Small and medium rice millers cry for help

Small and medium scale rice mill owners in Badulla district complain that they are in a dilemma because monies meant for them aren’t released by the authorities 

• “Banks wanted a collateral and farmers maintain that they do not have such property
• Several officers in the Central Bank and other commercial bank managers are behind the delay of granting loans to farmers 
• The authorities have turned a blind eye to paddy purchase from Badulla
• Prior to purchasing paddy during this year’s Maha season small and medium scale millers have requested the District Secretary to grant them loans
• Farmers are not interested in selling their paddy harvest during  Maha Season to the Government as large scale millers buy paddy at higher prices
• When selling rice at controlled prices we have to bear a loss of 1-2 Rupees

Medium scale rice mill owners complain that many issues have arisen with regard to the purchase of paddy harvest this season. The purchase of paddy from every district- including Polonnaruwa, Ampara, Badulla, and Anuradhapura -has led to a crisis.  Badulla District Paddy and Rice Producers’ Cooperative Society President B. A. S. Jayasinghe said that centres haven’t been established yet to purchase paddy in Badulla as in the previous year as there is no government initiative to buy paddy. This Cooperative Society was set up to purchase paddy. ‘‘A programme was implemented in 2019 to purchase paddy in Badulla and before that large scale millers from other areas bought paddy from Badulla at low prices,’’ he added.

Non-competitive paddy stocks

He also said that as paddy buyers in the area didn’t have money to buy paddy they requested for bank loans. “Banks wanted a collateral and we do not have such property. Even if we get loans after informing the Badulla District Secretary, the loans are granted after the harvest is sold. Four small millers in Badulla received bank loans of 10 million and 7.5 million Rupees using a collateral this time to purchase paddy. That amount cannot be used to make a purchase as expected. Some people buy paddy with their own money and sell back to large scale millers keeping a small profit as they have no other choice. Several officers in the Central Bank and other commercial bank managers are behind the delay of granting loans. Large scale millers are actually responsible for this crisis,” he added. 

Even though the Government has allocated money to buy paddy during the previous Maha season it has failed to buy paddy from the Badulla district. According to Jayasinghe, Badulla district ranks tenth in paddy cultivation among other districts. Mahiyanganaya, Giradurukotte and Mahaweli B Zone are the paddy cultivating areas in Badulla. “However, authorities have turned a blind eye to paddy purchase from Badulla. Small millers in Badulla purchased paddy in 2019 with personal loans they had obtained. They had informed the National Food Promotion Board. Later Badulla District Secretary released funds granted through the Treasury one month after harvesting,” he added.

Prior to purchasing paddy during this year’s Maha season small and medium scale millers have requested the District Secretary to grant them loans before harvesting begins. Jayasinghe said that even though money had been allocated the District Secretary had conducted the relevant meetings to purchase paddy two months later. “As money allocated to buy paddy does not reach small and medium scale millers, purchasing paddy through Divisional Secretaries has come to a halt allowing large scale millers to take maximum use of the situation. Selling rice in the future at state guaranteed prices could become a crisis,” he added.

Money allocated for purchasing in Badulla

In the meeting held to purchase paddy in Badulla the District Secretary had expected to allocate 0.5 million Rupees. Jayasinghe said that he was unaware of on what basis the allocation was made. “I talked about this at the meeting. This could be a result of some parties trying to allow large scale millers to purchase paddy directly or indirectly from Badulla at cheaper prices. There were 142,000 metric tons of paddy in 2020 Maha Season in Badulla and the government was satisfied with just 16,000 metric tons of paddy. Warehouses in Badulla district can store up to 7500 metric tons of paddy; valued at 60 million Rupees. However Badulla District Secretary has said that a sum of 0.5 million Rupees sufficed to buy the expected paddy harvest during this Maha season; the yield amounting to 13200 metric tons in the whole of Badulla district. 

