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Impact of COVID19 on food supply chains in Sri Lanka

Sri Lanka’s agriculture sector has so far been relatively little affected by the COVID19 outbreak, as the sector is only loosely integrated with global supply chains. From the outset of COVID19 pandemic, the government adopted timely measures to minimize the impact on agriculture. However, many farmers still suffered severe losses due to control measures, and temporary import restrictions hamper trade. Dairy farmers are among the least affected. In preparation for future potential food shocks, field level warehousing and cold storage facilities could be established. Other than COVID19, the sector may also be affected by the changing climate and the economic crisis.  Yet, the sector is predicted to achieve a positive growth of 1% in year 2020 and could still be an interesting market for input providers.
The economy at a glance
Sri Lanka’s economy was already facing a tough time when it was hit by the COVID19 outbreak in March 2020.  A constitutional crisis in 2018 and Easter Sunday attacks in 2019 significantly affected the economy, leading to a historically low growth rate in 2019. Given the current circumstances, IMF has predicted a negative growth of 0.5% for Sri Lanka in 2020. The government now faces the challenges of reducing the fiscal deficit while domestic and foreign debt payments are also due. Enhancing exports and foreign investment to ease the pressure on depreciating currency and increasing the government’s revenue to meet the ever rising public expenses are also top priorities.
Currently, most of the economic sectors have been affected by COVID19 with adverse consequences on the trade balance and the balance of payments. The government has taken many measures to revive the economy. They have introduced re-financing and working capital facilities for COVID19 hit businesses, injected LKR 240 billion new money into the banking system and suspended imports of non-essentials till at least mid-July 2020. The lockdown has been partly lifted as from 11 May but implications for the economy remain to be seen in the coming months.
Further, 2020 is an election year in Sri Lanka, including the parliamentary election scheduled for the near future. This may lead to adoption of popular policies amidst the crisis.  

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