Controlling rice prices commendable

The Government having declared rice as an essential commodity imposed price control last week. This decision was taken to protect consumers from unscrupulous middlemen - paddy mill owners and wholesale traders.

It was a commendable move by the Government to protect consumers as well as local paddy farmers. While implementing the controlled price for rice, the Government would make every effort to maintain the current paddy prices, to check the unreasonable high profits raked by middlemen.

There has been an unprecedented demand for rice during the past few years. At the same time, our paddy farmers enjoyed better fortunes as the price of paddy has almost doubled.

There was a time when some paddy farmers committed suicide as they were unable to repay their loans. There was hardly anyone to buy paddy at a reasonable price and as a result some paddy farmers either abandoned their profession or went for other crops.

Such unfortunate events that took place during the UNP regime ended after President Mahinda Rajapaksa assumed office in November, 2005. Under the Mahinda Chinthana program, added value has been given to local produce as the Ministry of Agriculture embarked on a massive cultivation project - Api Wawamu Rata Nagamu.

Against this backdrop, people were encouraged to consume rice for all three meals - a habit people in rural areas cultivated for centuries. Even the urban households started consuming more rice as the majority of people reduced consumption of wheat flour based products.

This new development increased the demand for rice and provided better value for the local paddy farmer. During 2007, Sri Lanka’s rice consumption increased while wheat flour imports dropped significantly compared to the previous year. That was a positive sign as Lankans placed more faith on local grains, rather than depending on American imports, spending valuable foreign exchange.

Soaring world crude oil prices and the unexpected high demand for food in Asia had a negative impact on Sri Lanka’s economy too. There has been an unprecedented demand for food from countries such as China and India.

The rice crisis in Malaysia, Indonesia and the Philippines has been far greater. The price of rice, which on world markets surged around 175% over the past 12 months, is being closely watched as a barometer of potential unrest in several countries.

The high prices affect consumers all over Asia. Food inflation even in Asia’s wealthiest nations such as Japan, South Korea, Singapore, Hong Kong and Malaysia can engender a political issue. But for the poorest in Asia such as Bangladesh, Nepal, the Maldives and Philippines, rising food prices could lead to malnutrition.

Though the Opposition made many attempts to capitalise on the rice crisis here, the Government took every possible step to control the situation.

Trade Minister Bandula Gunawardene, on the instructions of the President, has been working round the clock meet the challenge. He recently made a fruitful visit to Myanmar, which has agreed to send buffer stocks of rice to Sri Lanka.

Though Myanmar rice was anticipated in time for the Sinhala and Hindu New Year, it was not possible due to certain logistical problems and the traditional New Year holidays there. With the arrival of rice from Myanmar by the end of this month, the local rice market would soon stabilise.

After the Government imposed a controlled price for rice, Pettah wholesalers and big-time middlemen put down their shutters and prevented rice from reaching the market. Nearly all wholesale outlets along Fourth Cross Street, Fifth Cross Street and Old Moor Street were closed on Thursday.

The Consumer Affairs Authority (CAA) moved into action swiftly and intensified their raids on errant traders. The CAA officials took errant traders to task in Pettah on Friday for failing to comply with the Government’s regulations on rice prices and some shops were sealed.

After the CAA flexed its muscle, Pettah wholesale traders agreed to sell locally produced rice at controlled prices. Their decision should resolve the crisis in the coming week and with the arrival of the imported stocks by the Government, prices could be even less than the present controlled price.

Hence, there is no need to panic as the Government is making every endeavour to protect both the consumer and paddy farmer.

According to Minister Gunawardena, the CAA received over 100 complaints on rice hoarding and refusing to sell rice while stocks were available. But many trade organisations and supermarkets have pledged to sell their rice stocks under the Government’s stipulated maximum retail and wholesale prices.

Around 10,000 kg of paddy are being milled daily at the Government owned Paddy Store in Thalawa and sufficient stocks are being released daily to the Markfed and Coopfed as a relief measure. Co-operatives and Coop cities islandwide will get sufficient rice stocks to be sold to consumers.

The Government is also contemplating to bring the rice trade under Emergency Regulations which will enable law enforcement authorities to take even more stringent action against rice hoarders and those who artificially jack up prices contravening the maximum prices stipulated by the Government.

Whatever said and done, the final answer to the Asian food crisis and surging world crude oil prices is to develop local agriculture. If we could pay more emphasis to the current ‘Waga Sangramaya’, Sri Lanka, blessed with a rich soil and ideal weather conditions, would be in a better position to overcome any food crisis.