Garvin Karunaratne,Ph.D. Michigan State University, former Government Agent, Matara.
I am prompted to write about what was achieved in Sri Lanka since we gained independence in order to educate some of our presidential aspirants who have said that we have not achieved anything.
I can emphatically state that Sri Lanka had done wonders in the field of agricultural marketing within the short period of three decades 1948 to 1977. By 1977 Sri Lanka stood far ahead of what all .other countries have ever achieved. However, it is sad to note that after 1977 the development infrastructure that had been built up with great care was privatized and abolished under the advice of the International Monetary Fund(IMF) by the Government of President JR Jayawardena.
The main programmes of agricultural marketing were:
The Guaranteed Price Scheme for Paddy & Cereals
Rice Milling
The Vegetable & Fruit Marketing Scheme
The Cannery
The Bakery
The Fair Price Shops
Agricultural Loan Scheme
I entered the Public Service of Sri Lanka in 1955 as an Assistant
Commissioner in the Department for Development of Agricultural Marketing,
covering its activities in Districts and was
in charge of the Vegetable & Fruit Purchasing Scheme in 1957. In
1958 a special Department, the Department of Agrarian Services was created for
furthering agricultural marketing and also agricultural production where I was
an Assistant Commissioner. In 1961 I was
in charge of the Agricultural Loan Scheme.
I was an Assistant Commissioner of Agrarian Services from 1958, but
covered all activities of the Marketing Department till 1960.
The Guaranteed Price
Scheme for Paddy and Cereals was
meant to purchase paddy and cereals from
genuine producers at a premium price well above the prices offered by traders.
The price was also above the World
Market price. This was done as an incentive for producers., as otherwise the
producers will be at the mercy of traders who tried to buy their produce at the
lowest possible price. The Department
had established stores all over producing areas and had rice mills to mill the
paddy. One of the key features was
that purchases were to be made only from genuine producers. . The agricultural overseer of the area had
to produce a list of cultivators and owners who cultivated in each season,
giving the extent cultivated in the particular season and based on the average yield, the
cooperative society was authorized to
purchase only on this list. Thus in the Sri Lankan system the premium price
reached the genuine cultivator. Other countries that had similar programmes
purchased produce from anyone and then the premium price offered went to the
persons who handed over the produce, mostly to traders who had collected the
paddy.
This system was
continued by the Department of Agrarian Services when it took over the
guaranteed price scheme. Later the Paddy Marketing Board took over the
paddy purchasing scheme and continued it.
This was a great success and I am certain that this purchasing scheme
was greatly instrumental in making Sri Lanka self sufficient in paddy
production by 1970. It is important to note that Sri Lanka became self
sufficient while implementing a rice ration scheme offering rice at a low rate.
If not for the rice ration scheme the poor would not have been able to buy rice
at the market rate.
Rice Milling
Rice Milling came to the fore when Sri Lanka had to mill large
quantities of paddy that were produced by the success of the green revolution.
The Marketing Department(MD) imported a
few large rice mills and installed them in the producer areas- at Ambalantota,
at Anuradhapura and Amparai. These were the best available then. I supervised the working of the rice mill at
Ambalantota for two years. The MD also called for applicants from the private
sector to invest in rice milling. MD
produced specifications of rice milling
machinery that can be imported and also drafted plans to construct rice mills-
with storage, drying floors etc. The Private Sector responded, applicants were
selected and allocations of foreign exchange were authorized for the import of machinery as at
that time foreign exchange was controlled. The millers had to construct the
buildings under the supervision of the Assistant Commissioners. I served as
Assistant Commissioner in the Southern Province and I supervised the rice mills
being constructed and getting into rice milling. The response was quick and very successful.
Many rice millers later became business magnates like Harischandras.
This method of using our private entrepreneurs was the opposite of
what President JR Jayawardena did when
he had to import flour. Instead of depending on local entrepreneurs to
mill the wheat to flour, he invited a multinational from Singapore-. Prima, to
come over and establish flour mills, import wheat, mill and handover the flour
to us. Then the profits went tax free to Singapore while in the case of rice
milling the profits stayed in the country, benefiting our private sector. The
Government also benefited because the rice millers paid taxes.
