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Sunday, 12 May 2013





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No end in sight to vegetable crisis

After a serious crisis where hundreds of tonnes of vegetables perished as a result of oversupply, bad weather and the resulting drop in quality, the wholesale price of vegetables at the Dambulla Dedicated Economic Centre (DEC) is picking up slowly. Traders and farmers expect the prices to stabilise in the coming weeks.

No buyers

The crisis faced by vegetable farmers is not a new or strange one. Market failure due to oversupply that affects farmers on the one side and the consumers on the other are reported frequently.

There are many reasons for this perishable commodity. Therefore the views of stakeholders and first hand information on how markets function gives an insight to the issue.

The manager of the Dambulla DEC, Cristy Wijeratne who welcomed us was in an aggressive mood and he queried what news value the media had to report on price decline.

According to him, since market failure is a common scenario there is nothing to report. The media is also responsible for the market crisis because they exaggerate the situation.

In the latest crisis, farmers suffered due to exaggerated media reports because farmers did not bring their products to the market believing media reports, on the days that followed, he said.

He denied media reports which stated that thousands of tonnes of vegetables that couldn't be sold were dumped during the past few weeks. He said that only vegetables that always pick low prices such as ladies fingers, cucumber and pumpkin were destroyed as a result of massive oversupply, but that reports saying that hundreds of tonnes were dumped were not true because nobody had measured it.

However, traders said even vegetables such as beans were dumped.

According to Wijeratne, the loss to farmers was not an issue because they are used to this kind of crisis and farming is like a game, they win sometimes and lose sometimes.

Cristy Wijeratne

Usually Wijeratne and his office do not respond to media inquiries and declined comment on the market situation. He said that it is not his duty and his office sends market reports daily to the Secretary to the Ministry of Consumer Affairs and the media can get the necessary information from the Secretary.

This bureaucratic argument is perfect but not practical.

Wijeratne said that this was a good lesson for farmers and they should know what to grow. He pointed out several reasons for oversupply of vegetables.

The Dambulla DEC receives supplies from farmlands all over the country. Buyers too come here in search of quality fresh vegetables and, therefore, low quality products are rejected and dumped in large quantities daily.

Some farmers who bring in low quality products are unable to find buyers and dump the produce. Cultivation of imported hybrid vegetable seeds is another reason. These vegetables are soft and rot easily.

Though this problem has been discussed time and again, the same issues prevail, without being resolved. We did not see a single plastic crate being used for the transportation of vegetables. Polythene sacks and traditional transport methods continue to be used.

Wijeratne said that people resist change and after the government spent millions on plastic crates and on a huge campaign to promote them the process has gone back to the old system.

In Dambulla, trading is mainly between intermediaries and not farmers and retailers or consumers. At a glance, the market looks competitive and prices are determined by supply and demand.

Traders who collect products from the farmers bring them to Dambulla and most of the buyers too are wholesalers. The market price is determined by this trade in large quantities. Trading takes place through shops in the market and the shop owner gets a commission of Re.1 per kilo.

Last Tuesday, R.M. Saman, a collector had brought a lorry load of beans and tomatoes from Hanguranketa. He offered beans at Rs. 45 per kilo and tomatoes at Rs. 55 per kilo. He was worried because there were only a few buyers and therefore the demand was low. K. Athulla, a buyer from Kinniya bid at Rs. 40 per kilo for beans and Rs.45 per kilo for tomatoes and Saman quickly accepted the bid and closed the deal.

The transaction took place through Rathna Stores. Athulla had reasons to reduce prices. The quality of the vegetables was poor due to heavy rains that prevailed during the past few weeks.

Saman said that he bought beans at Rs. 40 per kilo and tomatoes at Rs. 50 per kilo and incurred a huge loss.

A transaction in progress.

However, Asanga Kumara, a farmer from Elagamuwa, Kekirawa said that it was not true. Normally the collectors pay low prices to farmers and they have a sufficient margin to cover transport costs, losses due to damages and price fluctuations.

The difference between the wholesale price of vegetables in the DEC and the retail market just outside the DEC was over 100 percent. For instance, the wholesale price of beans was Rs. 40 per kilo and the retail price was Rs. 80 per kilo.

Farmers said that their cultivation decisions are based on factors such as market prices, cost and availability of water and there is no cultivation plan or coordination.

The intermediaries in the supply chain earn a higher profit than the farmers. Traders said that the margin is higher because they have to cover transport cost, losses in transportation and the risk of price fluctuation.

However, they are better informed today through mobile phones and they know the market price at the time they buy vegetables from the farmers. Farmers do not have the bargaining power because after they pluck their vegetables they have to sell them as quickly as possible.

There are many reasons for the frequent crisis in marketing vegetables and the market may never solve them. Issues are linked with the disorganised agriculture sector, lack of information and coordination. Despite the losses they incur, neither the farmers nor the traders could give up their jobs, but it is a loss to the national economy.



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