determined to battle rice mafia
Last year the
country has produced 2.1 million metric tons leaving the
spoilage aside and this itself is a great achievement. But, as I
told you, what this mafia has done is, they have sold 350,000
metric tons of high quality rice for animal feed mainly to two
companies in the country, as the worldwide corn prices have shot
up. According to the Hector Kobbekaduwa Agrarian Research and
Training Institute, last year’s gap between demand and supply of
rice was only 79,000 metric tons and I take full responsibility
about the authenticity of all the numbers I mention. Now, I
think you can clearly see the picture and how this mafia
“They have sold 350,000 metric
tons of rice for animal feed as the worldwide corn prices have
shot up” - Hemakumara
The Sri Lankan government last week imposed a price control on
rice. Price controls are something almost all the economists
frown at. Even the laymen who do not understand much economics,
question whether the decision by the government to impose a
price control is realistic in the present economic scenario in
the country as the presence of rice cartels is obvious.
Then, what is the solution for this sky rocketing rice price in
the country, if a price control does not delver the expected
results? The economists who believe in demand-supply theory will
say, let us flood the markets with imported rice at a low price
and tackle the question of the rice cartels that are squeezing
the guts of the general public.
On surface, the theory seems very simple and capable of
providing the right solution. But, we all know that there is
always a gap between theories that mould a certain human action
and the reality as the externalities forever barge in. In the
same way, the Sri Lankan rice crisis is supplemented by a food
crisis the whole world is facing today, due to adverse weather
conditions and climatic changes. Therefore, the option we have
for importing rice to fill the gap, seems not so trouble-free.
Now you can see that the rice crisis the country is facing is
homegrown and at the same time, global in nature. Therefore, it
is crystal clear that we have to find a remedy for the crisis in
between price controls and imports. Then what would be the way
out? It is the march towards self-sufficiency, which many
economists have rated illusive in the present global economic
dependency state of affairs.
Here the Non-Cabinet Minister of Agriculture, Hemakumara
Nanayakkara who is often an outspoken personality shares his
views on the rice shortage the country is facing.
Following are excerpts of the interview.
Q: Many are attempting to describe the present shortage of
rice in the country in a global context. Given the conscious
efforts by all countries towards food security, this seems
fairly true. As the Non-Cabinet Minister of Agriculture how
would you describe the situation?
A: I should say it is only partially true. Globally, the
food prices are going up and in the same way, the rice prices
have gone up. But, if we try to attribute the recent prices only
to that fact, it is totally wrong and is a misinterpretation of
the real situation. What we are experiencing today is a
synthesized price hike by a handful of millers and traders who
have got together as a mafia to make the maximum profits by
keeping rice prices at a higher level.
Let us calculate the net cost for a kilo of rice. Generally, 1.5
kilos of paddy is used to produce one kilo of rice. The average
prices the millers have been purchasing one kilo of paddy from
farmers in the last few years was Rs.27, 28 and 29. Then we can
come to a simple conclusion that 1.5 kilos of rice may cost
Rs.45.00. According to our figures, milling costs and handling
and transportation charges account for Rs.3.85 and Rs.3.00,
respectively. Now we can calculate the net cost of a kilo of
rice by getting the figures together as Rs.51.85. This is the
net cost of a kilo of rice. I know you must be wondering why we
have to buy a kilo of rice for Rs.80.00. The answer is, it is
because there are a handful of millers who have got together as
a mafia to gain maximum profits.
Q: Another factor even some of the economists are pointing
out is that, Sri Lanka has a very high cost of production when
it comes to rice. Therefore, what they are saying is that it is
economically prudent to import rice than grow it. How would you
tackle this statement?
A: I should say that Sri Lanka does not fall under the
countries which have a very high cost of production in terms of
rice and if someone is saying otherwise, it is a diabolical lie.
