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| Sunday, 20 March 2005 |
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Stabilising paddy purchasing price successful by Gamini Warushamana The government's attempt to stabilise the paddy purchasing price at a profitable level for farmers in the open market has been successful inspite of shortcomings in some areas.
This was clearly seen when we visited several Mahaweli areas in the Anuradhapura and Polonnaruwa districts where paddy harvesting has already begun. Farmers said that paddy prices in the open market have gone above the minimum fixed price at government and co-operative purchasing centres. Farmers in Megalewe in Mahaveli H zone said that private traders are purchasing Samba paddy at Rs. 17 and 18 per kilogram. The government purchases Nadu at Rs. 15.50 and Samba at 16.50 per kilogram. Megalewe Dutudana Farmers (Pvt) Ltd purchases paddy with financial assistance of the government under the Mahaweli Authority's supervision. By March 10 the company had purchased 136,039 kgs of Nadu and 4,700 kgs of Samba. The short supply of Samba to government purchasing centres is due to private traders paying a higher price. Kamardeen, a farmer in Nelliyagama was collecting the harvest of his two and a half acres paddy field when we met him. He told the Sunday Observer that the seasonal price this year does not worry them but the unexpected rains had caused problems. Problems arise due to bureaucratic bottlenecks. By March 10 the Anuradhapura Government Agent (GA) had not obtained money to be distributed to co-operatives and farmers' societies. Kamardeen said that due to lack of funds, co-operatives are not making purchases in areas such as Palagala and therefore prices are as low as Rs. 12-13 per kilogram. According to our Anuradhapura regional correspondent the Anuradhapura GA received Rs. 160 million by March 10. " Some private traders are purchasing low quality paddy at Rs 12-13/Kg while high quality paddy fetches a higher price." Therefore price is not a problem during this Maha season in Mahaweli H zone" said Resident Project Manager K. D. Amaradasa. The authorities expect a harvest of 162,500 MT from the H zone this Maha season and 60% of them will immediately come into the market. Amaradasa said that the Mahaweli Authority has warehouses and they have rented them to the private sector as well. The government has taken effective measures to influence the market. On one hand it has got directly involved in purchasing paddy through co-operatives and farmers' societies. This had a significant influence on the market price and the supply was controlled. The government has planned to purchase 70,000 MTs of paddy or 3.6% of the total harvest of 1.95 million MTs. The government has provided a Rs. 5 billion confessional credit line to medium and small scale traders and mill owners to purchase paddy. This has created a significant influence on demand. Instead of a few large scale traders and their cartel there are a large number of buyers this season. The government has also given a guarantee to purchase Nadu and Samba rice at Rs. 30.50 and 31.50 per kilogram. R. M. K. Mahindarathne, in the Tambutegama Industrial Park, a medium scale mill owner obtained the government's loan facility of Rs. 100 million from the Hatton National Bank and is awaiting another Rs. 500 million from the People's Bank. The annual interest rate of these loans is 7%. Mahindarathne said that at present he purchases around 150,000 kgs per day at the government's recommended price. He said that by March 10 he had 874,000 Kgs in stock. He has warehouses that can stock paddy worth Rs. 1 billion. According to farmers and traders the market power of the traders is the main reason for the price hike in rice. Managing Director of Megalewe Dutudana Farmers Company (Pvt) Ltd said that a minimum 72 Kgs of rice can be obtained from 100 Kgs of paddy. If they hire a mill the grinding cost would be Rs. 1.58 per Kg. Therefore the total cost of rice works out to Rs. 24.50 per kilogram and for large scale mill owners the cost is lower. Private traders are earning huge profits from rice and this goes up to even Rs. 40. The government's intervention has improved the rice market. Farmers societies and co-operatives have agreements with the government to provide Nadu and Samba rice at Rs. 30.50 and Rs. 31.50 per kilogram. Traders who obtained loans will also have to provide rice at a lower price. Mahindananda said that he sells Nadu at Rs. 26 and Samba at Rs. 32 per kilogram. |
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