It has to be noted that rice milling was a great success, a
feather in the cap of Sri Lankan investors.
It tells anyone that the Sri
Lankan private sector can be successful
if only the Government will give them some direction. Proper direction is
required because otherwise many investors could undertake the same activity and
further the Government has to actively control imports.
.
The Vegetable & Fruit
Marketing Scheme & Cannery
In order to ensure that Sri Lanka could produce all its vegetable
and fruit, it was necessary to offer attractive prices to producers. Generally traders tried to purchase at the
lowest possible rates. The aim of a trader is to boost their profit.
The MD developed an islandwide marketing programme for vegetables
and fruits. The MD appointed Assistant Commissioners to the Districts which
produced large quantities of vegetables. These officers were expected to visit
the producer fairs. All producers brought their wares for sale to the producer
fair in the area. The fairs were held every week. The Assistant Commissioners
in the areas informed the availability of vegetables and the prices at which
the traders purchased to The Tripoli Headquarters in Colombo. Similarly the MD
Unit at the wholesale market in Colombo reported the prices at which the goods were being sold to
retailers. (Tripoli was a very large
hangar at the Colombo Railway Goods Shed and this was the headquarters of the
Vegetable and Fruit Marketing Scheme of the MD)
The Assistant Commissioner at Tripoli Market studied the prices at
which the goods were being sold at Colombo wholesale market and the prices at
which the goods were being bought by traders at the producer fairs. He would then
fix a buying price for the main varieties well above the prices at which the
traders purchased and he would keep a margin of around fifteen percent and fix
the prices at which the goods would be sold at the MD Fair Price Shops. The
buying prices were intimated to the District Offices by telegram and over the
telephone. The MD had Purchasing Depots
and a fleet of lorries in the producer areas and a Marketing Officer will
proceed to every important fair and put up a board giving the prices at which
they would buy from producers. The MD
would buy from producers and dispatch the goods immediately to Tripoli Market
in Colombo by lorry or by railway wagons. .
The MD had, a main retail shop at Tripoli Market and around fifty
small Fair Price shops in Colombo and a few in many cities.
Local producers would call over at Tripoli with any produce they have and the MD
purchased all produce..
Triploi Market opened at six in the morning and around ten or more
wagons were always at the rail siding to be unloaded. In addition there were
always around ten to twenty lorries. The goods were unloaded, allocated to the
different sections- the Upcountry Unit, the Low country vegetable Unit or the
Fruit Unit, where the goods were weighed, cleaned up and immediately dispatched
to the retail units in the morning itself. By nine in the morning the goods
received would be offered for sale at the retail units.
In case there was an excess that could not be disposed of
Tripoli Market would decide to have Van
Sales where a van load of produce will be taken around selling to anyone. The
Van Sales on many days will go on till late in the night till the full quantity
was sold.
In case of goods that could be kept for the next day, there were a
few cold rooms at Tripoli but the idea was to sell the produce more than
storing.
The MD purchased around ten percent of the produce but the
presence of the MD buying from producers at a high purchasing price meant that
traders who bought from producers too had to buy at the price offered by the MD
because otherwise they would not be in business.
Many cannot figure out the business acumen that we followed in
MD. In my words, The motto of the MD
was to pay the highest possible price to the producer and sell at the lowest
possible price to the consumer a creation of Ceylon administrators basset and
BLW. Fernando. We as Assistant Commissioners
tried hard to work on this tight rope. At the end of each month a profit
and loss account was made and I have had to bear the brunt of censure if either
I incurred a loss or achieved a profit of over 10%”(From: How the IMF Ruined
Sri Lanka)
The installation of a Cannery
in the early Fifties proved to be a boon to producers. The entire quantity of
Red Pumpkin, Ash Pumpkin, Melon and Oranges were purchased. These were made
into Golden Melon Jam, Silver Melon Jam and Orange Juice. Pineapple was turned
into Juice and Jam.
Tomatoes were made into Juice and
Sauce. With the opening of the Cannery
chena producers made fantastic incomes.
