Posted on March 7th, 2021


Philip Gunewardene, who was very sympathetic towards the farmers, introduced a Crop Insurance Scheme which benefited the farmers immensely. I am not sure whether this insurance scheme is still operative, said Elmo de Silva in 2020 . 

Philip   prepared a Crop Insurance Bill in 1958. 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 was also deeply concerned with the plight of the farmer  when it came to selling his rice. The Department of Agricultural Marketing, handled the Guaranteed Price Scheme to buy paddy from farmers at a premium price, recalled Garvin Karunaratne. We were extremely strict to ensure that the premium price got to the real producer. 

Philip wanted to reduce the payment of Rs 12 for a bushel of paddy to Rs 10 with the remaining        2 paid in form of fertilizer. It was to be retained by the Cooperative to make it easy for farmer to buy fertilizer and other agricultural supplies. There was opposition. CP de Silva was the strongest opponent of the scheme.

Protests were organized with the support of mudalalies of Polonnaruwa and Minneriya who bought the farmers paddy at Rs 8 or lower and who stood to lose. They brought people in vans and cars from those areas and picked up some from Dematagoda, Bambalapitiya and other places and organized a demonstration to defeat the proposal. Philip’s Harbor and Dock workers Union met the march and there was a free for all. Prime Minister got frightened, when he saw the demonstration and supported   CP de Silva. Philip had to drop the scheme, and a proposal that would have led to an increase in paddy yields was blocked, said Meegama.

The rural sector needed a body which would give them medium and long term credit. There were no credit facilities available for the small traders either.  The two available banks, Agricultural and Industrial Credit Corporation and the Cooperative Federal Bank did not help. Bank of Ceylon was not operating in rural Sri Lanka, either. The main sources 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. 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. Amendments suggested by Central Bank were incorporated.

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. There are savings among the farmers when the harvest is in and these could be banked. 

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.  Philip resigned from Cabinet and the Bill was forgotten. In any case, a Cooperative Development Bank would have needed a strong Minister to successfully implement it as there were powerful vested interests opposing such measures, observed Meegama. (Continued)

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