By Maheesha Mudugamuwa
As the Government agrees to purchase paddy from local farmers competitively with the private sector, concerns have now been raised over the possibilities of a dramatic increase in rice prices in the local market at the end of this year.
Analysing the rice prices in the market at present, the farmers’ unions stressed that the prices were high in the market at a time when it should go down, as the paddy harvest is gradually happening. Instead, the rice prices at present are higher than it should be, according to them.
They also claimed that when the paddy purchase prices go up, the rice prices would definitely increase, as the mill owners are not willing to incur losses by purchasing paddy at higher rates and selling at a loss.
“In the end, it’s the consumers who will be affected by the Government’s inability to control the rice prices in the market,” All Ceylon Farmers Federation (ACFF) National Organiser Namal Karunaratne told The Sunday Morning.
“This happens every year. The prices are increased by mill owners during the time when there is no paddy available with farmers, and they reduce the prices when the harvesting time is near,” Karunaratne stressed, adding that the stock that was currently in the market was the paddy purchased in the 2019/2020 Maha Season.
“This is the mafia the Government should stop,” Karunaratne said. “How could three or four mill owners control the country's rice market? This has now become a practice, as it has been happening for a very long time and none of the governments could stop this mafia,” he said, putting the blame on the Government and the respective authorities for exploiting both farmers and consumers.
Reviving state-owned mills a solution
According to the ACFF, the rice market in Sri Lanka is dominated by four key players with a new entrant recently joining. As identified by them, the rice market is a national property, as it belongs to the taxpayers who provide fertiliser at concessionary rates and maintain the irrigation system to provide adequate water supply for paddy cultivation.
Urging the Government to revive the state-owned rice mills and to take the production under its control, Karunaratne said there were several state-owned rice mills which were not operating at present and if the Government could renovate and restart the production, it could possibly issue the rice to the market at lower rates.
“At present, even if the Government buys rice at lower rates from the farmers, it has to resell it to the mill owners for the milling process, as the Government has no operating mills. Therefore, even if the paddy was taken by the Government and sold at low rates to the private mill owners, the consumers still have to spend high prices,” he stressed.
Having no government-owned mills, the private mill owners, including both small and large-scale ones, are controlling the rice market, which ideally should be under the Government’s control, considering the high demand, Karunaratne stressed.
He also noted that the Government couldn’t eradicate the mafia created by several mill owners and therefore, the responsibility for the present situation should be taken by the previous administrations.
“If the present Government also fails to take action against the mafia, the issue would continue for many years to come,” he added.
According to statistics, the total paddy production of the country is at 36 million MT per year while the total rice production is at around 24 million MT per year. During the Yala Season alone, farmers produce around 3-3.5 million MT of paddy and during the Maha Season, it is around 4.5 million MT.
Paddy farmers at the receiving end
The ACFF urged the Government to take the rice market under its control so that the mill owners would not be able to earn massive profits out of rice produced by poor farmers.
“Have you ever thought about how farmers can be so poor while these mill owners or the middle-men are super rich? That’s because they exploit the poor farmers by buying paddy at the lowest rates and selling it to the retail market by doubling the actual prices,” Karunaratne stressed.
In the meantime, Cabinet approval has been granted to purchase paddy from local farmers competitively with the private sector to provide a higher price for farmers under the Government’s rice purchasing programme of the Maha Season of 2020/21.
The Cabinet of Ministers has also decided to maintain the price of nadu at Rs. 98 per kg in the future, without any changes, despite paddy being purchased at a higher price by the businessmen.
Co-Cabinet Spokesman and Mass Media Minister Keheliya Rambukwella, at the cabinet media briefing last week, said that the Government was committed to look after both farmers and consumers and therefore, a decision to increase the purchase price of a kg of rice was taken to help uplift the living standards of farmers.
The Minister also acknowledged that by purchasing paddy at higher prices, the big market players are also trying to increase the market price of rice.
“As a responsible government, we are ready to face this challenge successfully by purchasing paddy competitively with the private sector and maintaining the price of nadu at Rs. 98. The Government will never let private rice mill owners increase prices arbitrarily and the Government will bear the loss incurred from this process,” he said.
During this year’s Maha Season, the Paddy Marketing Board (PMB) expects to purchase 300,000 MT. With regard to small and large-scale irrigated farmers receiving the fertiliser subsidy, the PMB will purchase paddy according to the extent of cultivated land. At least 1,000 kg will be purchased from farmers who cultivate between 1-1.5 hectares and 1,500 kg will be purchased from farmers who cultivate between 1.5-2 hectares.
However, prior to the new cabinet decision, Agriculture Minister Mahindananda Aluthgamage warned the farmers that those who failed to sell their paddy to the Government at the controlled price would be removed from the government fertiliser subsidy programme.
According to the Minister, farmers who are not contributing to the Government’s National Programme of Paddy Purchasing have to buy fertiliser at Rs. 4,000 per 50 kg pack during the next Season and they will not receive benefits of the Government’s agri insurance.
As per government statistics, in Sri Lanka, there are 1,041,923 paddy farmers and among them, 266,291 farmers are cultivating more than one hectare of land and we will only purchase 10% of the harvest. The annual rice requirement of the country is around 25 million MT.
Speaking to The Sunday Morning, Minister Aluthgamage noted that the Government has decided to purchase a stock of paddy from the farmers under the National Paddy Purchasing Programme.
“For this, the Government has allocated Rs. 23 billion to purchase paddy in the coming Maha Season, and it has been identified as the largest allocation so far. Also, we have renovated 323 warehouses with all the needed facilities for this programme with the help of the Army, which can store more than 325,000 MT of the harvest,” he added.
