{"id":111743,"date":"2021-02-16T17:16:35","date_gmt":"2021-02-17T00:16:35","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=111743"},"modified":"2021-02-16T17:16:35","modified_gmt":"2021-02-17T00:16:35","slug":"skyrocketing-prices-is-there-a-remedy","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/02\/16\/skyrocketing-prices-is-there-a-remedy\/","title":{"rendered":"SkyRocketing Prices: Is there a Remedy?"},"content":{"rendered":"

by Garvin Karunaratne<\/em><\/span><\/h2>\n\n\n

Sky rocketing prices of vegetables and fruit has happened to be\nthe order of the day. Once we did have a method to control inflation by\nensuring that traders cannot keep a fat margin. That was the system built up by\nSri Lankan administrators RH Basset and BLW Fernando Commissioners of the\nDepartment for Development of Agricultural Marketing.  This system was\nworked in a perfect manner from the Fifties till the late Seventies, when \nwe bowed to the IMF and abandoned it.<\/p>\n\n\n\n

I enclose a Paper written by me a few years ago which details the\nsystem which was  unique to Sri Lanka. Opening more Economic Centers do\nnot provide an answer to inflation.  Perhaps this paper may offer some\nideas.<\/p>\n\n\n\n

Controlling Inflation: Howonce we did it<\/h4>\n\n\n\n

Inflation-\nRising Prices is a major concern today. Sri Lanka had built up the\ninfrastructure to control inflation. What we are seeing today-unbridled\ninflation, has been caused because we  did away with the infrastructure we\nhad.<\/p>\n\n\n\n

For the\nmarketing of essential commodities, in my own words:<\/p>\n\n\n\n

The Department for the Development  of Agricultural\nMarketing\u201d\u00a6 ensured that prices of all essential commodities were indirectly\ncontrolled and the traders were compelled to offer fair prices to the producers\nand the retail shop keepers were compelled to sell at fair prices to\nconsumers.  This is a system that I have never seen elsewhere in the\nworld\u2019 \u00a6The motto of the Department was to pay the highest possible price to\nthe producer and sell at the lowest possible price  to the consumer.( From:\nHow the IMF Ruined Sri Lanka,\u201d\u00a6 (Godages)<\/em><\/p>\n\n\n\n

 <\/em>I was involved with the entire\nSystem because I was appointed Assistant Commissioner for the Development of\nAgricultural Marketing in 1955, and worked in the Ratnapura, Hambantota,\nAnuradhapura  Districts as well as was in charge of the Tripoli Market,\nthe Headquarters of the Vegetable Marketing Scheme for a year in 1957.<\/p>\n\n\n\n

 <\/em>This System involved a Network\nof Retail Shops(Fair Price Shops) in every major city and a Vegetable  and\nFruit Marketing Scheme involving purchasing, selling and processing  \nvegetables and fruits, a Scheme  that covered the entire island.<\/p>\n\n\n\n

The\nentire island was covered by Assistant Commissioners in the Provinces and\nMarketing Officers posted in producer areas, who had to +report the\navailability of produce, prices at the Fairs, and guide producers to plant\nvarieties in demand.<\/p>\n\n\n\n

 A\nNetwork of Retail Shops(Fair Price Shops)<\/strong><\/h4>\n\n\n\n

In order\nto enable the availability of essential food the Marketing Department\nestablished a large number of shops in the cities and these shops were well\nstocked with essential food like dhall, sugar, flour, onions and vegetables.\nThese were sold at rock bottom prices, where no profit margin was kept. The\nintention was to unofficially control the retail prices offered by private\ntraders. When a well stocked shop was selling goods at a low price the private\nretailers too had to sell at similar prices otherwise they will have no sales\nbecause the consumers will all go to the Marketing Department shops and the\nprivate shop keepers will have to close down. Assistant Commissioners had to\nensure  that the Departmental shops were well stocked.<\/p>\n\n\n\n

