The MCC Compact Method of Creating more Poverty: The USA can definitely do better.
Posted on October 26th, 2020

By Garvin  Karunaratne, PhD. Michigan State University 

The Millennium Challenge  Corporation Compact has come up with an easy, novel method of poverty alleviation. It requires the identification and separation of a mass of  land, the  creation of a cadastral map of land parcels and a complete inventory of State land…improve the valuation of State and private land parcels by improving data collection…improving deeds registry… and research in support of measures to improve land administration policies”(The Island:15/7/2019)  The aim is also” increase tenure security and tradability of land for small holders. 

The method  involves a “transportation project for which MCC provides $ 480 million to promote economic growth.  This comprises a transport project of  $ 350 million .and a land project of $ 67 million 

It was the Batalagoda   Rice Research Institute that found the miracle seeds in the early Fifties, a half decade before the International Rice Research Institute was established by the USA in the Philippines. I was in the fray introducing new varieties to cultivators in 1955, later as Assistant Commissioner of Agrarian Services in Anuradhapura  I spearheaded the Green Revolution through elected cultivation committees- 300 hundred of them. The combined effort of the Department of Agrarian Services and the Department of Agriculture did a yeoman task later spearheaded by no less a person than Mr Dudley Senanayake, the Prime Minister of the country. I served as the Additional Government Agent at Kegalla in 1967 and 1968  and we spared no pains to bring about development. 

`The work involved a range of Departments- the Department of Irrigation to provide irrigation, The Department of Land Development to handle the development of peasant cultivation in colonies, the Department of Agriculture with its Rice Research Institutes, the Department of Agrarian Services, the Government Agents in charge  of land handled by District Land Officers, the Department of Small Industries, the Department for Development of Agricultural Marketing- the department that provided the development infrastructure for marketing vegetables. In these I have worked as the Assistant Commissioner of Marketing Development, Assistant Commissioner of Agrarian Services, Senior Assistant Commissioner of Agrarian Services, the Deputy Director for Small Industries and the Additionl Government Agent at Kegalla and the GA at Matara for eighteen long years. 

The MCC Compact thinks of transportation necessities. Sri Lanka had a marvelous  transport system in the Fifties and Sixties. Red Onions were produced in Jaffna and our stores were stock full during the season. During the season around twenty wagon loads of red onions were despatched  to the rest of the island daily. In my days in the Southern Province three wagon loads of red onions  came daily to Galle and was sold to dealers and consumers by the Marketing Department. During the paddy harvest season daily twenty wagon loads of paddy came to Galle and Matara for distribution to millers to be milled for distribution to people. At Tripoli Market the headquarters of the Vegetable Marketing Scheme there were at least ten wagon loads  and twenty lorries of vegetables dispatched the earlier day from all corners of the island.  Our transport network was extremely efficient. Highways built in recent times by our Prime Minister Mahinda Rajapaksa in his service as a Minister and Prime Minister has seen to it that transport is very efficient. Now the Railways have gone downhill, but road transport has been developed;there are better motorways and what is required for any programme of poverty alleviation is not transport facilities.  

Land was ably handled by the Government Agents who had District Land |Officers fully equipped with vehicles and surveyors. 

With all the Departments of the Government working pell mell, by 1970, the Green Revolution was a grand success and the country was self sufficient in paddy the staple crop even while issuing a rice ration to the people. The peasants settled in the colonization schemes got massive  harvests. 

To get down to what has been achieved by the Unites States of America in Third World Countries, the only success one can speak of in poverty alleviation is the Comilla Programme of Rural Development, in Bangladesh, with expertise provided by Michigan State University.  Half a dozen professors resided in the serpent infested Kotwali Thana and with the Director Akhter Hameed Khan  developed a model of poverty alleviation by providing irrigation water, mainly through deep tube wells, introducing new high yielding varieties of paddy, worked with peasants organizing them in cooperatives, brought about administrative changes, cooperatives attending to marketing.  This Programme  had grand success in that it doubled the yields of paddy the staple crop and also brought about a situation of full employment. Truly even today the Kotwali Thana where the Programme was implemented is an oasis within a poverty stricken Bangladesh. 

In all the above programmes that have been successful transport and land registration was an insignificant part. It was the opening of land, the provision of irrigation water, organizing peasants into cooperatives and other people’s organizations, providing marketing facilities, an efficient agricultural extension service that enabled poverty alleviation. 

Thus I wonder how a petty land project and a transport project is going to bring about poverty alleviation.  

If the MCC  Project had been drafted by any one with a knowledge of agricultural economics there would be funds for agricultural and rural development extension services, the build up of marketing channels, initiating small industry to enable people to get involved in manufacturing their production. That was what  the Comilla Programme of Rural Development  proved beyond doubt.  

