The incapacity of the government to deal
with the impending food crisis with the
island’s staple food, rice, becoming scarce
due to multiple reasons was best
demonstrated when Agriculture Development
and Agrarian Services Minister Maithripala
Sirisena recently claimed that the
government would introduce firmer laws if
the prevailing regulations on the current
price control prove insufficient to break
the rice monopoly in the market.
That statement alone, coming from the
Minister in charge creates enough doubts in
the minds of the citizens as to whether Sri
Lanka could actually deal with the domino
effect of market monopolies, insufficient
local production, losses caused by destroyed
paddy cultivations and reduced opportunities
for rice imports.
Sirisena has also claimed that there
would be no change in the government’s
stance with regard to the price control
introduced for rice. According to him, the
price controls were introduced to provide
relief to the consumers.
No scarcity
Sirisena has also said that the country
would not experience a rice scarcity as
there was sufficient stocks to meet the
country’s demand and that no one will be
allowed to hoard rice any more. But the
reality somehow appears to be different to
the picture painted by the Minister.
Meanwhile, IGP Victor Perera requested
wholesale dealers of rice to keep their
businesses open as the government has
imposed a price ceiling on the commodity.
The IGP said that the law would be
strictly enforced against errant dealers,
and that consumers could lodge complaints
with the Consumer Affairs Authority (CAA) or
with the nearest police station.
The CAA and the police are to launch
islandwide raids to apprehend traders who
sell rice at prices higher than the maximum
rates announced by the government.
The Attorney General has advised the
government that magisterial courts could
impose a maximum Rs. 100,000 fine and a
six-month imprisonment to first-time
offenders who have hoarded or violated the
price ceiling. The sentence will be doubled
for second-time offenders.
The rice forfeited from errant traders
will be marketed and the income thus earned
will be credited to the CAA fund.
However, rice wholesalers, mill owners
and farmers have been at loggerheads since
the government decided to introduce a price
ceiling for rice.
Farmers refuse sale
Early last week, farmers in Polonnaruwa
had reportedly refused to sell their produce
after traders reduced their buying rates to
Rs. 30 per kilo of samba and Rs. 24
for nadu.
According to the farmers, the selling
rate for samba and nadu was Rs.
42 and Rs. 32 respectively before the New
Year.
Following the government’s decision to
impose a price ceiling for rice, farmers
became hesitant to sell their produce at the
lower rates offered by the mill owners and
wholesalers.
Rice wholesalers and mill owners argued
that it was not practical to reduce prices
overnight. Business at the Maradagahamula
rice wholesale market came to a standstill
following the government’s decision.
According to wholesalers, the ad- hoc
decision of the government has brought the
rice market to a standstill. They also
charged that the decision would also have an
adverse impact on the farmers, as they would
not receive a decent price for their
produce.
The controlled price of a sack of
samba rice (65 kg) is Rs. 4,030 whereas
the price at which it was purchased was Rs.
5,400 according to traders. Rice was sold
sparingly at some boutiques on Friday. At
one, a kilo of samba was sold at Rs.
85, a kilo of nadu or brown rice was
Rs. 70 and a kilo of rathu kekulu was
Rs.65. The owner said he was selling at
controlled prices while suffering a loss.
The traders have said that they were
unable to sell the existing stocks at the
controlled prices since mill owners fixed
the prices and if the existing stocks were
sold at the new controlled prices, they
would suffer heavy losses. They have said
that they would have to suffer a loss of Rs.
1,000 on each sack of rice purchased before
the New Year.
However, traders eventually agreed to
sell rice at the ceiling price. Last week
rice was sold at the revised prices.
According to traders, the sales were made
even though losses were incurred.
The rice stocks of the Pettah traders
were sold within a day under the new prices.
Traders were then hit by a new problem —
the lack of stocks.
According to sources the delay in rice
reaching the Pettah market was due to a
delay created by the mill owners.
Artificial shortage
It was said that the mill owners had
adopted delaying tactics to limit the flow
of rice to the market, which would create
another shortage. This shortage is expected
to increase rice prices.