By the mid Fifties within a few years from the installation of the Cannery the MD had in
addition to making our country self sufficient in Jam, Juice and Sauces, even
built up a foreign trade exporting pineapple pieces and rings. Assistant
Commissioner Oswald Tilekeratne in charge of the Cannery often took wings to
foreign lands.
The Vegetable and Fruit Marketing Scheme had two aims: To provide good prices to producers and also
to offer goods at reasonable prices to city consumers. When a Fair Price Shop is selling goods , no
one will go to a private shop, unless the private shop too sold at a similar
price. The MD unofficially controlled
prices. The Scheme controlled inflation, by not allowing traders to keep a fat
margin.
Fair Price Shops
Through Fair Price Shops
established in every City- there were around fifty in Colombo
alone, the Department, ensured that the
prices of all essential commodities were indirectly controlled and the traders
were compelled to sell at fair prices to consumers.”
In addition to the vegetables and fruits, the Shops had for sale
all essential items like rice, sugar, flour, lentils, and MD Cannery products. The aim in having
essential items like lentils, sugar and flour always in stock was to avoid
traders creating a shortage and thereby increasing the prices. When stocks are
available in the MD Shops people would not buy at the private shops unless they
offer at a reasonable rate, equal or priced a few cents above the MD shop
price.
Bakery
The MD had a first class bakery that made quality bread, and pastries and these items were sold at many
outlets.. Expertise at the Bakery were
used to run large Restaurants at festivals like at Kataragama. Food
preparations were sold at rock bottom prices and this actually controlled the
prices at Hotels in Kataragama. during the Festival period. I supervised this Restaurant for the two
years I served in the Southern Province.
The Agricultural Loan Scheme
The Department of Agrarian Services provided loans to agricultural
cooperative societies. In 1961 I worked in charge of this loan scheme.
Cooperative Societies had to provide cultivators with funds to buy agricultural
requisites like fertilizer. Every Cooperative Society would collect details of
the loans that are required, make a total, check whether the applicants were
genuine producers and submit papers to get a loan from the Department of
Agrarian Services.
The Cooperatives would be given the funds to be distributed to the
producers. It was also my duty to visit the cooperative societies at random and
inspect their books to ensure that the loans had been disbursed and also that
recovery had been done.
The
Cooperative Wholesale Establishment(CWE) While the Marketing Department handled the
marketing of local produce, there was a need for imported goods to be made available at reasonable
rates. The CWE was established with this aim in view. Goods that were being
imported by traders were sold keeping a high margin of profit and the CWE
imported the same items and sold them at rock bottom prices , keeping a small
margin of profit. The CWE ran a number of shops in Colombo and the
outstations. The Salu Sala was like the CWE dealing with textiles. These
trading institutions played a major role in enabling the people to buy imported
essential items at reasonable rates.
This
entire agricultural marketing infrastructure to help the producer as well as to
bring an increase in production was totally intact till the United National
Party won the 1977 general election. The newly elected Government of President
Jayawardena requested financial aid from the International Monetary Fund(IMF).
Then the IMF insisted that if financial assistance was required Sri Lanka had
to follow the Structural Adjustment Programme(SAP). This SAP had a number of
provisions that were damaging to Third World countries but President
Jayawardena agreed to follow the SAP conditions. While Sri Lanka submitted
India and Bangladesh did not follow the SAP. They dodged and rejected the SAP.
The main condition that ruined the agricultural marketing infrastructure that
Sri Lanka had built up was the provision that the Government could not do any
commercial undertakings and that all commerce should be left to the private
sector. In fact in the SAP, the Private Sector was adopted as the engine of
growth. The other provision was that Sri Lanka had to follow a high interest
rate. The interest rate was increased and entrepreneurs had to obtain loans at
the interest rate of 24%, which was forbidding.
This caused the death knell of the agricultural marketing infrastructure
we had built up with great care. I am concerned because I was a part of it and
have been fine tuning the system, wherever I worked for eighteen long years.
In
detail, The Guaranteed Price for Paddy was abolished and in its place
during the harvest season the Government fixed a price to purchase
paddy. Paddy was purchased from anyone who brought it to the Government store.