Anyone thinking of agricultural development has to think of building up the agricultural extension service , which does not exist today at the village level because during the days of President Premadasa,  2400 overseers who worked at the village level were promoted as Grama Niladharis. Uptodate no trained officer has been appointed and the Govermants have been  appointing untrained  workers. Thus any poverty alleviation through agriculturae has to look into this aspect.  

Let me get down to specifics., It will interest the MCC organizaers to know that till 1977 SriLanka had a highly developed cereal, vegetable and fruit marketing scheme  which was totally abolished at the advice of the International Monetary Fund. The Department for Development of Agricultural Marketing implemented a cereal purchasing scheme whereby paddy and other cereals in short supply. Paddy was till 1977 purchased at a premium price from genuine cultivators. This price increase reached the genuine cultivators. After 1977, the method of purchasing from genuine cultivators was abandoned and instead paddy was purchased from anyone. Generally it was traders that sold to the Government  and the premium price went to the traders and not to the genuine cultivators.  In case the MCC wants to attend to any poverty alleviation in any country agriculture has to be looked into. Transport and land are very miniscule aspects and attending to only these two aspects cannot bring about poverty alleviation.  the development infrastructure that the country had has to be brought back.  

The Marketing Department had a vegetable purchasing scheme which purchased vegetables from producers at prices higher than what was offered by traders at the producer fairs. The vegetables were transported overnight to Tripoli Market, the headquarters in Colombo when all vegetables over ten rail wagon loads and about twenty lorryloads are received every morning and the vegetables are distributed to Fair Price Shops in the City. This controlled inflation. The IMF advise that the Marketing Department should be privatized and abolished was done in 1978 and the  producers are at the mercy of the trader mafia that purchase at the lowest possible price.  In case the MCC wants to provide marketing facilities to enable producers to sell their produce at reasonable rates, it should advise that the Marketing Department should be re established.  

The Marketing Department had a Cannery which purchased fruit from producers. The total produce of pineapples, red pumpkin and ash pumpkin  was  purchased at a premium price and this was turned into Juice and Jam. This was a boon to the producers. The country became self sufficient in Jam and Juice. With the abolition of the MD the producers have no market for their produce. This alleviated poverty among the vegetable and fruit producers and this may be an idea for the MCC to take action in case they are interested in poverty alleviation. 

To enable cultivators to have high yielding varieties of paddy for the areas we had Rice Research Institutes. Half of these have been privatized. And currently there is no definite programme to have high yielding varieties planted. 

What is the necessity to bring in a US Company for any surveying in Sri Lanka. The Survey Department in Sri Lanka is a well equipped and a very efficient department. . 

What is the urgency to do a survey of 2.5 million plots of land in the  country.  Private ;lands are surveyed and all LDO allotments have also been surveyed in the last few decades before they were alienated to settlers. 

It would interest the Millennium Challenge Corporation officials to come to know how the development in Sri Lanka and other Third World countries was sabotaged. That is the story of my book: How the IMF Sabotaged Third World Development(Kindle/ Godages: 2017) 

Let me close with a quote from luminary professor Jeffery Sachs: 

Western  Governments enforced  draconian budget policies in Africa in the 1980s and 1990s., The IMF and the World Bank virtually ran the economic policies of the debt ridden continent recommending regimes  of budgetary belt tightening jnown technically as the Structural Adjustment Programme. These programmes had little scientific merit and produced even fewer cresults. By the start of the twentyfirst century Africa was poorer than in the late 1960s when the IMF and the World Bank  had first arrived on the scene, with disease, population growth and environmental degradation spiralling out of control. IMF led austerity has frequently led to riots, coups and the collapse of public services>”( From The End of Poverty) 

Sri Lanka has too played poodle to the IMF since 1977, carrying out all its instructions. Sri Lanka had to abolish its development infrastructure that had  actually brought about poverty alleviation, self sufficiency in agriculture and success in many areas of industry. All this was sacrificed following the IMF prescriptions, which we yet follow. It would be apt to state that our current international debt of $ 56 billion was created by adhering to the instructions of the IMF. 

It is time the IMF and its ruling Countries of the West- the USA  opened their eyes and direct a new paradigm for development. and its implementation would bring great credit to the United States of America. 

Garvin Karunaratne, Ph.D. Michigan State University 
Author of  How the IMF Ruined Sri Lanka & Altternative  Programmes of Success, Goidages, 2006 
How the IMF Sabotaged Third World Development,(Kindle/Godages 2017) 
 Colombo 27/10/2020  

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