{"id":94831,"date":"2019-11-05T17:48:13","date_gmt":"2019-11-06T00:48:13","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=94831"},"modified":"2019-11-05T17:48:13","modified_gmt":"2019-11-06T00:48:13","slug":"sri-lankadevelopment-pitfalls-agricultural-marketing","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2019\/11\/05\/sri-lankadevelopment-pitfalls-agricultural-marketing\/","title":{"rendered":"Sri Lanka:Development & Pitfalls: Agricultural Marketing"},"content":{"rendered":"

Garvin Karunaratne,Ph.D. Michigan State University, former Government Agent, Matara.\u00a0<\/em><\/span><\/h2>\n\n\n

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.<\/p>\n\n\n\n

I can emphatically state that Sri Lanka had done wonders in the field of agricultural marketing within the short period of three decades\u00a0 1948 to 1977.\u00a0 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. <\/p>\n\n\n\n

The main programmes of agricultural marketing were:<\/p>\n\n\n\n

The Guaranteed Price Scheme for Paddy & Cereals<\/p>\n\n\n\n

Rice Milling<\/p>\n\n\n\n

The Vegetable & Fruit Marketing Scheme<\/p>\n\n\n\n

The Cannery<\/p>\n\n\n\n

The Bakery<\/p>\n\n\n\n

The Fair Price Shops<\/p>\n\n\n\n

Agricultural Loan  Scheme<\/p>\n\n\n\n

I entered the Public Service of Sri Lanka in 1955 as an Assistant\nCommissioner in the Department for Development of Agricultural Marketing,\ncovering its activities in Districts and was \nin charge of the Vegetable & Fruit Purchasing Scheme in 1957. In\n1958 a special Department, the Department of Agrarian Services was created for\nfurthering agricultural marketing and also agricultural production where I was\nan  Assistant Commissioner. In 1961 I was\nin charge of the Agricultural Loan Scheme. \nI was an Assistant Commissioner of Agrarian Services from 1958, but\ncovered all activities of the Marketing Department till 1960.<\/p>\n\n\n\n

The Guaranteed Price\nScheme for Paddy and Cereals was\nmeant  to purchase paddy and cereals from\ngenuine producers at a premium price well above the prices offered by traders.\nThe price was also  above the World\nMarket price. This was done as an incentive for producers., as otherwise the\nproducers will be at the mercy of traders who tried to buy their produce at the\nlowest possible price.  The Department\nhad established stores all over producing areas and had rice mills to mill the\npaddy.   One of the key features was\nthat purchases were to be made only from genuine producers.  . The agricultural overseer of the area had\nto produce a list of cultivators and owners who cultivated in each season,\ngiving the extent cultivated in the particular season  and based on the average yield, the\ncooperative society was authorized  to\npurchase only on this list. Thus in the Sri Lankan system the premium price\nreached the genuine cultivator. Other countries that had similar programmes\npurchased produce from anyone and then the premium price offered went to the\npersons who handed over the produce, mostly to traders who had collected the\npaddy.  <\/p>\n\n\n\n

This system was\ncontinued by the Department of Agrarian Services when it took over the\nguaranteed price scheme. Later the Paddy Marketing Board took over the\npaddy purchasing scheme and continued it. \nThis was a great success and I am certain that this purchasing scheme\nwas greatly instrumental in making Sri Lanka self sufficient in paddy\nproduction by 1970. It is important to note that Sri Lanka became self\nsufficient while implementing a rice ration scheme offering rice at a low rate.\nIf not for the rice ration scheme the poor would not have been able to buy rice\nat the market rate.<\/p>\n\n\n\n