It has also been alleged that the main
mill owners never participate at any of the
discussions initiated by the government to
resolve the rice crisis, as the government
supported them.
"Millers are also going directly to the
retailers now since they could earn a bigger
margin by selling directly to the
retailers," sources said.
Another issue with regard to the ceiling
prices was the low price fixed for samba.
Extra cost
According to sources, mill owners have to
bear an extra cost to polish and clean the
samba before sending it to the
market. Hence, mill owners have now started
to send in kekulu, rice that does not
cost much to clean.
However, Consumer Affairs Minister
Bandula Gunawardena denied that the mill
owners were delaying in sending rice to the
market.
"Mill owners have now started their
normal work routine after the New Year
holidays. Nipuna produces close to 200,000
mt. of samba a day," he explained.
Nipuna of course is produced by Minister
Sirisena’s brother.
Gunawardena also said that it was not
practical for millers to hoard rice as rice
from the next harvest as well as the quota
of rice to be imported from Myanmar was
going to flood the market soon.
"If they hold on to rice, it will be
their loss," he said.
Gunawardena said that the CAA was also in
the process of checking rice warehouses in
the Polonnaruwa District to see if rice was
being hidden.
He however agreed that wholesalers were
now being sidelined as the mill owners sold
their produce direct to the retailers.
"Wholesalers have been affected, but they
are involved in trading other goods as well
so it won’t make such an impact. However, we
want relief for the consumers and that has
been granted now," Gunawardena said.
As fate would have it, the ‘Granary of
the East’ is on the verge of starvation.
Gone is the proud legacy of a self-sufficed
nation, with Raja Rata meeting the island’s
rice production and exporting the excess.
Forget the excess, there is not enough to
sell. The farmers, millers and wholesalers
are all having a field day battling it out
while consumers suffer.
Gone too is the blasphemous claim of
today’s administration to replace the Dutch
introduced bread with our ancient staple —
rice. Rice today is scarce than bread and
both remain unaffordable to many.
Amidst hiding of rice stocks further
intensifying the crisis and selling at
prices that exceed certified prices, the
government has imposed strict penalties in a
bid to bring the situation under control.
New penalties
The newly imposed penalties include a
fine not exceeding Rs.100,000, six months
imprisonment or both.
Further, over priced or hoarded stocks
would be confiscated by the government and
will be sold with the funds being credited
to the account of the Consumer Affairs
Authority (CAA).
Top police officers confirmed that
islandwide raids have commenced following
the new stipulations and that offenders
should be produced before a magistrate. The
raids would be carried out by the police
together with the Consumer Affairs Authority
(CAA).
The fines also vary according to the type
of hoarding or overselling done. The penalty
for a private establishment/dealer will be
between Rs. 10,000 and Rs. 100,000 according
to the provisions of the Consumer Authority
Act.
Other establishments and persons will
have to pay a fine ranging between Rs. 1,000
and Rs. 10,000.
The Act is also replete with provisions
to double the penalty in the event an
offender commits the offence more than once.
Trade and Consumer Affairs Ministry
Secretary, Dr. R. M. K Ratnayake said that
from last Monday (21) when the regulations
were introduced, police had launched a
series of raids together with CAA officials.
While the government moved to introduce
regulations to control prices and prevent
hoarding, others had their own ways and
means of dealing with the rice crisis.
Some of the popular supermarkets in and
around Colombo have begun to ration the sale
of rice. The approved quantity is one kilo
per customer.
Some supermarkets, according to CAA
officials have commenced offering 5 kg. rice
packs for purchasing, for those who spent
more than Rs. 1,000 on other goods.
As opposed to the supermarkets’ handling
of the rice crisis, small hotels and
restaurants presented a pathetic sight last
week. With rathu kekulu rice simply
taken off the menu, only certain types of
rice popular with the working masses were
available at these places.
In the meantime, Consumer Affairs
Minister Bandula Gunawardena assures that
there would not be a rice crisis and pledges
the support of the World Food Programme (WFP).
