Laksathosa and Economic Centres protect consumers:

Rs. 30 tax on a kilo of imported potatoes:

Govt committed to safeguard local farmers - Minister Johnston Fernando

By Uditha KUMARASINGHE

Co-operatives and Internal Trade Minister Johnston Fernando says his Ministry has intervened to import food commodities directly and play the role of price controller to stipulate the prices of essential food items in the local market. The Minister in an interview with the Sunday Observer said the significant progress achieved by this new mechanism would enable the Ministry to further reduce the prices of food commodities by another 20 percent in the near future. The establishment of Laksathosa branches and Economic Centres has paved the way for the Government to enter into a successful program to safeguard both consumer and the farmer.

Q: One year after the war, there is a lot of criticism that the cost of living is still high. What are your views on this and what is the Government doing to bring the cost of living down?

A: The prices of goods have been reduced when compared with the prices in the recent past. The inflation rate which was around 29 percent earlier has come down to 4.8 percent at present. There was not a period in the recent times which we could purchase a kilo of rice at Rs. 37 or Rs. 38. Today the prices of rice have come down drastically while the prices of other essential food commodities have been reduced. Vegetable prices have also come down while the prices of gas are also coming down rapidly.

It is only the UNP which says the cost of living is high. The Opposition Leader Ranil Wickremesinghe always turned his partymen into busy people to conduct various demonstrations when the UNP faced a huge electoral defeat or various internal plots are hatched to expel him from the party leadership. As a result, the partymen who wants to expel Wickremesinghe from the party leadership are compelled to conduct demonstrations following the orders given by the party leadership. Who participates in these demonstrations? Only the active members of the UNP are join these demonstrations. The ordinary people don't take part. Therefore the claims made by the UNP on the issue of high cost of living is just only a fabrication made by the UNP to safeguard their leader.

Q: The Government recently imposed a tax of Rs. 30 on a kilo of imported potatoes. Why was this step taken?

A: This Government is always committed to safeguard the local farmers. This Government has given a fertiliser subsidy to the farmers and also given a certified price for their paddy. The Government has taken all these measures to safeguard the local farmers. The Government imposed this Rs. 30 tax on a kilo of imported potatoes to protect our local potato farmers. Nuwara Eliya potatoes have already come to the market and this is the time the potato production of Welimada zone is coming to the market. As a responsible Government, we always study these developments taken place in our local market. We could see the prices of a kilo of potatoes was continuously dropping from Rs. 90 to Rs. 65 or Rs. 60. If these prices further drop, it may seriously affect the local potato farmers. After having discussions with President Mahinda Rajapaksa, he ordered to impose a tax of Rs. 30 on a kilo of imported potatoes to safeguard our local potato farmers. When the initiatives are taken to protect the consumers, the Government has to take measures to protect the local farmers as well.

Q: What are the other steps being taken to protect the local farmer? But in doing so, how can you ensure a better deal for the consumer as well?

A: As I mentioned earlier, the Government has taken a series of measures to protect the local farmer. In order to protect the consumer, the Ministry has intervened to import goods directly and play the role of the price controller to stipulate the prices of goods in the local market. Before we made our intervention, it was the private sector wholesale dealers who functioned as the price controller in the market. We could see this was implemented as a big Mafia during election time. Goods at Laksathosa outlets are 10 or 15 percent cheaper than in the local market. Under the Consumer Affairs Authority Act, the Ministry has made arrangements to provide quality goods to the consumers and display the prices of goods. The Ministry under this Act also intends to provide a loaf of bread with an accepted weight to the consumers. During a period of two months, my Ministry has been able to conduct the highest number of raids and impose over Rs. 15 million as fines from errant traders. We are fully bound to protect the consumers.

Q: Only rice has come down drastically in the market. Why cannot the same success be repeated with other goods?

A: At present the country has become self-sufficient in paddy and rice. This has led to a reduction in rice prices. The initiatives taken under "Mahinda Chinthana" to uplift the local farmers, provide them fertiliser subsidy and purchase their paddy under a certified price has also led to increase the country's paddy production. I don't see reducing the prices of rice drastically as a good move to safeguard local paddy farmers. But there should be a fixed price for rice.