Rice Milling <\/h3>\n\n\n\n

Rice Milling came to the fore when Sri Lanka had to mill large\nquantities of paddy that were produced by the success of the green revolution.\nThe Marketing Department(MD)  imported a\nfew large rice mills and installed them in the producer areas- at Ambalantota,\nat Anuradhapura and Amparai. These were the best available then.  I supervised the working of the rice mill at\nAmbalantota for two years. The MD also called for applicants from the private\nsector to invest in rice milling.  MD\nproduced  specifications of rice milling\nmachinery that can be imported and also drafted plans to construct rice mills-\nwith storage, drying floors etc. The Private Sector responded, applicants were\nselected and allocations of foreign exchange were  authorized for the import of machinery as at\nthat time foreign exchange was controlled. The millers had to construct the\nbuildings under the supervision of the Assistant Commissioners. I served as\nAssistant Commissioner in the Southern Province and I supervised the rice mills\nbeing constructed and getting into rice milling.  The response was quick and very successful.\nMany rice millers later became business magnates like Harischandras. <\/p>\n\n\n\n

This method of using our private entrepreneurs was the opposite of\nwhat President JR Jayawardena did when \nhe had to import flour. Instead of depending on local entrepreneurs to\nmill the wheat to flour, he invited a multinational from Singapore-. Prima, to\ncome over and establish flour mills, import wheat, mill and handover the flour\nto us. Then the profits went tax free to Singapore while in the case of rice\nmilling the profits stayed in the country, benefiting our private sector. The\nGovernment also benefited because the rice millers paid taxes. <\/p>\n\n\n\n

It has to be noted that rice milling was a great success, a\nfeather in the cap of   Sri Lankan  investors. \nIt tells anyone that the  Sri\nLankan private sector can  be successful\nif only the Government will give them some direction. Proper direction is\nrequired because otherwise many investors could undertake the same activity and\nfurther the Government has to actively control imports. <\/p>\n\n\n\n

. <\/p>\n\n\n\n

The Vegetable & Fruit\nMarketing Scheme & Cannery<\/h3>\n\n\n\n

In order to ensure that Sri Lanka could produce all its vegetable\nand fruit, it was necessary to offer attractive prices to producers.  Generally traders tried to purchase at the\nlowest possible rates. The aim of a trader is to boost their profit. <\/p>\n\n\n\n

The MD developed an islandwide marketing programme for vegetables\nand fruits. The MD appointed Assistant Commissioners to the Districts which\nproduced large quantities of vegetables. These officers were expected to visit\nthe producer fairs. All producers brought their wares for sale to the producer\nfair in the area. The fairs were held every week. The Assistant Commissioners\nin the areas informed the availability of vegetables and the prices at which\nthe traders purchased to The Tripoli Headquarters in Colombo. Similarly the MD\nUnit at the wholesale market in Colombo reported the  prices at which the goods were being sold to\nretailers.  (Tripoli was a very large\nhangar at the Colombo Railway Goods Shed and this was the headquarters of the\nVegetable and Fruit Marketing Scheme of the MD) <\/p>\n\n\n\n

The Assistant Commissioner at Tripoli Market studied the prices at\nwhich the goods were being sold at Colombo wholesale market and the prices at\nwhich the goods were being bought by traders at the producer fairs. He would then\nfix a buying price for the main varieties well above the prices at which the\ntraders purchased and he would keep a margin of around fifteen percent and fix\nthe prices at which the goods would be sold at the MD Fair Price Shops. The\nbuying prices were intimated to the District Offices by telegram and over the\ntelephone.  The MD had Purchasing Depots\nand a fleet of lorries in the producer areas and a Marketing Officer will\nproceed to every important fair and put up a board giving the prices at which\nthey would buy from producers.  The MD\nwould buy from producers and dispatch the goods immediately to Tripoli Market\nin Colombo by lorry or by railway wagons. . \n<\/p>\n\n\n\n

The MD had, a main retail shop at Tripoli Market and around fifty\nsmall Fair Price shops in Colombo and a few in many cities.<\/p>\n\n\n\n

Local producers would call over at Tripoli  with any produce they have and the MD\npurchased all produce..<\/p>\n\n\n\n

