The Proven Sri Lankan Solution to the spiraling Cost of Living- the malady of UNP policies
Posted on March 29th, 2010

By Garvin Karunaratne, BA,M.A.(Cey), MA(Mich) M.Phil.(Edin) Ph.D(MSU, US).former Government Agent, Matara District

Introduction

Sky rocketing consumer goods is a concern for everybody. The Rajapakse Government has declared that it will win this economic war too, now that the separatist terrorist outfit of Prabakaran which was threatening the very existence of this country has been annihilated.

I would like to share my personal experience of the strategies used by the past Governments through the Marketing Department and the CWE mechanisms to control the spiraling costs of consumer goods, which worked extremely well until the system was disjointed and dismantled and sold to the private sector at the dictates of IMF/World Bank twins by the post 1977 UNP governments. I am of the opinion that restoring the Marketing Department mechanism is essential to bring about increases in production , the creation of employment and the alleviation of poverty.

It is true that the world market prices of certain essential commodities has increased in recent years, but if the infrastructure that Sri Lanka had before 1977 to combat high prices had been intact it would have been possible to ensure that the increases were low. In my own words:

“The Department for Development of Agricultural Marketing of the Fifties and Sixties “¦ ensured that prices of all essential commodities were indirectly controlled and the traders were compelled to offer fair prices to the producers and shop keepers were compelled to sell at fair prices to the consumers.”( How the IMF Ruined Sri Lanka…(Godages)

This was done in a very shrewd manner by the Government too buying from producers and selling the goods to consumers in the cities.

When the Marketing Department competed with the traders and offered the commodities to consumers at very low rates the Private Sector traders too had to offer goods to consumers at similar rates if they were to be in business. The Marketing Department, as the Department for Development of Agricultural Marketing was generally called, was actually unofficially controlling the prices at which producers sold as well as the price that prevailed in the cities. The working of the Marketing Department was a thorn in the neck of the private traders because it effectively limited the profit they could make in trading.

The IMF believed in Free Market Economics and it was anathema for the Government to interfere with any economic activity. This was the Structural Adjustment Programme of the IMF in action. The IMF called for Liberalization and de-regulation. “De-regulation has meant that the power of regulation has gone out of the sovereign country into the hands of Trans National Corporations, private investors and private importers.(Microenterprise Development(Sarasavi)pg.22) In the Pre-1977 Period it was Assistant Commissioners under the guidance of the Ministers that made every decision- like what to import, prices etc. while after 1977 this role was taken over by the salesmen of private companies- their main attempt being to maximise profits.

Thus the spiraling costs of consumer goods today is a malady created by post 1977 UNP policies. Fortunately, President Rajapakse does not have to search far and wide, because the Marketing Department mechanism was practiced by the Governments of his own party up to 1977

UNP Malady

All that we had built, the systems, machinery, infrastructure, and price control systems were systematically dismantled by the UNP of the Jayawardene Era in the name of the open economy. The theory was that the Government should not handle trade and that it should be left to the Private Sector to handle it as they like. The difference was that when the Government Departments handled trade- be it in

vegetables- fruits-milk- fish, the motive was to serve the public. In trading the motto was to keep the lowest possible margin that would cover handling and transport. In the case of the Private Sector the motive was to keep a profit and serving the people was of secondary concern..

UNP propaganda distorting facts

Thus, the UNP is the culprit and architect of the high cost of living and soaring prices of consumer goods of the country. It is ludicrous therefore now, that they themselves turn back and shout at the present government for high cost of prices of consumer goods.

UNPers lead by Ranil Wickremasinghe should look up themselves in the mirror to find the real culprits. Instead, the current Government of President Rajapaksa is blamed for increases in prices of essential commodities by the so called free media. It is the natural tendency to blame the party in power and all the anger of the people are generally let loose on the government.

In this context it is necessary to understand that the Pre 1970 United National Party was a nationalist party that looked after the people while the Post 1977 UNP Governments were selling the country to the IMF, to Western Imperialists and to the rich of the country. The Private Sector of the country was allowed to keep any profit in handling local produce or imports. The motto of the rich was to get rich fast and the people had to suffer in silence. The UNP of the Post

1977 Era ran Sri Lanka for the rich of the country- charged the least income tax from high earners- even less than what the UK charges, offered unrestricted foreign exchange for the rich, even borrowing foreign exchange at high interest for this purpose, built up a system of international schools for the children of the rich and allowed the rich to live in the lap of luxury, while the masses lingered within the realm of poverty.

