{"id":97982,"date":"2020-01-19T18:59:15","date_gmt":"2020-01-20T01:59:15","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=97982"},"modified":"2020-01-19T18:59:15","modified_gmt":"2020-01-20T01:59:15","slug":"high-prices-for-vegetables-is-there-a-remedy","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/01\/19\/high-prices-for-vegetables-is-there-a-remedy\/","title":{"rendered":"High Prices for Vegetables: Is there a remedy?"},"content":{"rendered":"

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

The high prices for vegetables in Sri Lanka\ntoday tells me of where we went wrong.  <\/p>\n\n\n\n

Once in the pre IMF days, in the days before\nSri Lanka started playing poodle to the IMF Sri Lanka did have a method by\nwhich it controlled inflation. <\/p>\n\n\n\n

That was the Marketing Department at work.\nThere was a  scheme where the Marketing\nDepartment purchased vegetables at the producer fairs, brought the produce\novernight to the cities and sold the produce keeping a very low margin of some\nfifteen percent to cover up cost of transport and wastage. This Scheme which\nhad been developed by Sri Lankan administrators and politicians was abolished\non instructions from the IMF in 1978 when the Jayawardena Government caved in\nto the IMF. Since then it is the private sector traders that rule trade.<\/p>\n\n\n\n

I enclose on of my earlier Papers that detail\nhow the Marketing Department once controlled the prices of vegetables and also\nran a Cannery that produced all the fruit juice and  jam we required. We not only controlled\ninflation but we saved foreign exchange by producing fruit juice and jam. Our\nCannery even built up an export trade in pineapple pieces.<\/p>\n\n\n\n

I hope that our new leaders will study the\nmethods we had used in the pre IMF days and \nget down to ensure that the trader mafia cannot rule us any more. <\/p>\n\n\n\n

If only the Marketing Department  activities are restored, we can not only\ncontrol inflation, but we can also reduce imports and also find employment for\nour people.<\/p>\n\n\n\n

I enclose one of my earlier published Papers\nin the hope that the new Government may \nconsider some action. <\/p>\n\n\n\n

Once in the reign of Premier Mahinda Rajapaksa\nthe Army was enlisted to purchase vegetables and sell in their lorries and\npeople were assured of vegetables at reasonable rates. I was then full of hope\nthat the Marketing Department activities will be restored. But it did not\nhappen.<\/p>\n\n\n\n

It is time that our new Government makes an\ninitiative to re establish the Marketing Department activities- its vegetable\nand fruit marketing scheme and the Canning Factory. That will be a real\nachievement.<\/p>\n\n\n\n

Controlling Inflation- undue high prices for essential produce\nis the key to poverty alleviation.  How we once did it.<\/strong>
\nPosted on December 25th,\n2017 in Lanka Web<\/p>\n\n\n\n

By Garvin Karunaratne<\/em><\/h2>\n\n\n\n

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

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

The Department for the\nDevelopment  of Agricultural Marketing\u201d\u00a6 ensured that prices of all\nessential commodities were indirectly controlled and the traders were compelled\nto offer fair prices to the producers and the retail shop keepers were\ncompelled to sell at fair prices to consumers.  This is a system that I\nhave never seen elsewhere in the world\u2019 \u00a6The motto of the Department was to pay\nthe highest possible price to the producer and sell at the lowest possible\nprice  to the consumer.( From: How the IMF Ruined Sri Lanka,\u201d\u00a6 (Godages)<\/em><\/p>\n\n\n\n

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

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

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

 A Network of Retail Shops(Fair Price\nShops)<\/strong><\/h2>\n\n\n\n

In order to enable the availability of essential food the\nMarketing Department established a large number of shops in the cities and\nthese shops were well stocked with essential food like dhall, sugar, flour,\nonions and vegetables. These were sold at rock bottom prices, where no profit\nmargin was kept. The intention was to unofficially control the retail prices\noffered by private traders. When a well stocked shop was selling goods at a low\nprice the private retailers too had to sell at similar prices otherwise they\nwill have no sales because the consumers will all go to the Marketing\nDepartment shops and the private shop keepers will have to close down.\nAssistant Commissioners had to ensure  that the Departmental shops were\nwell stocked.<\/p>\n\n\n\n