Triploi Market opened at six in the morning and around ten or more\nwagons were always at the rail siding to be unloaded. In addition there were\nalways around ten to twenty lorries. The goods were unloaded, allocated to the\ndifferent sections- the Upcountry Unit, the Low country vegetable Unit or the\nFruit Unit, where the goods were weighed, cleaned up and immediately dispatched\nto the retail units in the morning itself. By nine in the morning the goods\nreceived would be offered for sale at the retail units. <\/p>\n\n\n\n

In case there was an excess that could not be disposed of\nTripoli  Market would decide to have Van\nSales where a van load of produce will be taken around selling to anyone. The\nVan Sales on many days will go on till late in the night till the full quantity\nwas sold. <\/p>\n\n\n\n

In case of goods that could be kept for the next day, there were a\nfew cold rooms at Tripoli but the idea was to sell the produce more than\nstoring.<\/p>\n\n\n\n

The MD purchased around ten percent of the produce but the\npresence of the MD buying from producers at a high purchasing price meant that\ntraders who bought from producers too had to buy at the price offered by the MD\nbecause otherwise they would not be in business.<\/p>\n\n\n\n

Many cannot figure out the business acumen that we followed in\nMD.  In my words, The motto of the MD\nwas to pay the highest possible price to the producer and sell at the lowest\npossible price to the consumer a creation of Ceylon administrators basset and\nBLW. Fernando. We as Assistant Commissioners \ntried hard to work on this tight rope. At the end of each month a profit\nand loss account was made and I have had to bear the brunt of censure if either\nI incurred a loss or achieved a profit of over 10%\u201d(From: How the IMF Ruined\nSri Lanka)<\/p>\n\n\n\n

The installation of a Cannery\nin the early Fifties proved to be a boon to producers. The entire quantity of\nRed Pumpkin, Ash Pumpkin, Melon and Oranges were purchased. These were made\ninto Golden Melon Jam, Silver Melon Jam and Orange Juice. Pineapple was turned\ninto  Juice and  Jam. \nTomatoes were made into  Juice and\nSauce.  With the opening of the Cannery\nchena producers made fantastic incomes. <\/p>\n\n\n\n

By the mid Fifties within a few years from the  installation of the Cannery the MD had in\naddition to making our country self sufficient in Jam, Juice and Sauces, even\nbuilt up a foreign trade exporting pineapple pieces and rings. Assistant\nCommissioner Oswald Tilekeratne in charge of the Cannery often took wings to\nforeign lands.<\/p>\n\n\n\n

The Vegetable and Fruit Marketing Scheme had two aims:  To provide good prices to producers and also\nto offer goods at reasonable prices to city consumers.  When a Fair Price Shop is selling goods , no\none will go to a private shop, unless the private shop too sold at a similar\nprice. The MD  unofficially controlled\nprices. The Scheme controlled inflation, by not allowing traders to keep a fat\nmargin. <\/p>\n\n\n\n

 Fair Price Shops<\/h3>\n\n\n\n

Through Fair Price Shops \nestablished in every City- there were around fifty in Colombo\nalone,  the Department, ensured that the\nprices of all essential commodities were indirectly controlled and the traders\nwere compelled to sell at fair prices to consumers.\u201d<\/p>\n\n\n\n

In addition to the vegetables and fruits, the Shops had for sale\nall essential items like rice, sugar, flour, lentils,  and MD Cannery products. The aim in having\nessential items like lentils, sugar and flour always in stock was to avoid\ntraders creating a shortage and thereby increasing the prices. When stocks are\navailable in the MD Shops people would not buy at the private shops unless they\noffer at a reasonable rate, equal or priced a few cents above the MD shop\nprice. <\/p>\n\n\n\n

Bakery<\/h3>\n\n\n\n

The MD had a first class bakery that made quality bread, and  pastries and these items were sold at many\noutlets..  Expertise at the Bakery were\nused to run large Restaurants at festivals like at Kataragama. Food\npreparations were sold at rock bottom prices and this actually controlled the\nprices at Hotels in Kataragama. during the Festival period.  I supervised this Restaurant for the two\nyears I served in the Southern Province.<\/p>\n\n\n\n