An\nincident comes to mind. I was then in charge of the Southern Province with my\noffice at Ambalantota. In the Red Onion season we got wagon loads of red onions\nfrom Jaffna and we were required to sell at whole sale prices to traders and\nalso to sell at our shops. One day  I had just inspected our shop at Galle\nand also visited a number of private traders\u2019 shops to ensure that they did\nsell red onions at reasonable prices. I returned to Ambalantota. The next\nmorning in office I got a telegram from Head Office. It read, Member of\nParliament Dahanayake reports that there is a shortage of red onions in Galle.\nInspect and report at once\u201d. Those were the days when we had no mobile phones\nand it was very difficult to get long distance calls. \u009d. I got into my car and reached Galle by  around four. I\nwent straight to our shop and found it well stocked with red onions. I checked\nthe books for sales. I visited a number of private shops and found them well\nstocked selling at a slight higher price than our price. That was how it ought\nto be. Armed with these details I went to Mr Dahanayake\u2019s residence. He was not\nin and I waited for him. I knew him well. It was late in the night about ten\nthat he came home and inquired what brought me there. I brandished the telegram\nand said that I had been in Galle the earlier day and found that red onions\nwere available in our shop and that there was no shortage. He  looked hard\nat me for a few minutes and said, Garvin, You know a man came to meet me and\nsaid that there was a shortage of red onions and to satisfy him I sent a\ntelegram to the Minister\u201d\u009d I quipped, \u201d But sir,\nthere is no shortage and there never was\u201d\u009d \u201d That\nI know but to keep that man happy I had to send a telegram.\u201d\u009d  He added,\u201d That is politics, Garvin. We have to keep our\nsupporters happy. Don\u2019t you worry, next time when I go to Colombo I will meet\nthe Minister and tell him that there is no problem here with the Marketing Department\u201d\u009d  That was all. I reported this meeting to our Commissioner\nand never heard again. Presumably Mr Dahanayake had phoned the Minister. \nWe Assistant Commissioners had to have a dragnet over all essential supplies\nand that included not only our shops but all private shops. It was an indirect\ncontrol of prices and availability.<\/p>\n\n\n\n

Again,\nonce at the District Coordination Committee at Anuradhapura it was reported\nthat the few traders were fleecing the colonists at Padaviya by charging high\nprices. I was the Assistant Commissioner at Anuradhapura and said that we will\nopen a shop at Padaviya. I got covering approval from the Commissioner and in a\nfew days time opened a Shop at Padaviya, to serve the colonists. Our Shops\neffectively controlled the cost of living. The private traders had to cut their\nprofits as otherwise they would be  out of business. That scheme worked\nwell.<\/p>\n\n\n\n

The Vegetable and Fruit Marketing Scheme<\/h4>\n\n\n\n

The\nMarketing Department established Vegetable and Fruit Packing Sheds(actually\npurchasing units) in all producing areas. The name given was packing sheds and\nthey were in many places in temporary buildings mostly made with timber. Even\nsome Assistant Commissioners had their offices in these temporary buildings in\n1955.<\/p>\n\n\n\n

The\nentire Vegetable Marketing Scheme was administered from Tripoli Market, based\nin the largest hangar in the Colombo Goodshed.  One part of the Scheme was\nto purchase vegetables and fruits from producers who brought their produce to\nour Vegetable Packing Sheds. They were paid immediate cash. The Department was\nequipped with lorries that were sent to the chief  Producer Fairs in the\nproducer areas. Thus there were mobile purchasing uints at all major fairs like\nEmbilipitiya, Colombage Ara,  Bandarawela, Welimada, Kekitrawa to mention\njust a few. These Purchasing Units comprised Marketing Officers and a staff of\npurchasing officers and labourers. The produce brought in was weighed and accepted\nfrom producers and they were paid cash immediately. The Assistant Commissioners\nof the Districts were required to visit all major fairs to ensure that the\npurchases were made regularly. When I worked in the Districts on most days my\nday commenced at four to get to the Fairs by six in the morning. Vegetables\nwere purchased and packed and dispatched to Triploi by evening either by\nwagons(by trains) or by special lorry.<\/p>\n\n\n\n

At\nTriploi Market, the Assistant Commissioner  had a Marketing Officer at the\nColombo Wholesale Market. His task was to report the prices at which the\nwholesale traders sold the produce to the retail traders and to report on the\navailability of produce. In the Districts, the Assistant Commissioners and the\nMarketing Officers had to report the prices at which private traders purchased\nvegetables and fruit.  Generally there was a wide gap between the prices\nat which the traders purchased goods and the prices at which the Wholesale\nTraders sold to the retail traders in Colombo. Based on these prices, the\nAssistant Commissioner at Tripoli Market decided the purchasing prices at which\ngoods were to be purchased at the Fairs. This price was always above the prices\noffered by the traders who bought goods at the Fairs. This helped the producers\nand the traders at the Fairs too had to offer a similar price because otherwise\nthe producers will not sell to them.<\/p>\n\n\n\n

On a\ndaily basis Tripoli Market received around twenty wagon loads of vegetables and\na similar number of lorries bringing in produce. These were checked and had to\nbe in our Retail shops by ten in the morning.  Tripoli Market was a hive\nof activity from early morning.  Then the Railways ran a very efficient\nservice and brought in produce in time.  For instance curd from Ridiyagama\nFarm in Hambantota was sent by lorry to Matara and came by night mail train to\nTripoli. This was an item in high demand. The retail price we fixed for\nRidiyagama Curd effectively controlled the prices of curd in private shops in\nColombo.<\/p>\n\n\n\n