Farm gate Vs Colombo Price

It is true that prices of certain items are exorbitant today. I am told that a kilo of beans at Narahenpita Economic Center was as high as Rs. 90. I was in Sri Lanka in February and did travel to Kataragama and also to Mahiyangana via Randenigala. The prices in the remote rural areas are very low while in the cities the prices are very high. On the way to Mahiyangana I spotted a lorry being loaded with crates of tomatoes and the price was Rs. 40 a kilo. If I offered spot cash, I could have purchased it for less. It was been dispatched to Colombo and payment would be weeks later. Back in Colombo the price of a kilo was never below Rs. 80 a kilo- a massive 100% profit. This unfortunately is a global phenomenon. In 2009 I toured Spain and bought a bag of satsumas at a farmgate for a single Euro. In the nearby Supermarkets the price was four Euros- a mark up of 400%. In California the trees are laden with lemons and oranges and there is no system of selling at the farmgate. However an orange is sold at around thirty cents in the Supermarkets. If the Sri Lankan Marketing Department mechanism is functional in California, many people can earn a living by selling oranges and the Supermarkets will have to reduce their prices.

Marketing Dept with its Non profit motive as the Middleman However there is a difference up to 1977 as far as Sri Lanka is concerned. This is because Sri Lanka is the only country in the world that had the development infrastructure in place to ensure that the producer gets a fair price and simultaneously for the consumer to get the same goods at a reasonable price. To get to basic facts that system enabled the producer near Mahiyangana to get paid at Rs. 40 a kilo for tomatoes and also enabled the consumer in Colombo to get it at Rs. 50 or Rs 55 a kilo. This was in a nut shell, the Department for Development of Agricultural Marketing at work.

The Master Plan

The Vegetable and Fruit Marketing Scheme was begun during the World War II to provide vegetables and fruits at cheap rates to consumers and also to provide fair prices to producers, the latter aimed at getting them to increase production. The cornerstone of this Scheme was to have Purchasing Units in all producing areas, a Central Depot in Colombo and Retail Units in all cities.

My first job in 1955 was as an Assistant Commissioner in this Marketing Department.

In the Producer Fairs, the traders do know that if they hold on offering a low prices, the producers will at the tail end of the day have to give in and sell to them as otherwise they will have to transport the goods back home incurring transport costs and bring the same goods back on the next Fair Day when they will meet the same traders and the same fiasco happens again. To add to this is the fact that vegetables and fruit cannot be stored because it is perishable.

Thus the producers are at the mercy of the traders. Economic theory has it that there is competition among traders- but not so in real life.

Trained & Kowledgeable Officers.

We Assistant Commissioners were charged with the task of having surveillance over all producer fairs in our area and my day began at four o’clock in the morning on at least four days a week to get to the Fairs in time. Unofficially the Marketing Department controlled the purchasing prices at all major fairs in the entire island. We had a mobile purchasing unit with a board exhibiting the prices we offered.

The System , on my own words was,

“To pay the highest possible price to the producer and sell at the lowest possible price to the consumer, a creation of Administrators Basset and B.L.W.Fernando. We as Assistant Commissioners tried hard to walk on this tight rope. At the end of each month a profit and loss account was made and I have had to bear censure if I had incurred a loss or achieved a profit of over 10%”.(How the IMF Ruined Sri Lanka..page 256). We were compelled to trade within a low margin of 10 to 15%. This can be compared with a 80 to 100% profit that all traders normally keep.

I was in charge of the Tripoli Market in 1956. I and Oswald Tillekeratne another Assistant Commissioner worked round the clock and continued minute by minute attending to unending phone calls calling for supplies from the various depots and we had over fifty.

The Tripoli Market was in a very large hanger situated in the Railway Goods-shed Yard at Maradana.. It was built during the war and it had come to be named Tripoli. There was another large store nearby, called Tunisia, also belonging to the Marketing Department which we used for handling paddy and other cereals. Tripoli Market had a rail siding where rail wagons could be shunted right to the door. This was important because every day around twenty wagonloads of vegetables were brought in by six in the morning. The outstation units that did not have railway connections sent in their produce by lorry and there were always around twenty lorries. A staff of over a hundred labourers were incessantly at work unloading and loading goods.

There were a number of units inside Tripoli Market where the goods were received. One Unit dealt with Up Country varieties of vegetables. Another dealt with Low Country commodities, while another Unit dealt with Fruits. In addition there was a Miscellaneous Unit that generally handled eggs.

Another item in demand was curd and we got curd from the Ridiyagama Farm, off Ambalantota. This Curd was always the best in quality and there was a good demand. The curd was purchased at Ambalantota and sent to Matara by lorry to be in time for the night train to Colombo. The night goods trains from all ends- Trincomalee, Jaffna, Batticaloa, Mannar, Matara, Badulla, Ratnapura all converged on Colombo by morning. It was an extremely efficient transport system.

Though today we import oranges then we had a full complement of lorry loads of oranges from Bibile. The input was such that we even had a machine to grade oranges by size.

The vegetables that came in had to get weighed and graded. The amount of waste in any consignment had to be weighed and checked by a Divisional Marketing Officer who will see that the weight was correct before the write off was authorized from the books. Because the vegetables had come overnight there was generally little wastage.

Excessive wastage was due to careless purchasing or careless packing and the Purchasing Unit was held responsible. We had to be meticulous as otherwise we would incur a loss. The Units were always a hive of activity from morning with the goods coming in being checked and dispatched for the sales outlets.

In front, there was a large sales depot where goods were offered for sale and the clients were many ranging from people who drove in cars, to people who would walk in on their way home after work. It was a hard time to ensure that the stocks of this sales depot as well as around fifty depots all over Colombo were replenished. My staff consisted of one Divisional Marketing Officer- R.F.C. de Livera a gentleman, a member of the Voluntary Army and an officer who could be trusted. He was one who could be made to sit on a heap of gold and be trusted not to take away any. Working in trade required dependable and trusted officers. In addition there were around a dozen Marketing Officers. Kulasingham was at the Colombo wholesale market and the others were all in charge of the internal units.

We had around eight cold rooms where we could store vegetables and my office staff was housed over the cold rooms. It comprised one Chief Clerk and some eight clerks and though their duty was confined to paper work I would drag one of them to attend to the work of a Marketing Officer whenever necessary.

There was always a never ending train of people who came to purchase vegetables. There were friends who would come to meet me, whom I had to greet and entertain, at least by being with them for sometime, inviting them to sit in my room and always something or other cropped up for me to leave them because there was always a problem that required immediate personal attention.

Fixing prices for the next day’s purchases was done by me, based on the prices prevalent at the wholesale market in Colombo, the prices at the main Fairs in the island as reported by the outstation Assistant Commissioners. The prices at all main Producer fairs like Embilipitiya, Colombage Ara, Kekirawa, Welimada, Bandarawela were closely monitored, as well as the prices at the Consumer fairs in Colombo, Kandy and other cities. The problem was that the prices varied even during the day depending on the quantities that came in. We always tried to fix a price above the prices reported at the producer fairs, if our margin of ten to fifteen percent enabled us to sell at a price below the Colombo market price. The Assistant Commissioners were informed of the prices by telegram and telephone. Those were days when we had telephones only in District Offices and outstation officers had to wait a long time at post offices to get a call to inform the prices to the Tripoli Market. At times I would go to the office of the Government Agent as his phone always got priority and the telephone exchange would connect me at once. I can also recall the telephone I had at my Ambalantota Office where when I wanted a telephone call I had to wind my phone endless to get through to the post master at Ambalantota. Thereafter I had to wait for hours to get a connection. In today’s mobile telephone situation it would be very easy to work the system.

Deciding on the price to purchase goods was a hard task. We had to purchase islandwide and we were never certain whether we would be able to cover up transport and handling costs. The Assistant Commissioners in the Districts could use their discretion to increase or decrease prices, in keeping with availability. Tripoli Market required a minimum quantity and if the producers brought in less quantities to the Fairs our prices had to get adjusted upwards. If large quantities were brought the prices had to get adjusted downwards because otherwise we would have to purchase a quantity that we cannot handle. It was a quick decision that had to be made and we had to face the consequences. There was no time to write down reasons and I wonder how the COPE Audits would have taken up the matter. At times on certain consignments we incurred a loss, that had to be covered by a profit on the next day. It was a case of walking on a single tight rope. We dared and generally acquitted ourselves creditably well. Commissioner Fernando was a Chartered Accountant and every move by the Assistant Commissioners was under close surveillance. He kept in touch with the staff and would guide us in a most masterly manner. Trade was in his veins and gradually we learned the art of deciding the right price.

Working in charge of Tripoli Market was demanding at all times and I was happy when after a year’s time I got posted to Anuradhapura.

The entire Marketing Department, involved other activities like the purchase of paddy under the Guaranteed Price Scheme for paddy and other cereals and Rice Milling. On the whole there was a total staff of around 3,000. We had a very efficient Transport Officer in Fonseka. A hundred lorries were on the incessant move.

The Canning Factory

The Marketing Department established a full fledged Canning Factory in the Fifties where we did experiments in processing fruits into jam and juice. Then Sri Lanka was importing large stocks of jam and juice from Australia and the aim was to make jam and juice to enable us to stop imports. Under Alles and Pathmaperuma, the Canning Factory became fully functional. We tried various fruits. We even purchased guavas from the guava belt in Balangoda to Belihul Oya- where guavas grew wild. With the establishment of this Canning Factory the Department was able to offer floor prices for items like Pineapples, Ash Pumpkin and Red Pumpkin. A Floor Price meant that we purchased the total stock offered. Red Pumpkin was the base to make Golden Melon Jam and Ash Pumpkin the base to make Silver Melon Jam. The producers of these varieties benefited from the floor prices because we would purchase their entire stock. As a result we became self sufficient in all jam, jelly and fruit juice. The fruit juice was orange. Today my blood boils to see the shelves of Supermarkets full of orange juice from California! My mind raves with the loss of production, the unemployment our people suffer and the loss of our valued foreign exchange in imports.

Down came the IMF axe of privatization and the Canning Factory was privatized. Floor prices are no more for the producers.

Today in the remote areas pineapples, red and ash pumpkin cannot be sold at all during the season. They fetch very low prices. Many a producer has told me that their produce has had to be buried. Silver Melon Jam and Golden Melon Jam are long forgotten. Imports have taken their place. Today thanks to the UNP and the IMF policies we are creating employment for people in the Developed Countries while our people remain unemployed.

An Export Trade

The Marketing Department was even successful in establishing an export trade in canned pineapple. Sri Lanka has the Mauritius variety of pineapple which is far tastier than the larger, Nav(Ship) Variety which is produced all over the world. In Hawaii I visited the DelMonte

Canning Factory and saw Nav pineapple being canned. Our Marketing Department canning factory can easily stand comparison to the Canning Factory I saw in Hawaii. Our Mauritius pineapple variety is far tastier than the Nav pineapple variety produced in other parts of the world.

After the demise of the Marketing Department’ exports of pineapple died a natural death- a loss of valuable foreign exchange. The privatized Cannery now even imports fruit.

Red Onions

During the Red Onion season we were having a hive of activity and the Assistant Commissioner in Jaffna ran round in circles attending to purchasing red onions and dispatching them by the wagon load to Tripoli as well as to cities like Galle. Once, I covered the Galle District from my headquarters at Ambalantota.

I can remember an instance regarding the sale of red onions in Galle. Wagon loads of red onions came from Jaffna. We sold to the traders at a wholesale price and also sold at a cheap rate in our retail unit at Galle. It was my task to see that traders were provided with red onions and also to see that our retail shop never ran out of Red Onions. I was in Galle on a certain day and everything was in order. I got back to Ambalantota my headquarters by night. The next morning when I went to my office, I received a telegram from Head office. It read “MP for Galle, Dahanayake reports shortage of Red Onions in Galle. Proceed immediately, inquire and report.” I hooked into my car in anger- it always had my toiletries and extra clothes. I was back on my way to Galle, driving as fast as my Peugeot 203 would take me. I went to a number of private retailers observing whether they had red onions and finding the sale price. I went to our retail unit and found they had ample stocks. I had my network of private informants whom I contacted and was satisfied that our shops functioned well. I always built up a private spy service of friends. Then I went to meet Mr Dahanayake. He was not at home and I waited till he came. It was hours but I had to meet him. He came home at around ten o clock in the night and was surprised to see me waiting for him. I showed him the telegram and told him that there was no shortage of red onions at all in Galle. He looked hard at me for a moment. I knew him well and was in constant touch with him. It was strange and I wondered for a moment.

” You know, Garvin, we have to please our voters. Some fellow came and told it to me and to keep him happy I sent a telegram to your Ministry”, I asked for the name of his informant and was told that he cannot remember I pointed out that this telegram gave the impression to my Ministry that I was not doing my work well.

“That is politics. ” he said. “Next time I go to the Ministry I will tell the Minister that everything is satisfactory. Tell me if you have any problem.”

That was all. I submitted a report of my investigation and what Mr Dahanayake told me. And the Ministry took no further action. Evidently Mr. Dahanayake had contacted the Ministry. We Assistant Commissioners were always on pins.

Working with politicians was always demanding. Politicians were of two categories. One group was the Minister and the Deputy Minister in the Ministry under whom the Department functioned. The other category happened to be the politicians in the Districts where we worked like Mr Dahanayake. At times it so happens that the requests of the District Members of Parliament cannot be accomplished by us. A Clash ensues and we get transferred overnight to please the District Member of Parliament. We are even kept in quarantine for a short while to please the Member of Parliament- to give him the impression that we are punished. Eventually we are given a kick upstairs. We administrators get used to this play of politics.

Van Sales

The Marketing Department also made van sales. Van Sales on the Streets in Cities was done when there were quantities that could not be easily sold at our normal outlets. A Van with a Marketing Officer or a Manager would be sent out to attend to street sales. The sales will go on till late in the night at times till our stocks were sold. Our officers had to work round the clock when the necessity arose.

Planning Production

The Assistant Commissioners in the Districts advised the producers what varieties should be produced- this was based on the demand. They attended divisional meetings chaired by the Divisional Revenue Officers(later Assistant Government Agents) and worked through various cooperative and rural development societies.

We laid a dragnet covering all producer fairs in the island and visited them to see that the traders offered reasonable prices to the producers. We were known to the traders and they were aware that if they offered low prices, one of our mobile purchasing units will be sent the very next week. Overall the Marketing Department did purchase less than ten percent of the crop, but we really ruled the day to determine the prices for the producers as well as the prices in the cities.

Bakery

A Bakery was established in Colombo which produced bread, cakes and short eats and sold to consumers at reasonable rates. This Bakery proved to the bakers that they could easily manage to get a profit and offer the bread at the controlled price. Today most loaves of bread offered for sale in the cities are short weight. This Bakery was closed down by the UNP Government.

Hospital Supplies

The Marketing Department also had a Hospital Supplies Branch that supplied the requirements of vegetables, fruits and essential commodities to the main hospitals. The idea was that the hospitals would get good quality supplies at a rate cheaper than local traders.

In the case of main hospitals there was a unit with an Assistant Manager who had to order supplies from Tripoli Market or one of our main depots at Kandy etc. and buy the rest at cheap prices at local Fairs. At times problems cropped up and were solved. At times though good quality fruits were supplied by us, by the time the fruits reached the patients at meal time, it was not the same fruit. The Department got the blame. Once I remember one of our Assistant Commissioners stood in as a patient on a hospital bed, with a bed head ticket, unknown to the hospital staff other than the doctor in charge, to prove what was happening.

Effective Administration

The Marketing Department was really built up over night by Commissioner Basset. That will explain why many units even when I joined in 1955 were housed in wooden sheds. There was no time to plan and make up buildings. It was a case of a cement base for the floor, wooden uprights and walls built of timber- a structure that was put up within a few days. At the beginning there were Divisional Marketing Officers in charge of the Areas and gradually Assistant Commissioners were appointed.

Commissioner Basset was a quick and efficient administrator.

Many a tale is told of Basset and how he acted. Once he had gone to the Depot at Nuwara Eliya and found that the drains around the Vegetable Packing Shed had not been cleared. The Divisional Marketing Officer was waiting to greet him with his staff. To their dismay Basset grabbed the first broom stick that he could find in the office, rolled up his sleeves and cleaned the drains with buckets of water that he carried from a nearby tap. He had asked the officers that volunteered to keep away. Since that day the drains were always clean. Another tale is about how he recruited staff. Those were the days when there was full employment and it was fairly difficult to find anyone unemployed. An advertisement called for recruits for posts of Assistant Managers in the newspaper and about fifty had turned up. Basset gathered all of them and asked them to line up. To those who failed to line up properly, he called them and asked them to go away. They were weeded out. Then he asked them to shout out their number beginning with one.

The odd numbers were posted to the vegetable packing sheds as Assistant Managers and the even numbered were posted as Assistant Managers in Hospital Supplies.

We Assistant Commissioners had full powers to sack people if they were found to thieve or to be wanting. Once I went to the Stores at Mutur. No one knew that I would turn up early that morning. At that time I was stationed at Anuradhapura. I found that the watcher was missing at the Store entrance. I immediately took over his job and took note of the lorries that had come with paddy. After an hour the watcher turned up with a tale of woe. I told him to go home-he was given a standing sack. With stores in far flung places we had to have the staff that was responsible and the Head Office carried out their task to support us in the Basset Tradition. It was then Commissioner B.L.W.

Fernando, who had implicit trust in us. Once I inspected the Karawanella Hospital Supply Branch and the labourer told me that the Assistant Manager was attending to purchases at the Ruwanwella Fair. I went to the Fair and gathered the prevalent prices without the knowledge of our officer. Then I met our Assistant Manager who had written out purchase receipts at higher rates. Evidently he had played out some money- the rate between what the people were offering produce and what he had written on the receipts he had issued. The difference only amounted to less than some forty rupees- but that was it. He lost his job. There was no question about that aspect- a falsification was something that could not be condoned.

The situation was entirely different eighteen years later when I was the Government Agent, a high ranking officer in Matara. A Grama Sevaka working on flood relief measures, took away-stole a bag of rice that was meant for distribution to displaced homeless people. I held an inquiry and sacked him. I was summoned by the Parliamentary Accounts Committee that questioned me in detail as to why I sacked him. Finally I had to agree to take him back to work and when I stated that he should be punished in some form or other, they reluctantly agreed to cut off a few increments of his salary.

In 1955 when ever there was a shortage of stores, I would walk across to the largest house I could see, speak to the owner and take over a portion of the house as a temporary store. I would draw out a sketch of the section taken over with measurements and decide the rent to be paid myself. I would draw up an agreement and get the owner to sign. The next day I would move in an Assistant Manager or a Storekeeper, get hasp and staples fixed for a padlock and purchases would be commenced. I never answered a single audit query on such decisions. Eighteen years later as the Government Agent my word was not accepted for such a take over. I would have to get a valuation from the Valuation Department. The audits would insist on my calling for tenders and I have had to write out sheets of paper to prove my innocence.

My first appointment was as the Assistant Commissoner for the Ratnapura District and my office was in a wooden shed opposite the esplanade. It was actually a part of the retail shop. I had a Packing Centre at Godakawela under an able and trustworthy Marketing Officer, Saparamadu,, from where purchases were made at the producer fairs at Embili[pitiya, Colombage Ara and Godakawela. We did work really fast.

Once when I worked in Anuradhapura it was reported that the colonists in Padaviya were charged high prices for essential commodities by the traders. We decided to open a retail shop and it was established within a few days.

We Assistant Commissioners were always on the move. Generally the traveling allowances we drew were higher than our salaries. The Island was divided into about eight areas. When I worked in Anuradhapura, I covered Trincomalee. We had a purchasing unit and a retail shops at Anuradhapura and Padaviya. My units were in Boosa and Deniyaya when I worked at Ambalantota.

UNP the destroyer

The Marketing Department was abolished because it interfered with the free trade and the private traders were allowed to do anything they want. The Canning Factory was privatized and instead of buying goods from producers they now import fruits and produce jam. The UNP regime was thus responsible for canceling this Scheme which had taken decades to establish.

The Marketing Department was always making a small loss and was totally decimated by the UNP Government of Jayawardena at the behest of the IMF. The achievement of the Marketing Department to offer fair prices to the producer, to enable city dwellers to obtain goods at cheap rates, to enable the country to become self sufficient in vegetables, fruits, fruit juice, jam and thereby save foreign exchange by avoiding imports, the creation of employment in our country was not the concern of the UNP Government.

The IMF’s intent was to create trade and jobs for the Developed Countries. The poverty and unemployment created in the Third World was to be accepted as an essential factor for the well being of people in the Developed Countries. The people in the Third World have to be sacrificed for the prosperity of the First World. Take any advice or policy of the IMF and this will be revealed as their motive. That in essence is the IMF procedure since the Seventies. (Reference; How the IMF Ruined Sri Lanka, Godages)

The Cooperative Wholesale Establishment(CWE)

While the Marketing Department tackled all locally produced commodities, all imported essential commodities were handled by the CWE.

The Aim of the CWE was for the Government to import essential commodities in competition with the private sector and distribute them to people through retail shops at a cheap price. The intention was to unofficially control prices because if the private sector shops sell at high prices people will not buy from them but will purchase from the CWE shops. Thereby the traders could not make fat profits though imports. The CWE shops were everywhere and were well stocked.

The CWE was abolished and the CWE shops were closed down during the Ranil Wickremasinghe rule of 2001 to 2004 and this enabled the traders to make fat profits. The CWE was a shrewd mechanism to control inflation in all imported essential commodities. After demolishing the CWE mechanism today Ranil Wickremasinghe and the UNP blame it on the present Government. The UNP should actually be hiding its face in shame, but instead Ranil Wickremasinghe and the then Minister of Trade, Ravi Karunanayake are now posing as saints, having done the greatest damage to the economy of Sri Lanka by demolishing the CWE.

Price Control

The prices of essential commodities were controlled and there were Price Control Inspectors that conducted inspections to ensure that traders sold at fixed prices. It was also their task to ensure that the weights used by traders were correct. Once I was a member of a group of Staff Officers who went to the Anuradhapura Fair to purchase vegetables. We parked our car and marched in to find a commotion- the Price Control Officers had raided the Fair and had caught a number of traders using short weights. There were only two Price Control Inspectors in the group and they were about to be beaten up by the errant traders when we jumped in to their rescue. That group of Staff Officers included Tissa Devendra, a colleague.

Price Control was abolished by the UNP Government. Today many shops sell short weight.

Price Control has been brought back by the Rajapaksa Government but the full scale Price and Weights control has not yet been possible.

It is not possible to build up overnight a full system that had been built up over three to four decades.

Price Control has to be done simultaneously with the CWE and the Marketing Department playing a major role. When the CWE and the Marketing Department mechanisms are fully functional the traders always fall in line and charge low prices because if their prices are high no one will come to purchase from them. In the absence of a developed CWE and Marketing Department mechanism in action, the traders rule the roost in charging higher prices above the controlled price. With a few Price Control Officers at work it is not possible to ensure that every trader adheres to sell as the controlled price. Today many traders are charged and fined. In the context of the CWE and Marketing Department mechanisms being in action it was only a few traders that dared to sell at higher prices, because the availability of goods at cheap prices with the CWE and the Marketing Department automatically had the desired effect of making the traders sell at reasonable rates. Otherwise they will be shooting themselves in the foot. Thus prosecutions were few. A large number of prosecutions brings a bad name on the Government. The CWE and Marketing Department mechanisms made the traders fall in line automatically. There were very few errant traders.

Price increase & spiraling cost of living- a creation of UNP

Thus the blame for the price increases in essential commodities, shortages in the supply of fruits and vegetables, the shortages in rice in Sri Lanka have all to be laid at the door of the United National Party, because it is they that abolished the entire development infrastructure that we administrators and enlightened politicians had built up over the Forties, Fifties and Sixties. The UNP axed the Rice Ration Scheme, the Marketing Department, the Paddy Marketing Board and the CWE. The CWE was abolished and sold off during the 2001-2004 reign of Ranil Wickremasinghe. Those ruins are the record of the UNP and what can we expect of Ranil Wickremasinghe if he comes to power. He is bound to be the undertaker for whatever is left in the country.

It is a moot question as to what one can expect if the UNP wins at the general election. The prices will escalate further and the rich will become richer and there will be higher unemployment due to the system of free trade and reducing import tarrifs which encouraged imports while our people remain unemployed. That was the policy of the UNP. Already in Sri Lanka the rich are stinking rich with salaries of a million or more a month in a country where the masses get only a paltry twelve or eighteen thousand a month. In Golden Key the Deputy Chairmen- seven or eight of them are alleged to have drawn salaries of three million rupees plus perks a month.

Implement the Master Plan of Old

The Rajapaksa Government has attempted to re establish the CWE, However once entire Departments are sold off, vandalised and dismantled they cannot be easily set up again. It was the process of privatization and the reduction of public sector activities as advised by the IMF, which was followed by the UNP that caused this disaster. President Rajapaksa has decided that there will be no privatization, but the damage has already been done by the UNP

The Rajapaksa Government has established Economic Centres at Narahenpita in Colombo and a few other places where the private sector has been accorded with sales space. What is required is the mechanism of the CWE to compete with the private sector, where the private Sector has to compete with the prices at the CWE. That is essentially the missing link at the Economic Centers. It is only this competition both by the CWE and the Marketing Department that can control the private sector in action. In the case of the CWE there should be many small retail units all over the cities.

In the case of Vegetables and Fruits the Government should immediately re establish the Marketing Department equipped with a few Canning Factories in Colombo and other producer areas and cold rooms. I can vouch that the cost of establishing a full fledged Marketing Department with cold rooms and a canning factory can be recouped within

three to four years from foreign exchange savings. This will create employment for a large number.

A full fledged Marketing Department is essential. Its wide activities will pave the way to usher in a rural renaissance, something which the country eagerly awaits. The establishment of the Marketing Department mechanism is an essential pre requisite for the creation of production, employment and poverty alleviation.

Garvin Karunaratne, Ph.D.
Former Government Agent, Matara District.
28/3/2010

All quotations are from my books:
How the IMF Ruined Sri Lanka & Alternate Programs of Success, Godages,2006

Microenterprise Development: A Strategy for Employment Creation & Poverty Alleviation in the Third World: The Way Out of the World Bank & IMF Stranglehold, Sarasavi, 1997 “”…” by President Jayawardena and Prime Minister Wickremasinghe.

One Response to “The Proven Sri Lankan Solution to the spiraling Cost of Living- the malady of UNP policies”

  1. Mr. Pol Says:

    Thankyou for another excellent and highly informative piece Garvin

    The UNP (Ranils family especially) is tied heavily to all the Colombian businesses, with tentacles extended out to the provinces to snare up the raw materials and human resources as slave labour. They use their positions of power when ruling the country (e.g. 1977-94, 2002-04) to feed and support their family and friends corporations and establishments; giving contracts, money, bogus deals and selling of state resources to theses corporations and foreign multinationals so they can make a fast buck while passing the long term expenses and consequences on to the impoverished masses. As a result the people become even more destitute and large scale damage is done that only “they” can “fix” which involves more selling and dissolution of the state and vital State assets.

    These are the same criminals who attack MR, they do it out of jealousy because “godaya” MR succeeded in winning the war where these “superior” and “more educated” Colombians failed. They know MR is not corrupt like them and so long as he is in power the can no longer get “easy rides” like they used to and now generating a fast buck to fund their luxury lives at the expense of the people has become extremely difficult -hence the never ending complaining and attempts to topple the current Government.

    These people have uppity swanky lifestyles built on lies, corruption and hands in power, with the UNP out of power they can no longer sustain these fraudulent lifestyles they never really earned or deserve hence why they are desperate for “regime change” and will do anything (collude with foreigners, an LTTE victory, even Fonny’s military coup) to get it all back. These Colombians and UNP types are the most corrupt businessmen, politicians and individuals the nations has seen and they know it. When they cry “lack of freedom” what they really mean is a lack of “freedom” for them to rob the country to its bones, enjoy unbridled power and crush those who oppose them. They cannot stand the loss of power and wealth that has happened with the election of Mahinda Rajapkase. The destruction of the LTTE has resulted in them and the West being unable to “threaten” Sinhalese, both miss the LTTE and both are furious with Mahinda Rajapkakse for that above all else. He destroyed a vital tool of control and subjugation against the Sinhala masses, he has also brought economic empowerment to the whole nation not just a privileged pseudo-elite, which is why he is loved by the masses. The West and their Colombian hit forces here do not like this and talk nonsense about “freedom”, “human rights” and “media rights” to deny and camouflage the will of the people. So much so for “democracy”.

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