This report offers specific policy and investment options articulated around two broad areas: (1) stimulating growth in agriculture and sustainable management of fisheries and (2) providing public infrastructure and services that strengthen the enabling environment. A plan to stimulate growth in agriculture and fisheries, the first broad area, could be centered around the following set of goals: revitalize the rubber sector, develop high-value fresh products, improve rice productivity, modernize land and input markets, expand access to loans for machinery and seasonal input purchases, strengthen agricultural extension services to ensure dynamism in Mon State’s farm sector, improve management of marine capture fisheries, and facilitate expansion of aquaculture. The first part of the report details the challenges and potential solutions presented by each of these points. The second part of the report details options to create a growth-enabling environment through public infrastructure and services, centered around the following goals: improve the budgetary and fiscal process to enable locally driven public investment, improve access to and reliability of infrastructure, expand the formal credit market, promote productive investment by the private sector, strengthen regulatory frameworks for the construction sector, exploit the potential for the development of tourism, and improve the quality of and access to education and health services.

In April 2021, the Sri Lankan Government banned imports of agrochemicals, including chemical fertilizers, to make Sri Lanka the first fully organic and chemical fertilizer-free country globally. The ban was justified by human and environmental health concerns, such as many cases of kidney failure in the central parts of Sri Lanka. While previous policies had envisioned a stepwise transition, the sudden ban jolted the agriculture sector. However, it was aligned with the emerging national economic crisis with drastically declining foreign exchange reserves that restricted the import of commodities, including fertilizer for distribution at subsidized prices. The ban was also opportune because fertilizer prices peaked on international markets in 2022. Without any transitional time, the thrust for organic fertilizers failed to satisfy demand or obtain the required crop nutrients resulting in severe agricultural losses. After the first data on decreasing yields were revealed, the government lifted the chemical fertilizer ban on December 1, 2021, but it was too late as the cropping season had arrived. Without financial reserves to import fertilizer, the donor community was urged to assist. This paper addresses: (1) justification of the ban, (2) the feasibility of transitioning to organic fertilizers based on the available biomass to replace chemical fertilizers; and (3) the related cost implications. The scenarios focus on irrigated paddy rice and the plantation sector that underpin the national economy. Undervalued nutrient sources are also considered as well as the constraints to and implications of such a transition beyond Sri Lanka’s frontiers.