An incident comes to mind. I was then in charge of the Southern\nProvince with my office at Ambalantota. In the Red Onion season we got wagon\nloads of red onions from Jaffna and we were required to sell at whole sale\nprices to traders and also to sell at our shops. One day  I had just\ninspected our shop at Galle and also visited a number of private traders\u2019 shops\nto ensure that they did sell red onions at reasonable prices. I returned to\nAmbalantota. The next morning in office I got a telegram from Head Office. It\nread, Member of Parliament Dahanayake reports that there is a shortage of red\nonions in Galle. Inspect and report at once\u201d. Those were the days when we had\nno mobile phones and it was very difficult to get long distance calls. \u009d. I got into my car and\nreached Galle by  around four. I went straight to our shop and found it\nwell stocked with red onions. I checked the books for sales. I visited a number\nof private shops and found them well stocked selling at a slight higher price\nthan our price. That was how it ought to be. Armed with these details I went to\nMr Dahanayake\u2019s residence. He was not in and I waited for him. I knew him well.\nIt was late in the night about ten that he came home and inquired what brought\nme there. I brandished the telegram and said that I had been in Galle the\nearlier day and found that red onions were available in our shop and that there\nwas no shortage. He  looked hard at me for a few minutes and said, <\/p>\n\n\n\n

Garvin, You know a man came to meet me and said that there was\na shortage of red onions and to satisfy him I sent a telegram to the Minister\u201d\u009d <\/p>\n\n\n\n

I quipped, \u201d But sir, there is no shortage and there never was\u201d\u009d <\/p>\n\n\n\n

\u201d That I know but to keep that man happy I had to send a\ntelegram.\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\nDepartment\u201d\u009d <\/p>\n\n\n\n

 That was all. I reported\nthis meeting to our Commissioner and never heard again. Presumably Mr\nDahanayake had phoned the Minister.  We Assistant Commissioners had to\nhave a dragnet over all essential supplies and that included not only our shops\nbut all private shops. It was an indirect control of prices and availability.<\/p>\n\n\n\n

Again, once at the District Coordination Committee at\nAnuradhapura it was reported that the few traders were fleecing the colonists\nat Padaviya by charging high prices. I was the Assistant Commissioner at\nAnuradhapura and said that we will open a shop at Padaviya. I got covering\napproval from the Commissioner and in a few days time opened a Shop at\nPadaviya, to serve the colonists. Our Shops effectively controlled the cost of\nliving. The private traders had to cut their profits as otherwise they would\nbe  out of business. That scheme worked well.<\/p>\n\n\n\n

The\nVegetable and Fruit Marketing Scheme<\/h2>\n\n\n\n

The Marketing Department established Vegetable and Fruit Packing\nSheds(actually purchasing units) in all producing areas. The name given was\npacking sheds and they were in many places in temporary buildings mostly made\nwith timber. Even some Assistant Commissioners had their offices in these\ntemporary buildings in 1955.<\/p>\n\n\n\n

The entire Vegetable Marketing Scheme was administered from\nTripoli Market, based in the largest hangar in the Colombo Goodshed.  One\npart of the Scheme was to purchase vegetables and fruits from producers who\nbrought their produce to our Vegetable Packing Sheds. They were paid immediate\ncash. The Department was equipped with lorries that were sent to the\nchief  Producer Fairs in the producer areas. Thus there were mobile\npurchasing uints at all major fairs like Embilipitiya, Colombage Ara, \nBandarawela, Welimada, Kekitrawa to mention just a few. These Purchasing Units\ncomprised Marketing Officers and a staff of purchasing officers and labourers.\nThe produce brought in was weighed and accepted from producers and they were\npaid cash immediately. The Assistant Commissioners of the Districts were\nrequired to visit all major fairs to ensure that the purchases were made\nregularly. When I worked in the Districts on most days my day commenced at four\nto get to the Fairs by six in the morning. Vegetables were purchased and packed\nand dispatched to Triploi by evening either by wagons(by trains) or by special\nlorry.<\/p>\n\n\n\n

