

If Our new President follows the same methods and strategies our foreign debt will balloon further and he will get the blame. The Structural Adjustment Programme which was imposed on Sri Lanka in 1977 is so flawed that every country that followed it has gone from bad to worse.

In the two years 2022 to 2024, every dictate of the IMF was followed to the hilt and Sri Lanka’s economy floundered.

. It was a grave situation of people facing starvation and death due to lack of medical supplies. The situation was so severe that the people at a general election held in November 2024, rejected all political parties that had so far ruled the country, and elected the NPP, comprising major groups like the Janata Vimukti Peramuna, the ultra left.

It is hoped that the leading officials of the IMF who I hope will read this paper decide that our country should be allowed to assess and adopt different methods other than what the IMF has advised the countries to follow. It will be in the interests of the IMF to at least find a single successful country.

This situation is due to the fact that we have from 1977 changed, and altered the excellent agricultural extension system we had. We have had to import 700,000 tons of rice and mark my words we will have to import rice again in January. Again we will have to import rice after the Maha season ends in July . The fact is that we do not have a proper extension system today. Thus it is incumbent on the new administration of President Anura Kumara Dissabnayake to . develop a new agricultural extension system fast. .

Emerging from the colonial status to independence in 1948, the economy was run under full control- development- agriculture, livestock and industries, building tanks, opening up land, building roads etc. were all done with Rupees- the local printed currency. Foreign currency earned through exports and services provided was carefully collected- every dollar was documented- there were no foreign currency dealers and the collection at the banks was totally controlled. No dollars were allowed for foreign travel unless the travel was essential for the country, no dollars were given for foreign studies.

Allocations of foreign exchange were made for essential imports- food, medicines. To enable industries and production in the country allocations of foreign exchange were given by the Ministry of Industries for large industries and by the Department of Small Industries to small industrialists. Very small allocations were given for the import of cars, fridges. When I left Sri Lanka in1973 I was not given any foreign money. When my wife went in December 1973 she was given only three pounds and six shillings for her and three accompanying children. The use of foreign exchange was in firm control.

I am certain of this because I was an Assistant Commissioner in agricultural marketing, in agricultural development and small industry. I worked as Deputy Director of Small Industries allocating foreign exchange for essential imports to small industrialists in 1970. In 1971-1973 I was the GA at Matara.

A major change came with President Jayawardena seeking financial assistance from the IMF at the end of 1977 and the IMF forcing Sri Lanka to follow the Structural Adjustment Programme(SAP). The IMF insisted that the use of foreign exchange had to be relaxed- for the import of everything, and had to be relaxed in use for foreign travel, for foreign study and for this purpose gave dollar loans freely to Sri Lanka. Evidently this was done to make the country indebted.

The Structural Adjustment was based on the principle of the Private Sector as the engine of growth and the development programmes that dealt with commerce- the Marketing Department that implemented the Vegetable & Fruit Marketing Scheme , the Guaranteed Price Scheme for paddy , The Small Industrial Programmes- like Powerlooms and Handlooms were all to be closed down and that included the Cannery and Velona. Velona was the institute that guided and monitored textile manufacture. The Cannery established in 1955 made Sri Lanka self sufficient in all fruit produce like jam and drinks.

This liberal use of foreign exchange from 1977 that caused the build up of a foreign debt to $ 9 million by the end of UNP rule in 1995, to $ 49.5 billion by 2019 and to $ 56 billion by 2022and to as much as $ 100 billion in 2024. . The foreign debt had to be serviced- payment of interest and repayments and as there was no development it was a case of getting into further foreign debt to service the debt. Speaking of Prime Minister Ranil Wickremasinghe, the country’s debt increased from $ 50 billion to $ 100 billion in his two years 2022 to 2025. Instead of being ashamed he yet talks as if he did great. It is sad that no one dares to state that he ruined the economy. It is no achievement to flood the country with imports.

