by Garvin Karunaratne
Sky rocketing prices of
vegetables and fruit has happened to be the order of the day. Once we did have
a method to control inflation by ensuring that traders cannot keep a fat
margin. That was the system built up by Sri Lankan administrators RH Basset and
BLW Fernando Commissioners of the Department for Development of Agricultural
Marketing. This system was worked in a perfect manner from the Fifties
till the late Seventies, when we bowed to the IMF and abandoned it.
I enclose a Paper written by me
a few years ago which details the system which was unique to Sri Lanka.
Opening more Economic Centers do not provide an answer to inflation.
Perhaps this paper may offer some ideas.
Controlling Inflation: How once we did it
Inflation- Rising Prices is a
major concern today. Sri Lanka had built up the infrastructure to control
inflation. What we are seeing today-unbridled inflation, has been caused
because we did away with the infrastructure we had.
For the marketing of essential
commodities, in my own words:
The Department for the Development of Agricultural
Marketing”¦ ensured that prices of all essential commodities were indirectly
controlled and the traders were compelled to offer fair prices to the producers
and the retail shop keepers were compelled to sell at fair prices to
consumers. This is a system that I have never seen elsewhere in the
world’ ¦The motto of the Department was to pay the highest possible price to
the producer and sell at the lowest possible price to the consumer.(
From: How the IMF Ruined Sri Lanka,”¦ (Godages)
I was involved with the entire System
because I was appointed Assistant Commissioner for the Development of
Agricultural Marketing in 1955, and worked in the Ratnapura, Hambantota,
Anuradhapura Districts as well as was in charge of the Tripoli Market,
the Headquarters of the Vegetable Marketing Scheme for a year in 1957.
This System involved a Network of Retail
Shops(Fair Price Shops) in every major city and a Vegetable and Fruit
Marketing Scheme involving purchasing, selling and processing
vegetables and fruits, a Scheme that covered the entire island.
The entire island was covered
by Assistant Commissioners in the Provinces and Marketing Officers posted in
producer areas, who had to +report the availability of produce, prices at the
Fairs, and guide producers to plant varieties in demand.
A Network
of Retail Shops(Fair Price Shops)
In order to enable the
availability of essential food the Marketing Department established a large
number of shops in the cities and these shops were well stocked with essential
food like dhall, sugar, flour, onions and vegetables. These were sold at rock
bottom prices, where no profit margin was kept. The intention was to
unofficially control the retail prices offered by private traders. When a well
stocked shop was selling goods at a low price the private retailers too had to
sell at similar prices otherwise they will have no sales because the consumers
will all go to the Marketing Department shops and the private shop keepers will
have to close down. Assistant Commissioners had to ensure that the
Departmental shops were well stocked.
An incident comes to mind. I
was then in charge of the Southern Province with my office at Ambalantota. In
the Red Onion season we got wagon loads of red onions from Jaffna and we were
required to sell at whole sale prices to traders and also to sell at our shops.
One day I had just inspected our shop at Galle and also visited a number
of private traders’ shops to ensure that they did sell red onions at reasonable
prices. I returned to Ambalantota. The next morning in office I got a telegram
from Head Office. It read, Member of Parliament Dahanayake reports that there
is a shortage of red onions in Galle. Inspect and report at once”. Those were
the days when we had no mobile phones and it was very difficult to get long
distance calls. . I got into my car and
reached Galle by around four. I went straight to our shop and found it
well stocked with red onions. I checked the books for sales. I visited a number
of private shops and found them well stocked selling at a slight higher price
than our price. That was how it ought to be. Armed with these details I went to
Mr Dahanayake’s residence. He was not in and I waited for him. I knew him well.
It was late in the night about ten that he came home and inquired what brought
me there. I brandished the telegram and said that I had been in Galle the
earlier day and found that red onions were available in our shop and that there
was no shortage. He looked hard at me for a few minutes and said, Garvin,
You know a man came to meet me and said that there was a shortage of red onions
and to satisfy him I sent a telegram to the Minister” I quipped, ” But sir, there is no shortage and there never was” ” That I know but to keep that man happy I had to send a
telegram.” He added,” That
is politics, Garvin. We have to keep our supporters happy. Don’t you worry,
next time when I go to Colombo I will meet the Minister and tell him that there
is no problem here with the Marketing Department” That was all. I reported this meeting to our Commissioner
and never heard again. Presumably Mr Dahanayake had phoned the Minister.
We Assistant Commissioners had to have a dragnet over all essential supplies
and that included not only our shops but all private shops. It was an indirect
control of prices and availability.