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New price
structure
Under the new government regulations
the prices of rice will be: Samba
retail — Rs.70; wholesale — Rs.63,
Rathu Kekulu retail — Rs. 65;
wholesale — Rs.58, Sudu Kekulu
retail — Rs.65; wholesale — Rs.48,
Nadu retail — Rs. 65; wholesale Rs.
58.
Prices doubled
under the
Chinthanaya
Commodity
Nov. ’05
Apr. ’08
% Increase
Raw Red
30
77
157%
Par Boiled Red 36
75
108%
Samba
42
94
124%
Nadu
32
73
128%
Bread
17
37
118%
Monopoly condemned
Non-cabinet Agriculture Minister
Hemakumara Nanayakkara addressing the
media recently said that the government
would resort to legal action against
traders who refuse to follow the
specified prices.
He said that traders had no right to
sell rice at high prices when they had
purchased it for a much lesser price.
"It is illegal and action will be
taken," he said.
Nanayakkara was also critical of the
Paddy Marketing Board, claiming that the
inability of the Board to gather the
necessary amount of rice was also a
cause for the present rice crisis.
He faulted the Board’s decision to
purchase paddy at Rs. 22 per kilo at a
time paddy was being sold at higher
prices. "This decision prevented farmers
from selling paddy to the Board. Instead
they went to the private traders. As a
result all the state owned stores were
empty without any paddy," he charged.
Crisis addressed — Bandula
Consumer Affairs Minister Bandula
Gunawardena says that the rice crisis
has been fully addressed and that rice
was being sold at the government ceiling
price without any reported shortages.
He told The Sunday Leader that
rice stocks were flowing into the market
from the Maradagahamula centre.
According to Gunawardena, traders in
Maradagahamula have predicted a further
decline in rice prices.
"Traders in Maradagahamula say that
retailers have now started to come
direct to them. This has enabled them to
fetch a good price for their rice as
there was no involvement of a
middleman," he said, adding that the
Maradagahamula traders now dealt
directly with the retailers leaving
aside the wholesalers.
When asked if it would have an
adverse impact on the wholesalers,
Gunawardena said that they were involved
in trading other goods apart from rice
and therefore it did not make much of a
difference.
Pettah no longer hub
"Also, Pettah was earlier the hub of
all business activities and especially
when it came to trading goods, but now
it is not so. There are economic centres
all over the island, which operate 24
hours a day. Some centres operate all
night till dawn. Pettah is no longer the
heart of all the activity," he said.
As for the possibility of the adverse
impact a shortage of rice among
wholesalers might have on some of the
retailers, Gunawardena says that there
would not be a problem as people could
get their rice needs from Lak Sathosa or
the Cooperatives.
"Supermarkets may not have rice, but
that is no fault of the government. They
will have to go and find rice," he said.
He also said that Myanmar has started
loading rice for the first shipment and
the country would receive the rice by
next week.
"As another step, the cabinet decided
last week for the Foreign Minister to
make a special request from the Indian
government to provide 100,000 mt. of
rice to form a buffer stock in the
country," he said.
Gunawardena says that rice would flow
smoothly into the market due to the
measures taken by the government and
said that the paddy that was cultivated
in Panduwasnuwara and Yapahuwa in the
Kurunegala District that is to be
harvested within a short period of two
months would come into the market as
well.
Stocks slow to arrive
Traders have expressed concern over
the delay in rice stocks reaching the
market.
The rice wholesalers in Pettah have
run out of stocks.
Head, Old Moor’s Street Importers
Association, K. Palaniyandi told The
Sunday Leader that rice stocks
started to arrive in Colombo only by
Thursday afternoon and that too in very
small quantities.
He said that the previous stocks,
which were purchased at Rs. 80 and Rs.85
were sold at a lesser price as
stipulated by the government. "We sold
the rice at the government price
although we purchased it at a much
higher price," he said.
However, by Thursday afternoon, one
lorry load of rice had arrived in Old
Moor’s Street and another miller had
brought 50 sacks of rice, which were
sold to five shops.
