An Economic Retrospective on the Policy Banning Glyphosate in Sri Lanka between 2015 and 2018: The Case of the Tea Industry

Abstract

There was a flawed policy banning Glyphosate in Sri Lanka in 2015 that was later withdrawn, but only after significant economic losses were experienced, especially in the tea industry. The focus of this study is to highlight the impact of the policy on the tea growing sector and determine the economic cost on the tea value chain. It is also aimed to remind policymakers that science and economics, theory and evidence, still matter in implementing public policies. The methods used in the study involved gross margin budget analysis of tea grower groups, thematic analysis of qualitative data collected through interviews and welfare analysis of the impacts of the ban on the industry using an Equilibrium Displacement Model. Direct impacts were experienced by the farm sector engaging in tea cultivation. An unintended consequence of this policy was rejection of tea exports from Sri Lanka to Japanese markets. The annual loss in the tea industry by banning Glyphosate was estimated to be LKR 20 billion (more than $US100 million), though the true cost likely was much more than this. Hence, policies introduced to minimize adverse impacts from market failures warrant full attention being given to the scientific, economic, social and political realities of the case at hand, and the likely consequences for the affected parties and their responses.