There are five factors that should be considered when we talk
about cost of production; labour, water, seeds, fertilizer and
tractor costs. As we all know, the government is giving a huge
subsidy for every bag of fertilizer. The Sri Lankan farmers are
getting a fertilizer bag worth Rs.2000 for Rs. 300. At the same
time, not a cent is charged by the farmers in terms of water,
like in some other countries. Needless to say, the government
has to annually allocate enormous sums of money, to maintain all
the big and small reservoirs and tanks that provide water for
paddy. Sri Lankan farmers worry little about getting seeds. When
it comes to labour, India has cheaper labour rates than us. But,
when taken comparatively with the paddy cultivating countries in
the South Asian and the South East Asian regions, the Sri Lankan
labour is cheaper. In the same way, tractor costs are also on an
average rate. So, how can one say that cost of production of
rice in Sri Lanka is very high?
When it comes to productivity we are only behind Indonesia. Our
average yield for a hectare is 4.5 to 4.8 metric tons and we are
ahead of India, Thailand, Taiwan and Vietnam. That clearly shows
that paddy cultivation is a very profitable business here. But
there are various NGOs and INGOs that are trying to convince our
people otherwise. What they say is to abandon paddy cultivation
and go into high productive cultivations, for example such as
gherkins and import rice instead. If we accepted what they had
said, just imagine where we would have been today?
Q: Then what you are saying is the country does not have a
demand-supply gap in terms of rice as some of the millers and
traders vehemently claim?
A: I’m not saying that there is no demand-supply gap. But
what we have to find out is how such a shortfall of rice has
presently taken place in the country. Last year the country has
produced 2.1 million metric tons leaving the spoilage aside and
this itself is a great achievement. But, as I told you, what
this mafia has done is, they have sold 350,000 metric tons of
high quality rice for animal feed mainly to two companies in the
country, as the worldwide corn prices have shot up. According to
the Hector Kobbekaduwa Agrarian Research and Training Institute,
last year’s gap between demand and supply of rice was only
79,000 metric tons and I take full responsibility about the
authenticity of all the numbers I mention. Now, I think you can
clearly see the picture and how this mafia operates. I
personally think that this underhand deal of 350,000 metric tons
of rice for animal feed; is the result of a conspiracy by both
the millers and the companies who bought the rice for animal
feed. Due to the recent promotion of rice consumption by the
government, the consumption of wheat flour in the country has
come down by almost 50 percent. What these conspirators want is
to keep the rice prices ahead of wheat flour prices and attack
the government’s effort in promoting the rice eating habit among
the Sri Lankan people. After committing an unpardonable social
crime, now this mafia is hoarding rice, showing that they are
simply ruffians who have no conscience.
Q: Some are of the view that government’s move to impose
price controls for rice is not a very timely decision given the
present global economic situation. What is your stance on this?
A: It is the right decision at the right time and I believe
that through a price control we can fight this mafia. There are
countries in the world which have set examples for us to follow.
Recently, Philippine’s President Gloria Arroyo ordered raids on
the stores of rice traders who had hoarded rice and discovered
27,000 bags of rice and gave it to the people of the country who
were suffering from high rice prices. Having a price control is
not enough. The government should concentrate on buffer stocks
to be taken out, for future situations like this.
Q: So you firmly believe that the government’s move to impose
a price control on rice will work and deliver the expected
A: Yes, I believe it. I believe that it will work and if
not, we should put all our efforts to make it work. With or
without price controls, countries like India, Thailand and
Taiwan governments are closely monitoring their rice markets.
So, why can’t we make it work? It is this mafia, I earlier
described, who destroyed the Marandagahamula Millers which was
started by the late Prime Minister D.S Senanayake.
Marandagahamula being located in the Gampaha area has easy
access by train and road. The key objective of starting the
Marandagahamula Millers was to pump rice to the Western
province, where 70 percent of the rice produced was consumed,
without any delay, leaving no time for black marketers to
operate. However, the mafia I mentioned earlier; completely
wrecked the Marndagahamula Millers using their influence and
Q: Including the JVP, many in the country have been saying
that the group you are calling the mafia has the back up of a
powerful minister in the government. What do you have to say
A: I don’t know about such a thing. But I have to say that
if something like that is happening, we should use an all out
effort to stop it.