The IMF’s Structural Adjustment has caused poverty and the demise of many countries. What happened to many African countries is aptly described by Professor Jeffery Sachs:

Western Governments enforced draconian budget policies in Africa during the 1980s and 1990s. The IMF and the World Bank virtually ran the economic policies of the debt ridden continent recommending regimens of budgetary belt tightening known technically as Structural Adjustment Programmes. . These Programmes had little scientific merit and produced even fewer results. By the start of the twenty first century Africa was poorer than in the late 1960s when the IMF and the World bank had first arrived on the scene with disease, population growth,and environmental degradation spiralling out of control. IMF led austerity has frequently led to riots, coups and the collapse of public services.”(From The End of Poverty)

The IMF comes in as expressed aptly by Mahatir Muhammed former Prime Minister of Malaysia,  the personage that was successful in enabling Malaysia to face the East Asian Financial Crisis without any Aid from the IMF. •

‘If you go to the IMF and World Bank, their only interest is that you repay the loans. They don’t care what happens to the country, politically or economically… 

They also want to take over the running of the country and the economic policy of the country, which means we have to surrender to them.’ –

In short the IMF is not concerned with helping the countries to solve the problem. The IMF prescription causes the country to get indebted so that it will fall into their lap to search for further loans and get into severe debt. That is what happened to Sri Lanka

It is upto the country to understand what has really happened and find a solution. There can be starvation in the country- lack of food , medicines and essentials – but the IMF and the World Bank are not concerned.

The Plan for Action

The Only method is to get back to how we managed before the IMF imposed the SAP.

We have to  manage somehow with our incomes and attend to development- develop agriculture, livestock and industries with local currency.

For this purpose we have to mount a massive programme to make things ourselves and import only essentials.

All consumer goods have to be produced in the country.

We imported even banana crisps from Vietnam, Fruit Drinks from Australia, Cyprus, Tomatoe Sauce from the USA , Paratha from Singapore. We import even step ladders!

We have to develop programmes to make all these items.

The base has to lie in the development of agriculture, livestock and industries. This brings about incomes to the people in the process of bringing about production.

In agriculture it has to be realized that before the entry of the IMF in 1978, Sri Lanka had a very effective agricultural extension system. There was the Department of Agriculture with its Research Stations that produced the miracle high yielding paddy varieties H4 and H8, well before the IRRI( the International Rice Research Institute) was established by the USA in the Philippines in 1970. The Batalagoda and other Rice Research Institutes produced the miracle seeds H4 and H8 which were made available to farmers. 

 A vibrant credit scheme was available through cooperatives. I was an essential part of this and speak from sheer experience. The Department of Agriculture had a staff of trained agricultural overseers, at the village level. In addition, the Department of Agrarian Services was formed in the late Fifties to implement the Paddy Lands Act and it took over Rice Milling and Purchases of paddy at the premium prices under the Guaranteed Price Scheme for Cereals. This Department established cultivation committees of farmers and these committees were in charge of organizing paddy cultivation with the active participation of the farmers. This brought about increased yields. Loans were made available by the Department of Agrarian Services to the farmers through cooperatives. There were Multipurpose Cooperative Societies established all over the producer areas and the cultivation committees followed community development principles in enlisting the cooperation of cultivators to follow new practices like using high yielding varieties row seeding, weeding, application of weedicides etc. 

There was a staff of Assistant Commissioner in each District with around five to ten Divisional Officers and under the Divisional Officers there were trained overseers. In the entire island there were over a thousand overseers- called Field Assistants- one year trained in paddy cultivation. I served as an Assistant Commissioner and handled paddy production. In 1962 I was in charge of fertilizer distribution and disbursing loans to cooperatives. I designed the first circular detailing the use of fertilizer- there were three varieties to be used at different stages of the paddy plant growth. The Cultivation Committees did a grand task in the use of high yielding varieties and the appropriate use of fertilizer. The combination of the Department of Agriculture with its village level overseers and the Agrarian Services with its active cultivation committees did wonders in rice production. This was in the Sixties.

The Prime Minister Dudley Senanayake, when elected in 1965 took on the mantle of furthering paddy cultivation. Hitherto the District Administration was headed by a senior officer of the Administrative Service, the Government Agent. He was in charge of rural development, small industries and land development. The services of the Government Agent was obtained for the paddy production programme. Every Government Agent was given a senior assistant an Additional Government Agent to enable the Government Agent to devote full attention to paddy cultivation. The GA was gazetted as a Deputy Director of Agriculture, Agrarian Services and Cooperatives to enable them to give directions to the district staff of the three department: Agriculture, Agrarian Services and Cooperative Development.

 In order to ensure that yield levels were authentically done crop cutting surveys were organized based on random sampling and the crop cutting surveys were done by staff officers of other departments. This was done as a super check on the work of agricultural officers. The Prime Minister took a personal interest and there were selections of the best farmers who were given funds to proceed on pilgrimage to the holy sites of Buddha Gaya.

This multi pronged effort at paddy cultivation enabled Sri Lanka to become self sufficient in paddy production.