The\nAssistant Commissioner at Triploi Market kept a very low margin to cover up\ncost of transport and handling and fixed a low price for sales to the consumers\nthrough the network of Shops. Generally the Marketing Department kept a margin\nof around 10 to 15% above the purchase price while the private trader at the\nFair  kept a margin to 40 to 50% and the Whoelsale Traders too kept around\n40% and further the retail trader too kept around 40%.  Thus while the\nprivate trader generally kept a margin of 100% or 120% over the purchasing price\nat the Fair, the Marketing Department kept a margin of 10% to 15%.  The\nestablishment of Special Vegetable Depots at Dambulla  etc in recent\nyears, actually created another middleman, keeping a margin of profit.<\/p>\n\n\n\n

The\nworking of the Marketing Department  meant that the private traders at the\nFairs and the Wholesale Traders as well as the Retail Traders in the cities had\nto be satisfied with a low margin.<\/p>\n\n\n\n

The\nMarketing Department in the Fifties was headed by BLW Fernando, a Chartered\nAccountant and he would not allow any Assistant Commissioner to keep a higher\nmargin than 15%. That was a rule to be followed. Every month all Assistant\nCommissioners had to attend a Conference where the Profit and Loss calculations\nwere closely studied and the Commissioner would chastise all Assistant\nCommissioners that  had a profit of over 10% or incurred a loss.  We\nwere expected to cover up, not to incur a loss or  to get a large profit.<\/p>\n\n\n\n

This was\nthe key method by which the prices of vegetables and fruits were kept in check.\nThe Scheme has thus a dual aim- of offering the producer a fair price as well\nas offering the consumer a low price.  At times it was like walking on a\nrope but we got used to walk on it.<\/p>\n\n\n\n

The\nRetail Shops had to be well stocked and full of goods otherwise the wrath of\nthe Commissioner had to be faced.<\/p>\n\n\n\n

A few\nyears ago on one of my visits I found tomatoes being sold at forty rupees a\nkilo by a producer on the Mahiyangana Road, when the retail price in Colombo\nwas around rupees eighty to one hundred, a margin of over hundred percent. This\ncould not happen while the Marketing Department was at work. The Assistant\nCommissioners  were eternally traveling as they had to visit Fairs,\ninspect purchasing at the Fairs and the Vegetable Purchasing Depots, contact\nproducers and offer advice on items on demand. Generally our traveling\nallowances exceeded our salaries.<\/p>\n\n\n\n

Tripoli\nMarker had cold rooms where the excess produce could be stored.<\/p>\n\n\n\n

This\nVegetable Marketing & Fruit Marketingh Scheme  was very successful in\nensuring that consumers in cities obtained vegetables and fruits at cheap\nrates. The Cost of Living was kept in check.<\/p>\n\n\n\n

 The\nCanning Factory<\/p>\n\n\n\n

Local\nproducers got a boost with the establishment of the Canning Factory in 1955. At\nthat time Sri Lanka imported fruit juice and fruit from Australia and the task\nof the Canning factory was to produce fruit juice, jam an-d jellies. The\nVegetable Purchasing Centers sent goods to the Canning Factory. At the initial\nstages in canning fruit juice many problems were faced and it took over a year\nto surmount them and get down to production for all Sri Lanka\u2019s requirements.\nThe Marketing Department offered  floor prices for pineapples, red pumpkin\nand ash pumpkin and producers benefited immensely. Floor prices meant that the\nDepartment will purchase everything offered at that price. Pineapple was tinned\nand even an export trade was built up. Assistant Commissioner Oswald\nTilekeratne spread his wings abroad very often. Red Pumpkin was turned into Golden\nMelon Jam and Ash Pumpkin was turned into Silver Melon jam. The Factory\nactivity made Sri Lanka self sufficient in fruit juice, jam and many other\nprocessed food within a few years.<\/p>\n\n\n\n

The Marketing Department was called upon to\nattend to many tasks.<\/h4>\n\n\n\n

Once Sri\nLanka was not self sufficient in eggs. The Marketing Department offered a floor\nprice for eggs and Triploi Market collected eggs from the Negombo-Nattandiya\narea till Sri Lanka was self sufficient in egg production. Once Self\nsufficiency was  reached the scheme was disbanded.<\/p>\n\n\n\n

It was\nfound that during the Kataragama Season, the restaurants charged high prices\nfor meals.  This the Government combatted by running a large restaurant.\nOfficers who have the ability were posted from various units and they provided\nquality meals. The Menu included thosa, kiribath, string hoppers, pittu, rice\nand curry and the restaurant was kept open till late. When I covered the\nSouthern Province I was in charge of this restaurant for two years and was held\nresponsible for providing good quality meals at a cheap rate.  This was\nthe method by which the cost of living of the pilgrims was controlled.<\/p>\n\n\n\n

