By Garvin Karunaratne, Ph.D.

ƒÆ’-¡ƒ”š‚ I am happy to see the Army being called to tackle the cost of living and what is most important is to note that the Army has been able to sell the produce at half the price at which the traders retailed.ƒÆ’-¡ƒ”š‚  I am an interested party as in a number of Papers written by me I stated that the problem was the high margin of profit that the traders kept. I was also convinced of this because of my background in the Marketing Department, where the Department kept only a margin of 10% and further the Department purchased the vegetables from the producer at a higher price than what the traders offered.

ƒÆ’-¡ƒ”š‚ The Vegetable and Fruit Marketing SchemeƒÆ’-¡ƒ”š‚  of the Marketing Department was implemented islandwide and like in the case where the Army has initiated action to tackle the spiralling cost of livingƒÆ’-¡ƒ”š‚  today, the Marketing Department too was established overnight during World War II to combat the spiraling prices.

ƒÆ’-¡ƒ”š‚ Then a Civil Servant called R.H.Bassett was given full authority to establish a vegetable purchasing and retailing scheme. He moved really fast. He did not requisition or build shops; instead he found some crown land and put up a wooden shed. They were first called packing sheds- they were real sheds built up over night and the vehicles roared in with Marketing Officers. Even in 1955,ƒÆ’-¡ƒ”š‚  years after Bassett left, we Assistant Commissioners worked from these wooden sheds. At times our files got wet, but we dried them and worked undeterred. The manner he recruited is now a legend. One advertisement appeared in the newspapers for applicants to call personally. InƒÆ’-¡ƒ”š‚  comes Bassett and asks them to line up. Those who yet fiddled about and failed to line up properly, were thrown out. The rest were asked to shout out the numerals in order, starting from one. Those who faltered were asked to step out and disqualified. The rest were taken in- the odd numbers as Marketing Officers and the even numbers for office duties.

ƒÆ’-¡ƒ”š‚ I marched into this set up in 1955, when Bassett wasƒÆ’-¡ƒ”š‚  no more but we were under one B.L.W.Fernando a Chartered Accounted who never minced words. His orders had to be invariably carried out and we were put in charge of a Province. As much as we recruited overnight we were authorized to sack anyone that stole. I sacked an Assistant Manager for pilfering even forty rupees worth of goods. ThoseƒÆ’-¡ƒ”š‚  were the days when if I needed storage space I would step into the largest house I could find and persuade the owner to hand over some out rooms or a portion of his house. I negotiated the rent, paced up and down counting my steps, calculated the floor space,ƒÆ’-¡ƒ”š‚  drew a sketch and the net day posted an Assistant Manager and started purchases. It was something I dare not do when I was a Head of Department eighteen years later for fear of being censured by the Auditor General. We acted really fast and most of us worked a full 12 to 14 hour day including weekends, the day starting before si in the morning.ƒÆ’-¡ƒ”š‚  I am certain that the details I provide of how the Marketing Department started and functioned will help the Army to get going with the noble task of controlling the spiraling prices.

ƒÆ’-¡ƒ”š‚ There are protests already from various quarters. The Army Commander has been called a Vegetable Mudalali.. That was my job at Triploi Market in 1957, when my duty was to control the entire operation islandwide. The Assistant Commissioners who worked in charge of Tripoli Market could be proud of controlling the Trader mafia and offering fair prices to the producers,ƒÆ’-¡ƒ”š‚  fair prices to consumers and also saving valuable foreign echange.

ƒÆ’-¡ƒ”š‚ The Vegetable and Fruit Marketing Scheme was centered at Triploi Market, in one of the large hangers at the Maradana Goodshed.ƒÆ’-¡ƒ”š‚  There was a rail siding and every morning there were around twenty wagon loads and another twenty lorry loads of vegetables and fruits coming in from all corners of the island. They were all full of vegetables and fruits and these were unloaded, weighed and despatched to the retail outlets of the Department. If I remember right in the City of Colombo we had around fifty small retail outlets that sold vegetables and essential commodities like Dhall, Sugar, Onions etc.. There was a retail outlet even at Kohuwela. The Department had Purchasing Depots in all the producing areas and producers who brought produce to the depots could sellƒÆ’-¡ƒ”š‚  the produce and get paid cash immediately.. In addition the Purchasing Units had a few lorries and a Marketing Officer would go on a mobile purchasing mission to all the Fairs in the island to purchase produce. He would buy at the rates fied by Tripoli Market, pay the producer, and despatch the goods overnight to Colombo.ƒÆ’-¡ƒ”š‚  The Producer Fairs commenced at si in the morning and by noon the entire produce would be sold.