Q: Earlier you said the government should have had buffer
stocks to tackle the problem successfully. Witnessing an
imminent global food crisis, what are the measures the Ministry
of Agriculture has taken to ensure the food security in the
A: The President’s ‘Api wavemu rata nagamu’ campaign which
was launched several months back shows that we have recognised
the situation and has buckled down to business. Last week, I
sent a letter addressed to the President and Minister of
Plantation urging that the barren lands which are with the
regional plantation companies should be urgently cultivated.
There are thousands of acres which are not properly utilised
with these companies. In these lands, we can grow upland paddy,
green gram, black gram, manioc, sweet potato etc. At the same
time, there are a number of economically nonviable tea lands,
especially in the midlands, that can be used to grow grass like
Koinbetooth, Brackaria Brizanthia, Brackaria Mutica etc. as
fodder for cattle. At the same time, anyone who needs land to
cultivate should be given lands on a lease basis plus tax
concessions. This is a time we should all unite and boldly face
the problems we have and not a time to dash pots.
As a short term remedy, the government has struck a deal with
Burma to import 100,000 metric tons of rice. To conclude the
interview I should say the government is determined to go all
the way in dismantling this mafia and to provide the people with
rice at a reasonable price.
Bilateral trade with Poland could be expanded
By Quintus Perera
Though we are extremely keen to promote bilateral trade between
Poland and Sri Lanka there are some barriers such as the
distance, the security situation in Sri Lanka and the lack of
awareness of the trade potential of Poland in Sri Lanka, said
Dariusz Karwowski, Commercial Counselor-Head of Trade and
Investment Promotion, Embassy of the Republic of Poland in New
Delhi at a Press Conference held at Trans Asia Hotel last week
on ‘Business Opportunities in the Emerging Economies in the EU.’
A high level seminar on the subject preceded the Press
Conference, which was organised by the Sri Lanka – Poland
Business Council, Ceylon Chamber of Commerce. The seminar
focused special attention on creating greater awareness of the
growing potential, existing for developing trade and investment
between Sri Lanka and the emerging economies in the EU.
The seminar covered three potential emerging economies in the EU,
namely, Poland Romania and Hungary.
Karwowski said that they have decided to pay special attention
to the Sri Lankan economy and said that there are many things in
common to share between the two countries. He said that they
have a range of products and they are extremely interested in
promoting bilateral relations in South Asia.
He added that they have focused on many issues during the
seminar and discussed the potential of each country and how they
could be used towards mutual benefit.
He said in Poland, the annual growth rate is around six percent
and the industrial growth is around 10 percent and Sri Lanka is
perceived as a good potential country for cooperation. He
explained that Poland has been engaged in the trade of
industrial machinery, building industry machinery and food
He said as at present, Poland imports from Sri Lanka such items
like tea, rubber based products, precious stones and textiles
and Poland exports to Sri Lanka such items like steel, rubber
products, paper, electrical and other machinery. Exports to
Poland from Sri Lanka amounted to Rs 3.76 million while imports
to Poland from Sri Lanka amounted to Rs 2.63 million. He said
more than 50 percent of the exports to Poland from Sri Lanka
have been tea.
He said that Poland has expertise on shipyard and ship building
and Sri Lanka being an island surrounded by sea, it is another
area they could develop in Sri Lanka.
At the seminar, the Chief Guest was Julian Wilson, Head of
Delegation/Ambassador, Delegation of the European Commission to
Sri Lanka and the Maldives and focused on trade with the EU, in
particular the EU GSP Plus scheme. Ken Balendra, Consul General
of the Republic of Poland was the Guest of Honour.
The European Union consists of 27 countries and a population of
nearly half a billion. The EU makes up a huge market of
potential customers and suppliers for businesses in Sri Lanka.