Sri Lanka Among 10 Countries with Highest Rate of Food Price Inflation: World Bank

According to the most recent World Bank assessment, Sri Lanka is ranked fifth among the 10 nations with the highest food price inflation worldwide. The World Bank stated in its Food Security Update that trade policy actions on food and fertilisers have increased significantly since the start of the war in Ukraine.

At the start of the COVID-19 pandemic, countries actively used trade policy to address domestic needs when faced with possible food shortages. Sri Lanka's domestic food supply has been severely depleted as of July. Due to a lack of fertilizer, Sri Lanka's agricultural production has dropped by 40% to 50%, and there isn't enough money in the country to import food.

Shortages of fuel and fertilizer (used in farming, transportation, and harvesting operations) are anticipated to restrict the availability of food. The first shipment of 44,000 tonnes of urea backed by Indian credit has provided some solace (and 21,000 tonnes is expected to arrive soon). According to the assessment, there has been an increase in demand for Indian rice, with 9.6 million tonnes shipped this year.

Exporters are moving quickly to open letters of credit and have signed contracts to export 1 million tonnes of rice from June through September 2022 out of concern that export restrictions will be implemented (as has been done for wheat). Additionally, Sri Lanka experienced an 80% increase in food prices.

This occurs as food price inflation in South Asian nations, including Pakistan, continues to be at a multi-year high. The first grain shipment from Ukraine has begun, but issues with food security still exist. The agricultural, cereal, and export price indices have been stable over the last two weeks, according to the World Bank's assessment, with the agricultural and cereal price indices being 1% higher than they were two weeks ago.

Worldwide, domestic food price inflation is still high, with high inflation rates continuing in virtually all low- and middle-income nations and sharply rising in high-income nations. Three policy recommendations for increasing the availability and affordability of fertilizers were recently covered in a World Bank blog.

• First, nations need to end fertilizer export bans or trade restrictions.

• Second, according to the World Bank, fertilizer use must be made more effective, for example by offering farmers suitable incentives that do not promote overuse.

• Third, the global lender also advocated for spending money on innovation to create best practices and cutting-edge technologies that might help increase output per kilogramme of fertiliser used.