ƒÆ’-¡ƒ”š‚ TheƒÆ’-¡ƒ”š‚  cruicial task was fiing the buying prices at the District Purchasing Depots andƒÆ’-¡ƒ”š‚  this was done by the Assistant Commissioner in charge of the Tripoli Market.ƒÆ’-¡ƒ”š‚  I was in charge of the Tripoli Market in 1957. I had three officers at the Colombo Wholesale Market whose duty was to observe the prices at which the traders sold goods to the retailers. We could not find the prices at which the wholesale traders purchased goods from the producers but we could always find the prices at which the produce was sold to theƒÆ’-¡ƒ”š‚  retailers. The wholesale merchants always kept a good margin.ƒÆ’-¡ƒ”š‚  The wholesale market rates were reported to Triploi Market. The Marketing Officers who visited the Fairs in the producer areas, reported the prices at which produceƒÆ’-¡ƒ”š‚  was purchased by the tradersƒÆ’-¡ƒ”š‚  in the producing areas.ƒÆ’-¡ƒ”š‚  Based on the prices at the wholesale market in Colombo and the prices at the Fairs I decided the buying price. This was always a price higher than the prices offered by the traders at the Fairs. Fiing the right price was a litmus test. If the buying price was too high the traders would not buy and the Marketing Department would have to buy all the produce to tackle which we did not have transport and storage. The guideline was not to supplant the traders but to make them offer a higher price to the producer.

ƒÆ’-¡ƒ”š‚ The retail sale price in Colombo was generally fied at 10% or 15% over the buying price to cover the cost of transport and wastage,ƒÆ’-¡ƒ”š‚  Consumers benefited because our retail prices were generally around half of the tradersƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢ retail prices

ƒÆ’-¡ƒ”š‚ In February 2010, producers on the Mahiyangana Road were selling tomatoes at Rs 40 a kilo and at that time retailers in Colombo were selling at Rs . 80 to Rs. 100 a kilo.ƒÆ’-¡ƒ”š‚  If the Marketing Department purchased a kilo at Rs 40 a kilo the sale price would be less than Rs 50 thus benefiting the consumer. That area was not a real producing area. In the real producer areas the price would be below Rs. 40 a kilo.

ƒÆ’-¡ƒ”š‚ At best,ƒÆ’-¡ƒ”š‚  the Marketing Department purchased only around 10% of the produce at the Fairs, the traders had to be guidedƒÆ’-¡ƒ”š‚  by the prices at which the Marketing Department purchased because otherwise no producer would sell to them. What happens is that when the Marketing Department is ready to purchase at a particular price and this is displayed on a board, the traders too purchase at that price. Thus the Marketing Department controlled the prices at the Fairs in an unofficial manner.ƒÆ’-¡ƒ”š‚  Similarly in the townsƒÆ’-¡ƒ”š‚  the fact that goods are available at our sales outlets at a particular rate meant that traders had to also sell at that rate because otherwise no one will buy from them. The Department had a fleet of small vans that were eternally on the runƒÆ’-¡ƒ”š‚  filling the retail shops with produce.

ƒÆ’-¡ƒ”š‚ Relating this eperience to what the Army is doing today, one can state that the Army should purchase produce at the Producer Fairs. These are at Welimada and Bandarawela for up country vegetables andƒÆ’-¡ƒ”š‚  Embililipitiya, ColambageAra,ƒÆ’-¡ƒ”š‚  and Kekirawa for low country produce. In addition there are smaller Fairs throughout the island.

ƒÆ’-¡ƒ”š‚ The Army should have a central depot like the Triploi Market because the consumers require a variety of vegetables and a central depot like Tripoli Market can ensure that the Army sales outlets are fed with stocks of all varieties.

ƒÆ’-¡ƒ”š‚ A few cold rooms are also required to store vegetables and fruits as the total stock cannot be always sold and has to be stored overnight.

ƒÆ’-¡ƒ”š‚ There is no question of the Army failing in its mission. In February 2010, the shelves of Supermarkets in Colombo were full of bananas imported from Latin American countries. It is not necessary to import any bananas. We have not contracted to provide employment and incomes for farmers in Latin America! The Army should have a purchasing unit in the Rambukkana area which is the prime banana producing area in Sri Lanka. Bananas are grown mainly in the Sabaragamuwa and also in the Dry Zone areas.ƒÆ’-¡ƒ”š‚  It may be good to rope in the Divisional Secretaries toƒÆ’-¡ƒ”š‚  inform the availability of produce and also report the consumer prices in the regional cities. The Marketing Department had retail sales outlets in all small towns that sold vegetables and essentialƒÆ’-¡ƒ”š‚  goodsƒÆ’-¡ƒ”š‚  and we also suppliedƒÆ’-¡ƒ”š‚  all major hospitals in the island.