Purchasing issues in Polonnaruwa

The Government purchases paddy under two schemes; directly by the Paddy Marketing Board and through Divisional Secretaries who obtain money from District Secretaries. Under the second scheme operated in every district small and medium scale millers buy paddy using the loans they obtain. Paddy thus purchased is turned into rice and the Government receives 60-65% of rice. Selling rice to the Government with the money obtained from Divisional Secretaries has been a successful method carried out in Polonnaruwa and has protected small and medium millers in the district.

Millers who purchase paddy should mill the stocks after entering into an agreement with Divisional Secretaries. However, small and medium scale millers in Polonnaruwa district said that the District Secretary had not released the money required to mill paddy during the previous year. They have faced a serious issue as a result. Chaminda Jayaneth Kumara, a prominent miller, said that he had incurred a loss of 3.6 million Rupees for milling paddy last year and added that many other millers had experienced a severe financial crisis.

According to him milling begins after entering into an agreement which stipulates prices for each variety of rice. “This crisis occurred after a Finance Ministry officer changed the paragraph for payments in the agreement as four Rupees for milling one kilo. When the agreement was issued, the millers had already milled their paddy stocks as per the prices stated there. As Polonnaruwa District Secretary has kept the money they should get for milling, these millers are in difficulty,” he alleged.

These millers obtain loans to mill paddy and with the money they get from selling rice they usually settle loans and gain a profit. They give 60- 65% of rice to the Government. Sometimes several paddy varieties produce less harvest and they fail to give the required amount to the government. In such instances they buy rice from elsewhere to meet the required amount. When one hundred thousand metric tons of paddy are milled, they obtain 56,000 kilos of rice to which they add another 4000- 9000 kilos to meet the requirement of the government.
During such a situation we do not earn any profit, but have to obtain more loans, the millers said. For instance, Chaminda Jayaneth Kumara had to bear a loss of 3.6 million Rupees. According to the agreement a sum of eight Rupees is paid to mill one kilo of Samba rice, but only four Rupees has been paid. Those who fail to give the Government its share of 60 -65%, are not allowed to purchase paddy during the next season and therefore they add extra kilos of rice to meet the required amount. As there is no solution to this issue yet purchasing paddy under the Divisional Secretaries has not been successful this season, they added. When one scheme fails, large scale millers buy paddy at higher prices and rice prices are likely to increase again. According to Chaminda Jayaneth kumara rice prices were expected to reach a maximum in time for the New Year. 

“As money allocated to buy paddy does not reach small and medium scale millers, purchasing paddy through Divisional Secretaries has come to a halt allowing large scale millers to take maximum use of the situation. Selling rice in the future at state guaranteed prices could become a crisis”
- Badulla District Paddy and Rice Producers’ Cooperative Society President B. A. S. Jayasinghe

 “This crisis occurred after a Finance Ministry officer changed the paragraph for payments in the agreement as four Rupees for milling one kilo. When the agreement was issued, the millers had already milled their paddy stocks as per the prices stated there”
- Miller Chaminda Jayaneth Kumara

Change in paddy price

Farmers are not interested in selling their paddy harvest during  Maha Season to the Government as large scale millers buy paddy at higher prices. Even if the Government has several strategies large scale millers cannot be overpowered, the small scale millers complained. Accordingly, its direct and indirect influence will be seen during the New Year days. They said that the price of Nadu may stand at 120 Rupees, Samba at 150 Rupees and Kiri Samba at 180 Rupees a kilo.