Again, once at the District
Coordination Committee at Anuradhapura it was reported that the few traders
were fleecing the colonists at Padaviya by charging high prices. I was the
Assistant Commissioner at Anuradhapura and said that we will open a shop at
Padaviya. I got covering approval from the Commissioner and in a few days time
opened a Shop at Padaviya, to serve the colonists. Our Shops effectively
controlled the cost of living. The private traders had to cut their profits as
otherwise they would be out of business. That scheme worked well.
The Vegetable and Fruit Marketing Scheme
The Marketing Department
established Vegetable and Fruit Packing Sheds(actually purchasing units) in all
producing areas. The name given was packing sheds and they were in many places
in temporary buildings mostly made with timber. Even some Assistant
Commissioners had their offices in these temporary buildings in 1955.
The entire Vegetable Marketing
Scheme was administered from Tripoli Market, based in the largest hangar in the
Colombo Goodshed. One part of the Scheme was to purchase vegetables and
fruits from producers who brought their produce to our Vegetable Packing Sheds.
They were paid immediate cash. The Department was equipped with lorries that
were sent to the chief Producer Fairs in the producer areas. Thus there
were mobile purchasing uints at all major fairs like Embilipitiya, Colombage
Ara, Bandarawela, Welimada, Kekitrawa to mention just a few. These
Purchasing Units comprised Marketing Officers and a staff of purchasing
officers and labourers. The produce brought in was weighed and accepted from
producers and they were paid cash immediately. The Assistant Commissioners of
the Districts were required to visit all major fairs to ensure that the
purchases were made regularly. When I worked in the Districts on most days my
day commenced at four to get to the Fairs by six in the morning. Vegetables
were purchased and packed and dispatched to Triploi by evening either by
wagons(by trains) or by special lorry.
At Triploi Market, the
Assistant Commissioner had a Marketing Officer at the Colombo Wholesale
Market. His task was to report the prices at which the wholesale traders sold
the produce to the retail traders and to report on the availability of produce.
In the Districts, the Assistant Commissioners and the Marketing Officers had to
report the prices at which private traders purchased vegetables and
fruit. Generally there was a wide gap between the prices at which the
traders purchased goods and the prices at which the Wholesale Traders sold to
the retail traders in Colombo. Based on these prices, the Assistant
Commissioner at Tripoli Market decided the purchasing prices at which goods
were to be purchased at the Fairs. This price was always above the prices
offered by the traders who bought goods at the Fairs. This helped the producers
and the traders at the Fairs too had to offer a similar price because otherwise
the producers will not sell to them.
On a daily basis Tripoli Market
received around twenty wagon loads of vegetables and a similar number of
lorries bringing in produce. These were checked and had to be in our Retail
shops by ten in the morning. Tripoli Market was a hive of activity from
early morning. Then the Railways ran a very efficient service and brought
in produce in time. For instance curd from Ridiyagama Farm in Hambantota
was sent by lorry to Matara and came by night mail train to Tripoli. This was
an item in high demand. The retail price we fixed for Ridiyagama Curd
effectively controlled the prices of curd in private shops in Colombo.
The Assistant Commissioner at Triploi
Market kept a very low margin to cover up cost of transport and handling and
fixed a low price for sales to the consumers through the network of Shops.
Generally the Marketing Department kept a margin of around 10 to 15% above the
purchase price while the private trader at the Fair kept a margin to 40
to 50% and the Whoelsale Traders too kept around 40% and further the retail
trader too kept around 40%. Thus while the private trader generally kept
a margin of 100% or 120% over the purchasing price at the Fair, the Marketing
Department kept a margin of 10% to 15%. The establishment of Special
Vegetable Depots at Dambulla etc in recent years, actually created
another middleman, keeping a margin of profit.
The working of the Marketing
Department meant that the private traders at the Fairs and the Wholesale
Traders as well as the Retail Traders in the cities had to be satisfied with a
low margin.
The Marketing Department in the
Fifties was headed by BLW Fernando, a Chartered Accountant and he would not
allow any Assistant Commissioner to keep a higher margin than 15%. That was a
rule to be followed. Every month all Assistant Commissioners had to attend a
Conference where the Profit and Loss calculations were closely studied and the
Commissioner would chastise all Assistant Commissioners that had a profit
of over 10% or incurred a loss. We were expected to cover up, not to
incur a loss or to get a large profit.
This was the key method by
which the prices of vegetables and fruits were kept in check. The Scheme has
thus a dual aim- of offering the producer a fair price as well as offering the
consumer a low price. At times it was like walking on a rope but we got
used to walk on it.
The Retail Shops had to be well
stocked and full of goods otherwise the wrath of the Commissioner had to be
faced.
A few years ago on one of my
visits I found tomatoes being sold at forty rupees a kilo by a producer on the
Mahiyangana Road, when the retail price in Colombo was around rupees eighty to
one hundred, a margin of over hundred percent. This could not happen while the
Marketing Department was at work. The Assistant Commissioners were
eternally traveling as they had to visit Fairs, inspect purchasing at the Fairs
and the Vegetable Purchasing Depots, contact producers and offer advice on
items on demand. Generally our traveling allowances exceeded our salaries.
Tripoli Marker had cold rooms
where the excess produce could be stored.
This Vegetable Marketing &
Fruit Marketingh Scheme was very successful in ensuring that consumers in
cities obtained vegetables and fruits at cheap rates. The Cost of Living was
kept in check.
The Canning Factory
Local producers got a boost
with the establishment of the Canning Factory in 1955. At that time Sri Lanka
imported fruit juice and fruit from Australia and the task of the Canning
factory was to produce fruit juice, jam an-d jellies. The Vegetable Purchasing
Centers sent goods to the Canning Factory. At the initial stages in canning
fruit juice many problems were faced and it took over a year to surmount them
and get down to production for all Sri Lanka’s requirements. The Marketing
Department offered floor prices for pineapples, red pumpkin and ash
pumpkin and producers benefited immensely. Floor prices meant that the Department
will purchase everything offered at that price. Pineapple was tinned and even
an export trade was built up. Assistant Commissioner Oswald Tilekeratne spread
his wings abroad very often. Red Pumpkin was turned into Golden Melon Jam and
Ash Pumpkin was turned into Silver Melon jam. The Factory activity made Sri
Lanka self sufficient in fruit juice, jam and many other processed food within
a few years.
The Marketing Department was called upon to attend to many
tasks.
Once Sri Lanka was not self
sufficient in eggs. The Marketing Department offered a floor price for eggs and
Triploi Market collected eggs from the Negombo-Nattandiya area till Sri Lanka
was self sufficient in egg production. Once Self sufficiency was reached
the scheme was disbanded.
It was found that during the
Kataragama Season, the restaurants charged high prices for meals. This
the Government combatted by running a large restaurant. Officers who have the
ability were posted from various units and they provided quality meals. The
Menu included thosa, kiribath, string hoppers, pittu, rice and curry and the
restaurant was kept open till late. When I covered the Southern Province I was
in charge of this restaurant for two years and was held responsible for
providing good quality meals at a cheap rate. This was the method by
which the cost of living of the pilgrims was controlled.
With the abolition of the
Marketing Department, and the privatization of the canning factory all this
achievement was lost. That was the way in which the IMF crippled the
development of the Third World and created a situation where we had to import
from the Developed Countries.
Once the tomatoes producers at
Hanguranketa made pandals of tomatoes in order to highlight their plight of not
being able to sell their tomatoes. This could not have happened while the
Marketing Department was functioning. To start with the Assistant Commissioner
would be held responsible. If that happened when I was in charge of The Triploi
Market I would have sent a few lorries and the entire stock of tomatoes would
have been purchased within a few hours and it would have been turned into
Tomatoe Sauce and Juice at the Factory. Today Spain produces tomatoe sause,
tomatoe juice, tomato paste and sun dried tomatoes for most countries in
Europe. With a Tomatoe belt in Hanguranketa we cannot produce tomato sauce even
for our requirements. Our climate had enabled a variety of crops. There is a
mango belt from Anuradhapura to Matale. Even today if action is taken to pluck
mangoes and process it, we can be self sufficient in all fruit juice within six
months. The Chena cultivators will find sales for their Red Pumpkin,Ash
Pumpkin and Melon. There is an Avacado belt from Peradeniya to Gampola and
avacado juice can easily be made. The country will benefit by avoiding the
millions spent on imports.
Following the liberalization
free market economics of the IMF we created a market for tomatoe sauce
from the USA, and fruit juice from as far as Canada and Oregan in the USA.
Our producers have stopped producing large quantities for fear of being unable
to sell and we have unemployment and our farmers have low incomes. The Colombo
Supermarkets are full of Heinz Tomatoes sauce from the USA and fruit juice and
jam from Australia. The IMF did its work right to cripple development in our
countries and for us to buy goods from the Developed Countries. That was
the Structural Adjustment Programme in action. (For more details: How the
IMF Sabotaged Third World Development: Kindle & Godages)