ƒÆ’-¡ƒ”š‚ The Marketing Department hadƒÆ’-¡ƒ”š‚  a large network of buying and selling units and if the network of sales units is not widespread the attempt at controlling prices will be a failure. There should therefore be no question of the Army stopping its vegetable purchase and sale . If the Army stops its activity the traders will jack up the prices. The traders will keep higher profits to combat for what they lost during the Army-vegetable operation.

ƒÆ’-¡ƒ”š‚ Another aspect lies inƒÆ’-¡ƒ”š‚  Canning the etra produce. At the initial stagesƒÆ’-¡ƒ”š‚  there was no canning factory and the produce that was purchased had to be somehow sold.ƒÆ’-¡ƒ”š‚  This was done by having van sales at lower prices running at times till late in the night. Later inƒÆ’-¡ƒ”š‚  about 1955, aƒÆ’-¡ƒ”š‚  Canning Factory was established and this enabled floor prices to be offered for Pineapples, Red Pumpkin and Ash Pumpkin. The Department purchased the total quantity offered of these varieties, and preparedƒÆ’-¡ƒ”š‚  jam andƒÆ’-¡ƒ”š‚  juice. Red Pumpkin was made into GoldenƒÆ’-¡ƒ”š‚  Melon Jam and Ask Pumpkin into Silver Melon Jam. Sri Lanka became totally self sufficient in jam and food preservations and this saved valuable foreign echange. Pineapples were even eported.Under IMF advice the Cannery was privatized!

ƒÆ’-¡ƒ”š‚ Another importantƒÆ’-¡ƒ”š‚  aspect of the Marketing Department was to advise the producers as to what to produce.ƒÆ’-¡ƒ”š‚  Producers who brought produce to the Fairs and those who brought produce to the Purchasing Depots were advisedƒÆ’-¡ƒ”š‚  on what should be produced. The Assis tant Commissioners in the Districts also participated at the Divisional Revenue OfficersƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢ Divisional meetingsƒÆ’-¡ƒ”š‚  and their assistants like the Rural Development Officers and the Village Headmen were assigned with the task of contacting producers. In addition the Department of Agriculture had Agricultural Instructors at the Divisional level and Agricultural Overseers at the village level who helped the producers on technical matters.

ƒÆ’-¡ƒ”š‚ While the present foray of the Army into buyingƒÆ’-¡ƒ”š‚  produceƒÆ’-¡ƒ”š‚  in the remote producer areas and selling them in the cities has so far been a success it is essential that the Army activities have to be developed further and a full fledged Marketing Department has to be established if the cost of living is to be controlled.

ƒÆ’-¡ƒ”š‚ In my last Paper I questioned as to why we are frightened of the Trader Mafia that controls the prices. The fact that the Army was put into action shows that our Government is not frightened.ƒÆ’-¡ƒ”š‚  A Government that defeated the monster Prabhakaran is not a meek mouse.

ƒÆ’-¡ƒ”š‚ The IMF and the World Bank have their theory that the Private Sector is the engine of growth and that the Government should not engage in commerce. The Marketing Department mechanism is in commerce but it forms an essential part of the development infrastructure that will enable both the producer to be assured ofƒÆ’-¡ƒ”š‚  a fair price as well as the consumers to be assured of goods at a reasonable rate. It is a development infrastructure that is essential to create production and employment. We will fall into a deep abyss if we fail in production andƒÆ’-¡ƒ”š‚  employment creation.

ƒÆ’-¡ƒ”š‚ In the Fifties and the Sities the Marketing Department was a great success and it was decapitated by the United National Party under President Jayawardena at the behest of the IMF.

ƒÆ’-¡ƒ”š‚ Deploying the Army to control our spiraling prices is a move in the right direction. It is hoped that this foray will lead to the establishment of a new Marketing Department.ƒÆ’-¡ƒ”š‚  A development infrastructure comprising a Marketing Department, a CWE(Lak Satosa) for marketing and controlling prices, a vibrant agricultural etension service to enable production are absolute necessities in the march to economic development. This is nothing new. We had this set up earlier and we have to get it back. Otherwise we are committing hara-kiri!

ƒÆ’-¡ƒ”š‚ Garvin Karunaratne
Former SLAS, Government Agent, Marata District

18/1/2011