This excellent agricultural extension service came to be radically changed.

1.The Services of the Government Agent for paddy production ceased in 1970 with the iimplementation of the Divisional Development Councils Programme to provide employment to youths in industry and agriculture. Paddy production reverted back to the Agrarian Services and the Department of Agriculture.

2. In a few years- by 1978, the ruling UNP rule of President Jayawardena abolished the Paddy Lands Act and with this move the Department of Agrarian Services with its Divisioanl Officers and trained Field Assistants at the village level ceased to exist.

3. The Department of Agrarian Services had taken control over minor irrigation and with the abolition of the Paddy Lands Act and its cultiation committees, minor irrigation continued without any supervision, Years later Yaya Palakas were appointed but they had no cultivation committee to attend to the cultivation of paddy with the participation of the farmers.

4. The Crop Cutting Surveys were also disbanded. On the grounds that it was too costly.(Statement by the Secretary to Agriculture: (page 56 of 2006 book)

5. Around 1992, President Premadasa promoted all agricultural overseers to the rank of Grama Niladhari and thus there was no agricultural overseer at the village level. Today the work of the Agricultural Department ceases at the Divisional level and the lowest officer of the Agricultural Department- the agricultural instructor has to attend to as much as13,000 farmers in Yodakandiya or 3500 farmers at Ranoruwa, thus the work of the agricultural instructor is seriously impeded. In short the Department of Agriculture ceases below the divisional level.(See page 80, Nuwarakalaviya) Thus there is no adherence to dates of cultivation seasons and the tanks are not maintained now. Minor irrigation and the tanks that provide water stand totally neglected.

6. The World Bank around 1979 decided that agricultural officers must not use any organizations like cooperatives for extension and instead should contact farmers direct. This was imposed on all countries and the World Bank gave rewards of funds to countries that followed this method. Countries followed this method to get the rewards- funds and this meant that the officers could not contact farmers. They could only meet a few farmers out of thousands in their area. It is my opinion that this system was intended to cripple agricultural production in the Third World. The USA stands to benefit in getting their sales of what flour increased in the process.

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Thus the agricultural extension service has to be built up with a farmer’s organization like a cultivation committee cooperative at the base where the farmers can meet, decide their priorities and act together. A new extension system has to be ordained. When I established cultivation committees in Anuradhapura District in 1962, the farmers enthusiastically debated and followed new seed and applied fertilizer which resulted in a bumper crop. That is how we became self sufficient in 1970

These facts caused a breakdown in agricultural extension and any development in paddy production or in any crop production cannot be done now.

Paddy cultivation has to get reorganized immediately and unless this is done we will have to import 300,000 tons of rice or more, at the end of each season.

I shall close my Paper with a comment to one of my earlier papers (10092020)by a Plant Pathologist at MahaIllupallama farm, who became a scholar and migrated abroad.:

2 Responses to How our excellent agricultural extension system of the Sixties was sacrificed.”

1. Gunasinghe

 Says:
September 10th, 2020 at 5:03 pm

Dr. Karu, Point well taken. Whole agriculture department is ruin now. I was a plant pathologist (RO) at Mahailluppallama. I joined in late 1979. At that time the station was doing good with lot of officers with experience and extension division had a good in-service center. Lot of training were taking place at that time. I used to go to fields and took time to talk to farmers and gave some instructions how to control some diseases specially in Chile cultivation. I left Sri lanka in 1983 with wining Fulbright scholarship. I tried to come back after finishing my PhD and Department refused to extent my no-pay leave and fired me. To make the story short, in my recent visit to MI research station I was so sad to see the situation. All the building were in ruin. Many research fields are with grass and other weeds. No in-service center. Extension is no more. Department has gone to dogs. I am from a Village in Anuradhapura area. When I went to my village I noticed that most of farmers spaying weedicides to clean NEYARA (dived liyadi in paddi field). Old days farmers clean NIYARA with UDALLA. It is clear that weed killers abused.

In my days at Anuradhapurain 1962, MahaIllupallama was in great shape, luscious growth. That was Dr Ernest Abeyratne at work. It is the excessive use of weedicides and the use of fertilizer at the wrong time that has caused the CDKU kidney disease that has caused the death of over 40,000 farmers and has committed around half a million to the death row.

Garvin Karunaratne PhD Michigan State in agriculture and Education, former GA Matara and Assistant Commissioner of Agrarian Services in Anuradhapura from 1962-1963