The Unintended Consequences of Sri Lanka’s Fertilizer Ban

During 2021–2023, the small country of Sri Lanka faced a serious economic, political, and food-shortage crisis. The roots of this crisis were multi-faceted, but at least one large part of it can be explained using the basic “supply and demand” framework introduced in most economics classes.

This conceptual note will introduce students to some of the background of the country’s situation and then show them how this “supply and demand” framework can be applied in a real-world situation and how it might have been used to mitigate some of the devastating effects of the crisis in Sri Lanka.

• Apply the concept of opportunity cost to a discussion of organic farming versus conventional farming.
• Utilize the supply and demand framework to demonstrate how a reduction of crop yields would impact the price and quantity of food available on the market.
• Recall the concepts of elasticity of demand and elasticity of supply and apply them to the case of cereal crops, understanding how elasticities may differ in the short and long run.