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World Affairs








Lies, damn lies and statistics

Lanka’s staple food becomes unstable

This carter was seen eagerly awaiting the arrival of new stocks in order for him to make a living. The stocks however never came

Hoarders rule Hoarders rule

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.


Cracking the whip on hoarders

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).

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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