"The rice is coming in very slowly
and we sell the rice as and when we get
it," Palaniyandi said.
He said that the Consumer Affairs
Minister had assured him and other
traders that rice stocks would start
coming in slowly once the people
returned from the New Year holidays.
"The rice that we had is all over
now, we are still waiting to replenish
the stocks," Palaniyandi said.
Killer prices
The shocking extent to which the
price of rice has increased was
witnessed when a kilo of rice kept
increasing by at least Rs.10 every week.
The increase has been attributed to a
rice shortage in the local market with
all the imposed regulations simply
unable to keep the soaring prices under
check.
According to the Department of
Agriculture, an anticipated shortfall of
10% between local production and demand
increased to 12.5% following the recent
rains.
Agriculture Department officials
predicted that the crop failure due to
bad weather might not have a significant
impact on farmers. Although farmers were
in a position to earn between Rs.32 to
Rs.35 per kilo, a quality drop in the
yield already harvested was inevitable
since farmers were unable to find proper
storage facilities for their crops.
Increased rice consumption
Agriculture Minister Maithripala
Sirisena said that there has been a 50%
decline in wheat flour consumption,
which has in turn resulted in increased
rice consumption. The government, he
assured, "would take every possible step
to ensure the smooth supply of rice to
the market in the future."
Sirisena has said the increase in
rice consumption, a large amount of
paddy being sold as animal feed and the
4% drop in production recorded (in the
east) during the last harvest have been
identified as the reasons for the
shortage of rice experienced in the
market.
According to the Census and
Statistics Department, paddy production
has recorded a decline of 4.1% due to
hostilities in the east and bad weather
in some other parts of the island in the
third quarter of 2007.
Rice prices which escalated to over
Rs.100 per kilo in January, started to
decline with the government permitting
the importation of a limited quota of
rice. Rice importers alleged that the
state control of rice imports prevented
cheaper foreign rice from stabilising
prices in the market.
Last November the government exempted
the Rs. 20 import duty on rice for a
state firm and permitted the importation
of 75,000 metric tonnes of rice from
India. However, even this did not reduce
the rice prices as expected.
The government in a bid to resolve
the impending rice shortage and price
hike in the market has now allowed rice
to be imported into the country by
importers sans import duty.
Supply can’t meet demand — Farmers
union
The government has failed to meet the
demand for rice and is blaming it on
other parties, claims a farmers’ union.
The UNP affiliated Eksath Udara Lanka
Jathika Govi Peramuna (EULJGP) is also
blaming the government for driving
people towards starvation through
imprudent policies and allowing certain
monopolies of a ‘political kind.’
The EULJGP alleged that the
government was deliberately attempting
to keep the paddy-purchasing price
unaltered simply to allow Agriculture
Minister Maithripala Sirisena’s brother
Dudley Sirisena and government lackeys
who are also mill owners to create a
rice shortage by withholding stocks
thereby having a monopoly in the market.
The EULJGP predicts a rice scarcity
by October.
General Secretary, EULJGP, Priyanka
Dheerasinghe claimed that unless the
government’s paddy-purchasing price is
increased with immediate effect, the
private mill owners would purchase the
paddy stocks from the farmers and then
create a rice scarcity in the country.
"Although the government purchases
paddy at Rs. 22, private mill owners
purchased paddy for Rs. 35 before the
Sinhala New Year. Now we are told that
in Ambalantota farmers are paid Rs. 28
and as a result the paddy farmers have
stopped selling their stock to the Paddy
Marketing Board," he claimed.
Dheerasinghe added that the
government’s failure to continue the
fertiliser subsidy as pledged through
the presidential policy statement had
also contributed to the present
situation.
"Although the Mahinda Chinthanaya
promised to give a fertiliser
subsidy, the Ceylon Fertiliser
Corporation sold the subsidised
fertiliser to government supporters
only, depriving genuine farmers of the
low cost fertiliser," charged
Dheerasinghe.