The arrangement to buy from genuine producers was dropped. Today, our
Government makes a glorious utterance that they have purchased a great deal of
paddy, but the fact that the system had only helped the traders and not the
actual producer is forgotten. In fact today there is not even an agricultural
overseer at the village level who can tell who cultivated what extent. Paddy farming is done at the whims and
fancies of the farmers who have no one to get any help or instruction. Earlier
there was an Agricultural Overseer and in the days of the Agrarian Services
there were Cultivation Committees with a qualified Field Assistant at the
village level. The Paddy Lands Act was abolished and with this the Cultivation
Committees ceased to function. Even today there is a vacuum at the village
level. It is sad that the Ministry of Agriculture does not realize this fact.
In
the case of Rice Milling, the State of the Art Rice Mills of the MD
which ultimately belonged to the Paddy Marketing Board were abandoned. The most
valuable rice milling machinery was in some cases sold for scrap. Once I gazed
for ten minutes at the Ambalantota Rice Mill, my home for two years. I could
hardly believe my eyes. It was on a plot of around five acres that had been
apportioned to various departments. Many valuable parts of the machinery which
we doted on with great care were strewn all over. That was a mill that milled
4000 bushels of paddy a day and when we started the mill at eight in the morning
on a Monday it worked non stop day and night till it was stopped on Saturday night. Sunday was for cleaning
and re surfacing the rollers. That was done with great care. Now everything was
in a scrap heap. I can make a statement that new rice mills even if bought
cannot be easily installed. To start with it is not easy to find suitable land. That itself will take years if at all
it can be found. It is a colossal irrepairable damage.
The Vegetable
and Fruit Marketing Scheme was abolished and now the traders have a hay day
making fat margins. In fact I visited a friend in Pangiriwatta recently and I
saw a four story house that had sprung up overnight. I inquired from my friend
and down came the reply that it belonged to a vegetable wholesaler in Colombo who
buys a new limousine every year. In the days of the MD the profits they could
keep were low and that was how the Government could offer vegetables and fruit
at reasonable rates to consumers and also keep inflation at bay.
The Cannery
was privatized and it is no longer run to help producers. The MD Cannery
enabled producers to sell all their Red Pumpkin, Ash Pumpkin, Tomatoes etc and
producers had good incomes. Simultaneously Sri Lanka was self sufficient in
Jam, and Fruit Juice, Tomatoe Sauce. Last year the only Tomato sauce available
in a Supermarket in Colombo was from Colorado in the USA. All Jam and Fruit
Juice comes from Australia and the USA. The foreign trade we had built up in exporting pineapple
rings and pieces was lost.
The CWE
was partly abolished by President Jayawardena and what remained was further
abolished during the UNP reign of 2001 to 2003 by Prime Minister Ranil
Wickremasinghe and Minister Ravi Karunanayake. The CWE was reestablished by
President Rajapaksa but it could not function efficiently as it did
earlier.
When
in 1977 Sri Lanka was handed over to the UNP Government of President
Jayawardena the foreign debt of |Sri Lanka was only $ 750 million. Chandra
Maliyadda one of our then Permanent Secretaries had quoted that in 1970 we were
not having a foreign debt and he queried as to how Sri Lanka had built up a
massive debt today of around 56 to 60 billion dollars. Today there is no production and it is a
question of importing everything.
The
Agricultural Marketing Infrastructure that we had built up is unique to Sri
Lanka. There is no other country that had any similar infrastructure. The
closest in paddy is BULOG of Indonesia but that too did not function as
efficiently as our Guaranteed Price System. Bulog too was abolished at the
instance of the IMF.
This
was the legacy left by the United National Party of President Jayawardena. It
is a very sad story that I have narrated
in great detail in my book: How the
IMF Ruined Sri Lanka and Alternative Programmes of Success, (Godages) 2006.
Garvin Karunaratne,Ph.D.
Michigan State University, former Government Agent, Matara.
Author
of How the IMF Sabotaged Third World Development(Kindle/Godages:2017)
05/11/2019