The Agricultural Loan Scheme<\/p>\n\n\n\n

The Department of Agrarian Services provided loans to agricultural\ncooperative societies. In 1961 I worked in charge of this loan scheme.\nCooperative Societies had to provide cultivators with funds to buy agricultural\nrequisites like fertilizer. Every Cooperative Society would collect details of\nthe loans that are required, make a total, check whether the applicants were\ngenuine producers and submit papers to get a loan from the Department of\nAgrarian Services. <\/p>\n\n\n\n

The Cooperatives would be given the funds to be distributed to the\nproducers. It was also my duty to visit the cooperative societies at random and\ninspect their books to ensure that the loans had been disbursed and also that\nrecovery had been done.<\/p>\n\n\n\n

The\nCooperative Wholesale Establishment(CWE) While the Marketing Department handled the\nmarketing of local produce, there was a need for imported  goods to be made available at reasonable\nrates. The CWE was established with this aim in view. Goods that were being\nimported by traders were sold keeping a high margin of profit and the CWE\nimported the same items and sold them at rock bottom prices , keeping a small\nmargin of profit. The CWE ran a number of shops in Colombo and the\noutstations.  The Salu Sala  was like the CWE dealing with textiles. These\ntrading institutions played a major role in enabling the people to buy imported\nessential items at reasonable rates.  <\/p>\n\n\n\n

This\nentire agricultural marketing infrastructure to help the producer as well as to\nbring an increase in production was totally intact till the United National\nParty won the 1977 general election. The newly elected Government of President\nJayawardena requested financial aid from the International Monetary Fund(IMF).\nThen the IMF insisted that if financial assistance was required Sri Lanka had\nto follow the Structural Adjustment Programme(SAP). This SAP had a number of\nprovisions that were damaging to Third World countries but President\nJayawardena agreed to follow the SAP conditions. While Sri Lanka submitted\nIndia and Bangladesh did not follow the SAP. They dodged and rejected the SAP.\nThe main condition that ruined the agricultural marketing infrastructure that\nSri Lanka had built up was the provision that the Government could not do any\ncommercial undertakings and that all commerce should be left to the private\nsector. In fact in the SAP, the Private Sector was adopted as the engine of\ngrowth. The other provision was that Sri Lanka had to follow a high interest\nrate. The interest rate was increased and entrepreneurs had to obtain loans at\nthe interest rate of 24%, which was forbidding. \nThis caused the death knell of the agricultural marketing infrastructure\nwe had built up with great care. I am concerned because I was a part of it and\nhave been fine tuning the system, wherever I worked for eighteen long years. <\/p>\n\n\n\n

In\ndetail, The Guaranteed Price for Paddy was abolished and in its place\nduring  the harvest season  the Government fixed a price to purchase\npaddy. Paddy was purchased from anyone who brought it to the Government store.\nThe arrangement to buy from genuine producers was dropped. Today, our\nGovernment makes a glorious utterance that they have purchased a great deal of\npaddy, but the fact that the system had only helped the traders and not the\nactual producer is forgotten. In fact today there is not even an agricultural\noverseer at the village level who can tell who cultivated what extent.  Paddy farming is done at the whims and\nfancies of the farmers who have no one to get any help or instruction. Earlier\nthere was an Agricultural Overseer and in the days of the Agrarian Services\nthere were Cultivation Committees with a qualified Field Assistant at the\nvillage level. The Paddy Lands Act was abolished and with this the Cultivation\nCommittees ceased to function. Even today there is a vacuum at the village\nlevel. It is sad that the Ministry of Agriculture does not realize this fact.<\/p>\n\n\n\n