Dheerasinghe meanwhile accused Dudley
Sirisena and Minister Gamlath of not
allowing the Maradagahamula mill to
purchase paddy from the Anuradhapura and
Polonnaruwa Districts.
"These are the mill owners who
release bumper rice stocks to the market
but they have been deprived of going to
these districts to purchase paddy by the
ministerial siblings. This is a clear
indication as to how the government
sponsored paddy mafia is controlling the
country’s rice market," Dheerasinghe
alleged.
Meanwhile, the main opposition UNP
blames Consumer Affairs Minister Bandula
Gunawardena for the prevailing crisis
and queried as to how he could impose
price controls when there was a huge gap
between the rice supply and demand in
the country.
UNP MP Ravi Karunanayake urged
Gunawardena to supply the promised low
price rice to the entire country.
"There is a rice scarcity even in
Colombo. How can Minister Gunawardena
assure low priced rice to the people who
live in Colombo suburbs and remote
areas?" queried Karunanayake.
Only Myanmar to the rescue
Despite the government’s belief that
rice could be imported from at least
three neighbouring countries, only one
country — Myanmar —that has come forward
to supply some.
Still, the authorities must wait for
another week to receive the stock.
Some 100,000 metric tonnes are to be
imported from Myanmar.
The earlier pledge was to have rice
imported before the New Year to ensure
the availability of rice at an
affordable price, but both India and
Pakistan did not accede to the request.
Won’t get new stocks - Traders
As the rice crisis deepened,
President, Pettah Rice Traders’
Association, P. K. Samy said that
traders would only sell existing stocks
and pledged not to buy or import any
more only to end up suffering huge
losses.
Accordingly, traders have commenced
disposing of the existing stocks. "
Millers sell at higher prices and
naturally rice will go up in price,"
Samy added.
As wholesale dealers clamour for a
better price due to having purchased
rice from the millers at a much higher
price than what they now sell at, it is
learned that traders were also refusing
to visit Polonnaruwa, Kurunegala and the
Eastern Province in a bid to compel
farmers to sell at slashed rates.
P. K. Samy adds that some stocks were
purchased between Rs. 15-25 above the
stipulated prices but claimed that the
traders have agreed to comply with the
government’s stipulation.
However, he insists that imported
rice would not be subject to the new
price ceiling as the exchange rates and
other added costs too have to be taken
into consideration when deciding on a
sale price.
Meanwhile, the government despite a
ceiling imposed on April 22 swiftly
altered the stance and decided to permit
a Rs. 10 increase for white kekulu
which, following the revision sells at
Rs. 60.
Poor harvest part of the problem
The government has decided to
introduce measures to prevent a possible
rice shortage in the market and also to
stabilise rice prices.
The Trade and Consumer Affairs
Ministry is to launch a new scheme in
collaboration with the Agriculture
Ministry, Consumer Affairs Authority (CAA),
rice mill owners and wholesale dealers
to prevent an impending rice shortage.
The rice scarcity also had its
origins in the fact that the Maha
harvest had a poor yield.
Continuous rains in the Eastern and
North Central Provinces had resulted in
the destruction of many paddy fields
causing the country’s rice production to
plummet.
According to the Ministry of
Agriculture, about 90% of the paddy
lands in the Trincomalee and Polonnaruwa
Districts have been destroyed by the
recent rains.
In the meantime, the government
decided to reduce or even stop the
import of rice in a bid to encourage
local paddy farmers only to revise it as
the crisis deepened.
According to Trade and Commerce
Affairs Ministry Secretary, Dr. R. M. K.
Ratnayake, there is no lack of rice in
the domestic market despite the recent
floods in the Eastern Province that
devastated paddy lands.
East is the region that accounts for
65% of the rice production.
Dr. Ratnayake warns that though there
is no impending crisis at the moment,
there certainly would be one by
October/November.
Following the crisis, the government
had decided to retain a buffer stock of
200,000 metric tonnes in case the
millers and the traders were to decide
yet again to hold on to stocks.
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