Then we can protect both the consumers and the farmers. The Co-operative Wholesale Establishment (CWE) and the Paddy Marketing Board (PMB) have decided to re-open all the rice mills which had been closed down in the past. We would not provide room to those who have engaged in the rice industry to gain an unnecessary profit.

The Ministry has commenced importing food commodities directly. Through this mechanism we have been able to provide goods to consumers at concessionary rates. The significant progress achieved by this mechanism would help us to reduce the prices of goods in the local market by another 20 percent in the near future. We have not been able to control the prices of milk powder as a large quantity of milk powder is imported at present.

Therefore our milk powder prices are dependent on the milk powder prices in the world market. When the milk powder prices in the world market rapidly increased, the Government reduced the tax imposed on imported milk powder without allowing to increase the local milk powder prices. At present only 8000 metric tons of milk powder is produced locally and nearly 56000 metric tons of milk powder is imported. The President has given guidelines to increase local dairy production by 50 percent in 2015. That would provide milk powder to the consumers to less cheaper prices.

Q: What are your plans to improve the co-operative network?

A: We hope to provide financial assistance to develop the co-operative network. On the directive of the President, steps have been taken to fully computerise the co-operative network under the project called "Co-op net". The Government has to spend a huge amount of money for this project. We have also decided to amend the outdated Co-operative Act to suit with modern day needs.

Q: Are there plans to open more Laksathosa, especially in the North and the East and new Economic Centres as well?

A: At present 207 Laksathosa branches are operating countrywide. We have decided to open another 50 Laksathosa branches before the end of this year. We hope to establish Laksathosa branches in the Northern province with a new outlook by providing the opportunity to the consumers to purchase everything under one roof. The first Laksathosa branch with that new outlook will be established in Kilinochchi. This new concept would be introduced to other parts of the country as well. Arrangements have also been made to set up a 10 room hotel complex in these new Laksathosa supermarkets similar to the motel system in foreign countries. At present the Ministry is identifying suitable areas to set up new Economic Centres. Priority will be given to establish these Economic Centres in key farmer areas where farmers can directly come and sell their products.

Q: Is the Government on track to acquire the Shell gas business? What are the steps being taken to stabilise gas prices?

A: The group of eminent persons whom we have appointed to monitor the gas prices in the World Market have reported to us that gas prices are rapidly coming down in the World Market. Therefore we hope to give those benefits to our consumers. At present we are negotiating with the Shell Gas Company to acquire its shares to the Government. A Cabinet decision was also taken in this regard recently. But we believe there is a need of another gas company to Sri Lanka. Then we can create some competitiveness in the market. We are discussing to bring another gas company to Sri Lanka. The competitiveness created in the market would facilitate to provide gas to the consumers at a very fair price without allowing gas companies to obtain undue profits.

Q: Although the Government has stipulated prices for many items, there are many errant traders who do not do so. What are the steps being taken against these traders?

A: At present there is no controlled price for many goods. In this competitive market, traders can sell goods haphazardly according to their price. What the Government can do is only to enter into that competitive market. That is what we have done through Laksathosa and Economic Centres. However, former UNP Government completely ignored this system. As a result, prices of goods rapidly increased and created a mafia by putting the consumers into severe hardships. Having seriously considered this situation, President under "Mahinda Chinthana" took measures to open Economic Centres and re-open Laksathosa branches countrywide and re-establish the PMB. This has paved the way to the Government to enter into a successful program to safeguard both the consumer and farmer.

The Ministry through the CWE has made arrangements to introduce a "Buy back system" with effect from January next year. According to this system, the Ministry will directly purchase farmers' products and sell them to the consumers through the Economic Centres and Laksathosa branches. At present nearly 25 percent of vegetables and other food products are damaged in transportation. This loss is also added into the consumers as a burden. In order to minimise the post harvest losses, new plastic crates will be introduced to transport fruits and vegetables. This would also help us to provide fruits and vegetables to the consumers at lower rates and also prevent traders from exploit in consumers. Even though the wholesale prices of some goods have come down, traders are not willing to reduce their retail prices. Because they know they can exploit the consumers as they are familiar with the previous prices of those goods. But as a service to the consumers, we hope to directly purchase farmers products and sell them to the consumers through the Economic Centres and Laksathosa branches at concessionary rates.

Q: The Opposition says that the Government can reduce taxes on more imported items to give relief to the consumer. Can this be done?

A: A country cannot be developed without imposing taxes. But this Government has imposed taxes in a very justifiable manner. During the period of war against terrorists, the Government had to increase some taxes. The people of this country are well aware that this Government conducted the war in a situation where the entire world had faced a severe economic recession. Although the war against terrorism is over, we can't say the problem is over. In order to provide a lasting solution to the problem, the Government has to rebuild the Northern Province which was completely destroyed due to terrorism. Only the money spent by the Government on bullets has been stopped. But the Government has to pay the salaries and provide other welfare services to the three Armed Forces and Police. A huge amount of money has to be spent to develop the Northern Province which was earlier spent on the war. Therefore we should understand this reality.

It may be very easy for the Opposition to say to reduce the taxes on imported items. Didn't the UNP impose taxes when they were in power. They also imposed various taxes. But they didn't conduct any war or develop the country as well. President Rajapaksa could successfully win the war against terrorists and also develop the country.

The Government while engaging in a war against the most ruthless terrorist group in the world also continued its development drive and provide all welfare measures to the people. Nobody can point their finger at the Government that it has put an unnecessary burden on the people by imposing taxes. All the income gained by the Government through the imposition of these taxes have been utilised for the wellbeing of the country's people. As I mentioned earlier the UNP attempts to protect the leadership of Ranil Wickremesinghe while the JVP tries to cover up their nakedness by talking about these taxes.

During all previous elections, the UNP and the JVP raised this as a big issue. But the people completely rejected their claims by giving the highest percentage of votes to the President in the country's election history. The people are not ready to listen to these baseless allegations levelled by the Opposition. They can witness the massive development taking place within the country today.

Q: What are the steps being taken to encourage more people to consume rice based products instead of flour based products?

A: In order to encourage the people to consume rice based products, the Government has imposed a tax on imported wheat flour. We have laid emphasis to encourage the people to utilise more rice flour. The Government has implemented various programs to educate the people on the importance of use rice flour and rice based products.

This would help to safeguard local paddy farmers and also compel the people to purchase our indigenous products.

Q: Do you think paddy farmers have been able to obtain a better price for their paddy harvest at present? But various complaints have been made by the Opposition on Government's paddy purchasing program. Your comments?

A: As a Government we have recommended a certified price for the paddy. According to this certified price, a kilo of paddy is purchased by the Government between the rates of Rs. 28 and Rs. 30. But farmers in certain areas still sell a Kilo of paddy at Rs. 20 and Rs. 22.

We have looked into this situation. The main reason for this situation is that some farmers have not been able to produce paddy up to the standard expected by the Government. They have gone for new machinery and equipment. This is a natural thing. If a kilo of paddy is to be purchased Rs. 28 or Rs. 30, its moisture should be in the range of 14 percent. But the moisture of some paddy produced by the farmers are very higher rates of 20 or 23 percent. As a result a kilo of this kind of paddy is purchased by the private traders at Rs. 20 or Rs. 22. The paddy with this high moisture cannot be stored in a sack more than two days. Therefore the Paddy Marketing Board cannot purchase a kilo of this kind of paddy at Rs. 28.

If a kilo of paddy is purchased at Rs. 28, the Government has to spend nearly Rs. 50 or Rs. 55 to produce a kilo of rice. We have recommended a very fair price for the paddy. But I don't think reducing rice prices drastically is not a good move. Because both paddy farmer and the consumer should be protected.

If the farmers produce paddy up to the expected quality, the Government is ready to purchase any stock of their paddy.