In\nthe case of Rice Milling, the State of the Art Rice Mills of the MD\nwhich ultimately belonged to the Paddy Marketing Board were abandoned. The most\nvaluable rice milling machinery was in some cases sold for scrap. Once I gazed\nfor ten minutes at the Ambalantota Rice Mill, my home for two years. I could\nhardly believe my eyes. It was on a plot of around five acres that had been\napportioned to various departments. Many valuable parts of the machinery which\nwe doted on with great care were strewn all over. That was a mill that milled\n4000 bushels of paddy a day and when we started the mill at eight in the morning\non a Monday it worked non stop day and night till it was stopped  on Saturday night. Sunday was for cleaning\nand re surfacing the rollers. That was done with great care. Now everything was\nin a scrap heap. I can make a statement that new rice mills even if bought\ncannot be easily installed. To start with it is not easy to find suitable  land. That itself will take years if at all\nit can be found. It is a colossal irrepairable damage.  <\/p>\n\n\n\n

The Vegetable\nand Fruit Marketing Scheme was abolished and now the traders have a hay day\nmaking fat margins. In fact I visited a friend in Pangiriwatta recently and I\nsaw a four story house that had sprung up overnight. I inquired from my friend\nand down came the reply that it belonged to a vegetable wholesaler in Colombo who\nbuys a new limousine every year. In the days of the MD the profits they could\nkeep were low and that was how the Government could offer vegetables and fruit\nat reasonable rates to consumers and also keep inflation at bay. <\/p>\n\n\n\n

The Cannery\nwas privatized and it is no longer run to help producers. The MD Cannery\nenabled producers to sell all their Red Pumpkin, Ash Pumpkin, Tomatoes etc and\nproducers had good incomes. Simultaneously Sri Lanka was self sufficient in\nJam, and Fruit Juice, Tomatoe Sauce. Last year the only Tomato sauce available\nin a Supermarket in Colombo was from Colorado in the USA. All Jam and Fruit\nJuice comes from Australia and the USA. The foreign  trade we had built up in exporting pineapple\nrings and pieces was lost. <\/p>\n\n\n\n

The CWE\nwas partly abolished by President Jayawardena and what remained was further\nabolished during the UNP reign of 2001 to 2003 by Prime Minister Ranil\nWickremasinghe and Minister Ravi Karunanayake. The CWE was reestablished by\nPresident Rajapaksa but it could not function efficiently as it did\nearlier.  <\/p>\n\n\n\n

When\nin 1977 Sri Lanka was handed over to the UNP Government of President\nJayawardena the foreign debt of |Sri Lanka was only $ 750 million. Chandra\nMaliyadda one of our then Permanent Secretaries had quoted that in 1970 we were\nnot having a foreign debt and he queried as to how Sri Lanka had built up a\nmassive debt today of around 56 to 60 billion dollars.  Today there is no production and it is a\nquestion of importing everything. <\/p>\n\n\n\n

The\nAgricultural Marketing Infrastructure that we had built up is unique to Sri\nLanka. There is no other country that had any similar infrastructure. The\nclosest in paddy is BULOG of Indonesia but that too did not function as\nefficiently as our Guaranteed Price System. Bulog too was abolished at the\ninstance of the IMF. <\/p>\n\n\n\n

This\nwas the legacy left by the United National Party of President Jayawardena. It\nis a  very sad story that I have narrated\nin great detail in my book:  How the\nIMF Ruined Sri Lanka and Alternative Programmes of Success, (Godages) 2006. <\/p>\n\n\n\n

Garvin Karunaratne,Ph.D.\nMichigan State University, former Government Agent, Matara.  <\/p>\n\n\n\n

Author\nof How the IMF Sabotaged Third World Development(Kindle\/Godages:2017)<\/p>\n\n\n\n

 05\/11\/2019<\/p>\n","protected":false},"excerpt":{"rendered":"

Garvin Karunaratne,Ph.D. Michigan State University, former Government Agent, Matara.\u00a0 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 […]<\/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-94831","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\/94831","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=94831"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/94831\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=94831"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=94831"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=94831"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}