Reasons for shortage 

Small and medium scale millers indicated that the reason for a shortage of rice and the increase in the rice price was the unavailability of required rice stocks. Jayasinghe said that large scale millers have rice stocks and are in control of prices these days.

paddy Marketing Board prices

District Secretaries maintain that even though the paddy Marketing Board purchases rice at prices declared by the Government farmers have refrained from selling paddy. Paddy should be dry when sold to the Paddy Marketing Board at guaranteed prices. The Board buys 14% wet Nadu at 50 Rupees a kilo, 14% -22% wet of the same at 44 Rupees a kilo, 14% wet Samba at 52 Rupees a kilo and 14%-22% of the same at 46 Rupees a kilo. Farmers have to bear the paddy transport fees and they themselves have to store the stocks.
Private mill owners purchase paddy directly by visiting fields on the day of harvesting at a price that’s a little higher than the Government price. As farmers receive money on the spot, farmers sell their harvest to private mill owners. Large scale millers have groups who buy paddy at least one Rupee less than they would and in the end they get all the stocks. To halt this procedure, loans were granted to small and medium scale millers through Divisional Secretaries. However the scheme has come to a halt due to several reasons.
Even though the Paddy Marketing Board was ready to bear transport costs, it has not been a success yet. The Board has now decided to implement a process to buy paddy by visiting fields. Prices are declared without a proper plan and when the production cost increases the question arises whether rice could be sold at state guaranteed prices! It takes 1.5 kilos of paddy to produce a kilo of rice. Rice production cost per kilo is between 82.50-84.75 Rupees and includes transport and other expenses; hence can a kilo of Nadu be sold at 95 Rupees per kilo?

“We have not got paddy yet. We increased prices and if farmers can provide paddy we might release paddy,”
- Badulla District Secretary, Damayanthi Parangama

“We purchase rice at 50-52 Rupees per kilo and the prices are different. But the farmers only sell to private traders. No payment has been halted after milling. A similar incident occurred in 2018 and 2019 and now we make payments properly”
-  Polonnaruwa District Secretary,” W. A. Dharmasiri 

Finding solutions

Small and Medium Scale millers met with the Trade Minister, Bandula Gunawardena on March 2, 2020 as it is the Consumer Affairs Ministry that should find a solution to this issue. However the President of Badulla District Paddy and Rice Producers’ Cooperative Society Jayasinghe said that they did not get a better solution. “As there is no proper procedure to control the price of rice or to solve the rice shortage, Bandula Gunawardena is seeking to import rice. If the Government fails to find a solution, the rice price would not be controlled,” he added.

District Secretaries

Badulla District Secretary Damayanthi Parangama said that paddy could be bought if farmers had provided them with their produce. “We have not got paddy yet. We increased prices and if farmers can provide paddy we might release paddy,” she added. 
When inquired about the complaints forwarded by the President of Badulla District Paddy and Rice Producers’ Cooperative Society, she asked us to contact Ayesha who is the Badulla District Director of Agriculture. Our attempts to contact her proved futile. We also informed the District Secretary. 
Polonnaruwa District Secretary W. A. Dharmasiri said that Divisional Secretaries provide small and medium scale millers with money to buy paddy. “We expected to buy 40,000 tons of paddy, but we have only bought 2000 tons so far. Since the paddy price is competitive this time farmers are unwilling to sell their paddy stocks to the Government. Even though the Paddy Marketing Board purchases paddy at 56.50 Rupees a kilo the Board does not receive at least as much as we receive. We purchase rice at 50-52 Rupees per kilo and the prices are different. But the farmers only sell to private traders. No payment has been halted after milling. A similar incident occurred in 2018 and 2019 and now we make payments properly,” Dharmasiri added.

 “We buy rice at 56.50 Rupees a kilo. We initiated a new programme where we visit the houses of farmers to buy rice at 55 Rupees a kilo. “When selling rice at controlled prices we have to bear a loss of 1-2 Rupees. The Government will take steps to protect consumers while bearing such losses in future,” 
- Deputy Chairman of the Paddy Marketing Board Duminda Priyadharshana

Dudley Sirisena and Siripala Gamlath

Dudley Sirisena, a major rice producer, declined to talk on the hot topic. ‘‘I have given many statements to media and the Government on the purchase of paddy, increase of rice price and shortage of rice,’’ he added and hung up.
When inquired about complaints directed against Minister Siripala Gamlath, who is a rice businessman, regarding the increase in the price of rice and its shortage, he refused to talk. