Posted on April 25th, 2020


This essay contains the work done by Philip Gunawardana and P.H.William Silva during the MEP government of 1956. In the MEP government of 1956, Philip Gunawardena was given the Ministry of Food and Agriculture. The portfolio included the plantation sector as well as animal husbandry.

Philip had got down to work immediately, after taking up the portfolio, perusing files, talking to officials, visiting state farms, research and experimental stations, talking to farmers, and visiting Pettah to inquire into prices of rice and other foodstuffs.

Philip maintained that it was more profitable to invest money in the plantation crops and the existing paddy lands than invest in massive irrigation and land settlement schemes, which needed enormous capital.  ‘Vast sums of money are spent as capital expenditure on schemes which will only begin to pay in 10 or 15 years.  We need a quicker return.  That can be obtained by providing irrigation and drainage in areas where the schemes are already in operation,’ Philip said.

Philip took a deep interest in paddy production and studied it from all angles. He complained repeatedly about the paucity of statistics on paddy cultivation. There was no information on the size of holdings, yield, ownership, and so on. Thanks to Philip, in 1962, the Department of Census and Statistics started an agricultural census.

Philip contested the existing notion that it was cheaper to import rice than produce it. He said that it was not necessary to open up more and more land for paddy cultivation. It was better to increase production in the existing paddy fields in Purana villages and colonization schemes. He strongly urged investment in already asweddumised land through higher use of fertilizer, high yielding seed, use of mechanization for ploughing and sowing, would give greater returns.

Philip said that mechanization would take the drudgery out of agriculture and make it more attractive.  It may also stop the exodus from the village.   We must think of tractors not buffaloes, he said.  The Department of Agriculture will take over all available tractors in the public sector and operate a tractor service.

Philip wanted to create an Agricultural Implements Factory which will also produce mammoties, pick axes etc. Paddy milling industry had to be reorganized said Philip. Most mills are ramshackle and   there is wastage in the milling process.

There was the problem of low paddy yields. The basic principles of land use in ancient Ceylon were sound and in accordance with modern principles of land utilization, said Philip, quoting Ernest Abeyratne. Therefore all what was needed now was the introduction of modern techniques adapted to the Dry Zone environment.

The soil conditions and fertilizer needed In the Dry Zone, was known from ancient times, said Philip. But knowledge of soil conditions and fertilizer needs for paddy production in the Wet Zone was lacking.  Philip found that experimental plots and private individual farms in the Wet Zone had shown good yields where soil had been analyzed and correct fertilizer used. ‘They have obtained as high as 60 to 110 bushels per acres.’ In Kegalle, the Food Production Department had managed to increase yields by providing fertilizer, credit, high yielding seeds and adopting transplanting instead of the traditional   method of sowing.

Philip was deeply concerned with the plight of the farmer. The rural sector needed a body which would give them medium and long term credit. There were no credit facilities in the country for the small traders also.  The two available banks, Agricultural and Industrial Credit Corporation and the Cooperative Federal Bank were of no use. Bank of Ceylon was not operating in rural Sri Lanka, either. The main source for credit were the private loan agencies.

Philip wanted to set up a Cooperative Credit Bank, which would provide credit to the ‘small man’ in industry, trade or agriculture, as the existing commercial banks did not support him. The Cooperative Credit Bank would grant loans to the rural sector, for financing small agricultural industries and businesses, and also give loans for building. It would also act as a pawn broker.  The Bank would have branches in the principal towns and rural centers. The plan was to open 100 branches in the first year.

The Bill had received the support of the Central Bank. Amendment suggested by Central Bank were incorporated. Governor of the Central Bank Arthur Ranasinghe had in a personal letter to Philip, praised the idea and offered the services of his staff to help the take over the Cooperative Federal Bank into the new Bank.

The Cooperative Credit Bank Bill was put to the Cabinet in 1958.  It received the unanimous approval of Cabinet. Then the Bill was opposed by Minister for Lands and Land development, CP de Silva and Minister of Finance, Stanley de Soyza. CP de Silva said they would give Rs. 10 million to the Cooperative Federal Bank, instead.  Stanley de Soyza attacked the Bill when the draft was published in Daily News.  He protested that this Bank was to be set up under its own Act, and would have the powers of a normal commercial bank, not a cooperative bank.

Philip explained that the Cooperative Credit Bank which was a pioneer venture had to be liquid if it was to provide credit into the rural sector. It had to first make that money. ‘We have combined the function of a commercial bank with the functions of a development bank. The commercial side was to earn the money and lending was to be done by the development side, he said.

Philip thought that foreign banking interests were behind the opposition. The Finance Minister is expected to   see that banking facilities were provided to the rural sector. Instead he took the side of the foreign vested interests and opposed the setting up of this bank. SWRD took over the Bill from Philip, promising that he would see it through. That did to happen.  His opponents forced Philip to resign from the Cabinet and the Bill was forgotten.

Philip was also preparing in 1958, a Crop Insurance Bill. It was necessary to protect the farmer from crop failure, through crop insurance. This would be tried out first in two pilot projects, one where risk is high and one where risk is low. The pilot projects will not be experimental ones, they will be fact finding. At present we do not compensate when there is loss of crops. We wait till they are destitute and then give relief.

Philip brought a revised Paddy Lands Bill before Parliament.  The first Paddy Lands Bill was passed in 1953 under the UNP. It was a limited attempt at tenancy reform and was focused on Hambantota and Batticaloa alone. Under this Bill, tenant and owner should sign an agreement, valid for 5 years. Philip found that in Hambantota, only two such agreements had been signed.  Landlords avoided written leases. Without clear tenancy agreements, the benefit was for the money lender, said Philip.

Philip prepared a comprehensive Bill dealing with the whole question of tenancy, security of tenure, rights of landlords and tenants. It was to ensure long term security for the tenant and limited very strictly the rights of the land lord. The new act gave the ande goviya tenure without a time limit.  The number of tenant farmers affected were around 300,000. Philip said the Bill would also free the tenant from his traditional servitude to the landlord. The tenant’s children had to work in the landlord’s house as servants, often without pay.

Philip introduced his Paddy Lands Bill in 1957.  Meegama said that this Bill was perhaps the most important Bill presented in Parliament since 1947. This Bill will benefit the Kandyan peasantry more than any other worker. The Kandyan peasant is the most down trodden, said Philip. Nanda Wanasundera recalls, there was one tenant on the paddy land in Peradeniya, owned by her mother, who insisted she must get three fourths with Mother getting only one fourth.

Paddy Lands Bill was  passed on Dec 19, 1957, 61 for and 7 against. The Paddy Lands Bill gave security to the tenant farmer. There were a lot of objections to the Bill, including tremendous opposition from the SLFP in the MEP, especially CP de Silva. The paddy owners objected strongly. Nothing should be done to disturb to these ancient  hallowed practices, they said.

Crippling amendments were made to the Bill. Philip said he had wanted to implement the Paddy Lands Act in the entire island within three years, but under pressure from landed interests and capitalist interests, he had to make it five years. The number of landlords in the Cultivation Committee was increased to 25%. They could refuse to attend.  They did and the committee could not function.

The enforcement of the Act depended on its proper administration. But Philip could administer the Paddy Lands Bill for only one year. The Act needed certain changes. 50 amendments had been prepared.  Philip pointed out that the necessary amendments to the Act were ready when he was asked to resign. But they were not introduced and many tenants were evicted from their lands. They blamed it on Philip.

Meegama said the Paddy Lands Act , even without amendments could have been successfully implemented under a supportive minister and dedicated officers in the Agrarian Service Department .

One of Philip’s great success stories was potato farming in Nuwara Eliya. This had been tried before and failed.  The MEP government wrote off the debt on this failed attempt and tried again with better seed potatoes. The trial  was a complete success, and a potato research station was established in Rahangala.

In 1957 Philip reported that sugar cane production was begun on a large scale in Kantalai. This was the first time that lift irrigation on a large scale was being used in Sri Lanka.  In 1958 Philip reported that the sugar factory was also coming up.

Philip also started pineapple, coffee, cocoa, tobacco and cotton plantations. Pineapple was tried in Gampaha area, where the soil is suitable. Cocoa in Matale, Badulla and Koslanda, tobacco in Jaffna and Uva. Philip said that a citrus specialist from Australia had been surprised that we were not using the local varieties which will be more resistant to disease, unlike the imported varieties.

 A large cotton farm was planned for Hambantota, in the area between Walawe and Kirindi oya. We have developed a variety of cotton suitable for the area.  It is purchased at a good price by Wellawatte Spinning and Weaving Mills. Area under cotton was expanding as the villagers earned more by cultivating cotton. We propose to open a fairly large cotton farm in Ridiyagama area with Russian assistance, said Philip .

In dairy farming, Philip reported that they had experimented with crossing the Sinhala Cow with the Jersey and Frisian cows. The most successful match was with Jersey. The animal is larger than the Sinahla cow but not as large as Jersey. Milk yield was fairly satisfactory.

Philip improved the distribution of milk. Most of the milk went waste since the producing areas were so far from the towns and in a tropical climate milk soon goes bad. Therefore Philip set up two pasteurization plants in Gampola and Nattandiya where 10,000 pints of milk were collected daily, from producers. Milk Board  planned to set up two more plants at Polgahawela and Kotagala.

The Milk Board in 1958 launched a programme to popularize milk drinking, and to increase the supply to those areas which were ready to drink milk. The Board planned a chain of six feeder units for collection, processing and storage at Nattandiya, Gampola and Welikanda, with Kotagala, Polgahawela and Galle to follow. The Board also up the Colombo Central Dairy with Colombo Plan aid, to serve the Greater Colombo district.

An American NGO, CARE, had been invited by the UNP government to distribute milk powder. CARE was an acronym for Cooperative for American Relief Everywhere’. Philip objected to CARE distributing milk powder. It could be done by local agencies. Also what was the need for CARE to set up an office here, for the mere supervision of the distribution. Why  did the previous government allow a voluntary  organization to set up a branch office in Ceylon. Philip was suspicious. ‘I fear the Greeks  even when they offer gifts ‘ Philip  tried to change the agreement ,but  found that was not possible. ‘I looked,’  he said. ‘

In July 1958   Philip Gunawardene published an Agriculture Plan prepared by the Ministry of Agriculture Planning Committee. This was a substantial document. It was prepared with the support of a  group of dedicated public servants. It had an overview of the Agriculture sector, crop by crop, with   information on each, and what was needed. It covered food and plantation crops, animal husbandry, distribution, credit, crop insurance, multipurpose co-ops. It examined all the problems. It was a good starting point for anyone starting work on an agriculture plan, said Meegama. The plan was criticized by his opponents within the MEP.

Philip encouraged agricultural research. He wanted the research scientists in the Department of Agriculture and elsewhere to concentrate on research and not administration. He appointed administration officers for the 24 districts and relived the scientific officers of this work. Technical officers should be left to do technical work, not promoted to  do administrative work, such as petitions, he said.

Philip said that J.R. Jayawardene had in 1953 and 1954 disposed of very valuable state farms.  If JR had waited for a year or two most of these farms would have paid. Some of these farms were for research not to make a profit, observed Philip.  Philip wanted Gannoruwa to do research on rice.  He  set up  other research units. Rahangala for potato and citrus,    Hambantota for cotton,  sugar in Kantalai,   and paddy at Batalegoda. Under him, the Department of Agriculture started a soil survey.

There are five big firms which import fertilizer. The main ones are, Colombo Commercial , Baur, Shaw Wallace and  Moosajee. They have a virtual monopoly. CCC, Baur and Shaw Wallace work together. Government pays out enormous amounts for fertilizer for coconut, rubber and paddy. The government subsidizes 50% of the cost to the paddy cultivator.  This too goes to the importing firms. We are their mercy said Philip.

Philip wanted to make the CWE the sole importer of fertilizer. The idea was opposed, by many including the Minister for Commerce. Cabinet refused to give approval for CWE to import fertilizer.Even the Prime Minister had objected to the state importing fertilizers.

Philip then suggested creating a separate state organization for the purpose. It would be able to sell fertilizer cheaper. And eliminate the high profits the   three foreign firms were making   since they had a monopoly on it.  Nothing came of this either.

Until 1956, the cooperatives had been single purpose ones. There were about   10,500 of cooperatives   and they were of 70 different types. MEP decided to weld them into one organization, the Multipurpose Cooperative Society.  By 1958 a fair number of Multipurpose Cooperatives were formed, other were converted. There was terrific enthusiasm on the part of the public said Philip.

The MEP had taken over the Cooperative Wholesale Establishment. Before 1956, CWE was selling a bare minimum of items. So that the public had to go to the private trader for the rest.  MEP gave it a new board of directors and they had shown a profit in 1956 itself. MEP gave CWE trading rights and monopolies in respect of several items of food stuffs.  Philip’s plan  had been to make the CWE eventually the sole importer of all essential food stuff.  

However, Philip was not obsessed with state ventures. He  proposed joint stock companies, state and private, for paddy milling, coconut oil, and desiccated coconut.

P.H.William Silva was appointed Minister of Industries and Fisheries in the   MEP cabinet. His name is forgotten today, but it was William Silva who started the industrial sector in Ceylon. There were no local industries when MEP took power in 1956, everything was imported. The country was importing everything, from a pin, comb, pencil, biscuit to mammoties, water pumps, agriculture and industrial machinery, reported economists.   

The main obstacle to the creation of local industry when the country became independent was the lack of credit. World Bank Survey of 1951 reported that the banks operating in Ceylon did not support local industry. The Agricultural and Credit Corporation (est.  1943)  for the express purpose of Providing such credit had not done so. Those who went there found it impossible to arrange acceptable security. The British and Indian commercial banks present in the country, only lent for    short tem import export transactions.

Bank of Ceylon did not help either. Mortgages had to be secured by personal assets of borrowers. Bank of Ceylon did not give loans on new enterprises unless the bank officials knew the person.  The local moneyed class was also not prepared to invest in industry. William Silva observed that when a local person made money, he preferred to buy an estate and get a quick return.

William Silva   decided that in such a situation, the state had to step in and provide a lead in developing industry. He   presented a White paper on Industrial policy. He introduced the State Industrial Corporations Act of 1957. .. Budget 1957-58 included various tax concessions for industry.

A conscious effort was made towards industrialization in 1956. Corporations were established under State Industrial Corporations Act 1957, as well as special legislation. These corporations were provided with startup capital in form of grants and loans, confirmed economist Saman Kelegama. 

William Silva thought that the state    should undertake   ‘large’ industry, such as cement, steel and machinery.  He drew up three lists of industries.  The first list consisted of items reserved for the state. They included iron and steel, cement, chemicals, fertilizer, salt , mineral sands sugar, power alcohol and rayon. 

The second list had industries which were open to both state and private sectors. They included textiles, tyres and  tubes, tiles, asbestos products, bicycles, industrial alcohol, acetic acid,   sugar, vegetable oil, ceramic ware, glass ware, leather products, plywood, paper, electric bubs, dry cell batteries, accumulators, barbed wire, lumber, agricultural implements, wood working, furniture and cabinetry,  and concrete products. 

There was a third list of 82 industries ranging from motor car assembly to activated charcoal, reserved exclusively for the private sector.  Persons embarking on these industries would receive tax concessions and tariff protection . Meegama observed that this period  therefore saw the beginning of a  private  sector in industry with government encouragement . Industrialists  promptly  asked  the government to stop imports in the goods they are producing.  

The first industrial estate was established at Ekala, with a grant from the US, giving facilities for the small industrialist, so that he could avoid the expenses for land, building and provision of water and electricity. Ekala started to operate in 1960.

William Silva needed to find funds for the state  industries.  World Bank had refused to finance  local industry when the earlier government had asked them, so this time William turned to Russia. Russia gave money  to start the  steel factory at Oruwala, tyre factory at Kelaniya, cement factory at Puttalam,  and the state flour milling factory.  A Ceramic Corporation, Leather corporation, Plywood corporation and Caustic soda project were set up by the MEP government later on.

 The Mineral Sands Corporation was started by William Silva. William Silva was aware of the value of these mineral sands.  It contains  titanium oxide, rutile,  and zircon, he told Parliament . He was hoping to process them with the limited technical knowledge we possess.

 He  also took note of the Monazite available. There is monazite washed up by the tide. It is there on the shore. We can collect about a thousand tons for nothing, he said.   Having collected it, you separate by magnetic operation, the monazite from the sand. Monazite is radioactive. We will not sell it. We will stockpile pile it, so that we can use it someday in an atomic programme for peaceful purposes said William Silva hopefully.

William Silva set up a National Textiles Corporation and a new spinning and weaving mill at Veyangoda. He encouraged handloom weaving  by supplying yarn at a reasonable price.  He stopped the import of Indian handlooms to give a boost to the local handloom industry. It was on the foundation laid by him that the industry forged ahead and tens of thousands of rural girls found employment or self employment, said Bandu de Silva.

In 1956, Lakshman Rajapaksa, MP for Hambantota and Deputy Minister for Commerce and Trade set up a cotton processing factory at Mirijjawila near Hambantota to encourage cotton cultivators in Hambantota and Monaragala. During this period cotton was a popular crop in the Eastern part of Hambantota and Monaragala, and cotton was cultivated under rain-fed conditions. This factory functioned satisfactorily and it started processing their home grown cotton. It was set on fire  by the JVP in 1971.

William Silva was responsible for the mechanisation of the deep sea  fishing industry. This was a far reaching change. Till then deep sea fishing was done in the traditional   35 foot oruwa. This was realced in 1958, by a locally built  27 ft, three and half ton mechanized boat with a 25 horse power engine, built with Japanese aid.

William Silva he not only gave a boost to the industry but also improved the living conditions of fishermen throughout the island especially by providing them housing, said Bandu de Silva. William Silva also promoted inland fisheries by breeding tilapia and gourami.

I wish to acknowledge, with deep appreciation, that this essay mainly contains information taken from Philip Gunawardena and the 1956 revolution in Sri Lanka”byAnanda Meegama, Godage 2008.  (continued)

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