At Tripoli Market, the Assistant Commissioner  had a\nMarketing Officer at the Colombo Wholesale Market. His task was to report the\nprices at which the wholesale traders sold the produce to the retail traders\nand to report on the availability of produce. In the Districts, the Assistant\nCommissioners and the Marketing Officers had to report the prices at which\nprivate traders purchased vegetables and fruit.  Generally there was a\nwide gap between the prices at which the traders purchased goods and the prices\nat which the Wholesale Traders sold to the retail traders in Colombo. Based on\nthese prices, the Assistant Commissioner at Tripoli Market decided the purchasing\nprices at which goods were to be purchased at the Fairs. This price was always\nabove the prices offered by the traders who bought goods at the Fairs. This\nhelped the producers and the traders at the Fairs too had to offer a similar\nprice because otherwise the producers will not sell to them.<\/p>\n\n\n\n

On a daily basis Tripoli Market received around twenty wagon\nloads of vegetables and a similar number of lorries bringing in produce. These\nwere checked and had to be in our Retail shops by ten in the morning. \nTripoli Market was a hive of activity from early morning.  Then the\nRailways ran a very efficient service and brought in produce in time.  For\ninstance curd from Ridiyagama Farm in Hambantota was sent by lorry to Matara\nand came by night mail train to Tripoli. This was an item in high demand. The\nretail price we fixed for Ridiyagama Curd effectively controlled the prices of\ncurd in private shops in Colombo.<\/p>\n\n\n\n

The Assistant Commissioner at Triploi Market kept a very low\nmargin to cover up cost of transport and handling and fixed a low price for\nsales to the consumers through the network of Shops. Generally the Marketing\nDepartment kept a margin of around 10 to 15% above the purchase price while the\nprivate trader at the Fair  kept a margin to 40 to 50% and the Whoelsale\nTraders too kept around 40% and further the retail trader too kept around\n40%.  Thus while the private trader generally kept a margin of 100% or\n120% over the purchasing price at the Fair, the Marketing Department kept a\nmargin of 10% to 15%.  <\/p>\n\n\n\n

The working of the Marketing Department  meant that the\nprivate traders at the Fairs and the Wholesale Traders as well as the Retail\nTraders in the cities had to be satisfied with a low margin.<\/p>\n\n\n\n

The Marketing Department in the Fifties was headed by BLW\nFernando, a Chartered Accountant and he would not allow any Assistant\nCommissioner to keep a higher margin than 15%. That was a rule to be followed.\nEvery month all Assistant Commissioners had to attend a Conference where the\nProfit and Loss calculations were closely studied and the Commissioner would\nchastise all Assistant Commissioners that  had a profit of over 10% or\nincurred a loss.  We were expected to cover up, not to incur a loss\nor  to get a large profit.<\/p>\n\n\n\n

This was the key method by which the prices of vegetables and\nfruits were kept in check. The Scheme has thus a dual aim- of offering the\nproducer a fair price as well as offering the consumer a low price.  At\ntimes it was like walking on a rope but we got used to walk on it.<\/p>\n\n\n\n

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

A few years ago on one of my visits I found tomatoes being sold\nat forty rupees a kilo by a producer on the Mahiyangana Road, when the retail\nprice in Colombo was around rupees eighty to one hundred, a margin of over\nhundred percent. This could not happen while the Marketing Department was at\nwork. The Assistant Commissioners  were eternally traveling as they had to\nvisit Fairs, inspect purchasing at the Fairs and the Vegetable Purchasing\nDepots, contact producers and offer advice on items on demand. Generally our\ntraveling allowances exceeded our salaries.<\/p>\n\n\n\n

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

This Vegetable Marketing & Fruit Marketingh Scheme  was\nvery successful in ensuring that consumers in cities obtained vegetables and\nfruits at cheap rates. The Cost of Living was kept in check.<\/p>\n\n\n\n

 The Canning Factory<\/p>\n\n\n\n

Local producers got a boost with the establishment of the\nCanning Factory in 1955. At that time Sri Lanka imported fruit juice and fruit\nfrom Australia and the task of the Canning factory was to produce fruit juice,\njam an-d jellies. The Vegetable Purchasing Centers sent goods to the Canning\nFactory. At the initial stages in canning fruit juice many problems were faced\nand it took over a year to surmount them and get down to production for all Sri\nLanka\u2019s requirements. The Marketing Department offered  floor prices for\npineapples, red pumpkin and ash pumpkin and producers benefited immensely. Floor\nprices meant that the Department will purchase everything offered at that\nprice. Pineapple was tinned and even an export trade was built up. Assistant\nCommissioner Oswald Tilekeratne spread his wings abroad very often. Red Pumpkin\nwas turned into Golden Melon Jam and Ash Pumpkin was turned into Silver Melon\njam. The Factory activity made Sri Lanka self sufficient in fruit juice, jam\nand many other processed food within a few years.<\/p>\n\n\n\n

The\nMarketing Department was called upon to attend to many tasks.<\/h2>\n\n\n\n

Once Sri Lanka was not self sufficient in eggs. The Marketing\nDepartment offered a floor price for eggs and Triploi Market collected eggs\nfrom the Negombo-Nattandiya area till Sri Lanka was self sufficient in egg\nproduction. Once Self sufficiency was  reached the scheme was disbanded.<\/p>\n\n\n\n

It was found that during the Kataragama Season, the restaurants\ncharged high prices for meals.  This the Government combatted by running a\nlarge restaurant. Officers who have the ability were posted from various units\nand they provided quality meals. The Menu included thosa, kiribath, string\nhoppers, pittu, rice and curry and the restaurant was kept open till late. When\nI covered the Southern Province I was in charge of this restaurant for two\nyears and was held responsible for providing good quality meals at a cheap\nrate.  This was the method by which the cost of living of the pilgrims was\ncontrolled.<\/p>\n\n\n\n

With the abolition of the Marketing Department, and the\nprivatization of the canning factory all this achievement was lost. That was the\nway in which the IMF crippled the development of the Third World and created a\nsituation where we had to import from the Developed Countries.<\/p>\n\n\n\n

Once the tomatoes producers at Hanguranketa made pandals of\ntomatoes in order to highlight their plight of not being able to sell their\ntomatoes. This could not have happened while the Marketing Department was\nfunctioning. To start with the Assistant Commissioner would be held\nresponsible. If that happened when I was in charge of The Triploi Market I\nwould have sent a few lorries and the entire stock of tomatoes would have been\npurchased within a few hours and it would have been turned into Tomatoe Sauce\nand Juice at the Factory. Today Spain produces tomatoe sause, tomatoe juice,\ntomato paste and sun dried tomatoes for most countries in Europe. With a\nTomatoe belt in Hanguranketa we cannot produce tomato sauce even for our\nrequirements. Our climate had enabled a variety of crops. There is a mango belt\nfrom Anuradhapura to Matale. Even today if action is taken to pluck mangoes and\nprocess it, we can be self sufficient in all fruit juice within six\nmonths. The Chena cultivators will find sales for their Red Pumpkin,Ash\nPumpkin and Melon. There is an Avacado belt from Peradeniya to Gampola and\navacado juice can easily be made. The country will benefit by avoiding the\nmillions spent on imports.<\/p>\n\n\n\n

Following the\nliberalization free market economics of the IMF we  created a market for\ntomatoe sauce from the USA, and fruit juice from as far as Canada and Oregan in\nthe USA.  Our producers have stopped producing large quantities for fear\nof being unable to sell and we have unemployment and our farmers have low\nincomes. The Colombo Supermarkets are full of Heinz Tomatoes sauce from the USA\nand fruit juice and jam from Australia. The IMF did its work right to cripple\ndevelopment 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 &\nGodages<\/p>\n","protected":false},"excerpt":{"rendered":"

By Garvin Karunaratne The high prices for vegetables in Sri Lanka today tells me of where we went wrong.  Once in the pre IMF days, in the days before Sri Lanka started playing poodle to the IMF Sri Lanka did have a method by which it controlled inflation. That was the Marketing Department at work. […]<\/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-97982","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\/97982","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=97982"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/97982\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=97982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=97982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=97982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}