With the\nabolition of the Marketing Department, and the privatization of the canning\nfactory all this achievement was lost. That was the way in which the IMF\ncrippled the development of the Third World and created a situation where we\nhad to import from the Developed Countries.<\/p>\n\n\n\n

Once the\ntomatoes producers at Hanguranketa made pandals of tomatoes in order to\nhighlight their plight of not being able to sell their tomatoes. This could not\nhave happened while the Marketing Department was functioning. To start with the\nAssistant Commissioner would be held responsible. If that happened when I was\nin charge of The Triploi Market I would have sent a few lorries and the entire\nstock of tomatoes would have been purchased within a few hours and it would\nhave been turned into Tomatoe Sauce and Juice at the Factory. Today Spain\nproduces tomatoe sause, tomatoe juice, tomato paste and sun dried tomatoes for\nmost countries in Europe. With a Tomatoe belt in Hanguranketa we cannot produce\ntomato sauce even for our requirements. Our climate had enabled a variety of\ncrops. There is a mango belt from Anuradhapura to Matale. Even today if action\nis taken to pluck mangoes and process it, we can be self sufficient in all\nfruit juice within six months. The Chena cultivators will find sales for\ntheir Red Pumpkin,Ash Pumpkin and Melon. There is an Avacado belt from\nPeradeniya to Gampola and avacado juice can easily be made. The country will\nbenefit by avoiding the millions spent on imports.<\/p>\n\n\n\n

Following\nthe liberalization free market economics of the IMF we  created a market\nfor tomatoe sauce from the USA, and fruit juice from as far as Canada and\nOregan in the USA.  Our producers have stopped producing large quantities\nfor fear of being unable to sell and we have unemployment and our farmers have\nlow incomes. The Colombo Supermarkets are full of Heinz Tomatoes sauce from the\nUSA and fruit juice and jam from Australia. The IMF did its work right to\ncripple development in our countries and for us to buy goods from the Developed\nCountries.  That was the Structural Adjustment Programme in action. (For\nmore details: How the IMF Sabotaged Third World Development: Kindle\n& Godages)<\/p>\n\n\n\n

 The Bakery<\/h4>\n\n\n\n

The\nMarketing Department had a Bakery. This was the best bakery at that time and\nproduced bread and short eats at very reasonable prices. Then the price of\nbread was controlled and this bakery enabled the Government to fix a reasonable\nprice. In the absence of the State attending to produce bread even if the\nGovernment wants to fix a control price the Government has no definite method\nof finding the fair price, as the government has to be guided by the Private\nSector bakeries..<\/p>\n\n\n\n

 The Marketing\nDepartment with its vegetable and Fruit marketing Scheme and its Canning\nFactory took not years but decades to build up. All was lost when at the behest\nof the IMF President Jyawardena abolished the Marketing Department and\nprivatized the canning factory.<\/p>\n\n\n\n

The IMF\nadvice which we have followed from 1977,  has been for the Public Sector\nto be limited to the barracks, while the Private Sector has a hey day. In my\nexperience it is the Public Sector has to be marshalled to serve the people\nbecause the Private Sector will only work if they have a fat profit and that\nprofit comes at the expense of the consumer. The aim of the Public Sector is\nnot to supplant the Private Sector but to work with the Private Sector and\nprovide guidelines to avoid disaster. Today almost every Developed Country\nincluding the USA, the UK, Spain, Greece and even Germany are all faced with\nproblems caused  by the Private Sector bleeding the economies to death. It\nbegan with the Banks. It is a system where the rich fleece the majority , even\nat the cost of ruining the entire economy to aggrandize wealth. It is this\nSystem that was foisted on the Third World countries like Sri Lanka by the IMF\nand the earlier we understand this the better,<\/p>\n\n\n\n

( For\nmore details my book: How the IMF Ruined Sri Lanka(Godages)<\/p>\n\n\n\n

Today,\nthe IMF advice to Sri Lanka is to export to India and China. Both these\ncountries control their economies with a stranglehold and no one can export to\nthem, The IMF does not even understand the basis of their success. Take India\ntrade with them is always in their favour.. The Chinese economy is thoroughly\ncontrolled. Every dollar that comes in is strictly accounted for. Both India\nand China are not liberal and free economies. Both India and China have\nsucceeded in production and control inflation effectively.<\/p>\n\n\n\n

To my\nmind it is high time the present government re establishes the Marketing\nDepartment with its Canning Factory and Cold Rooms.  This will be a boon\nboth to the producer as well as to the consumer. I would urge that it be considered.\nTo my mind the Marketing Department mechanism is the only method of controlling\ninflation and the cost of living\u2019<\/p>\n","protected":false},"excerpt":{"rendered":"

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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":["post-111743","post","type-post","status-publish","format-standard","hentry","category-by-garvin-karunaratne"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/111743","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=111743"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/111743\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=111743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=111743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=111743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}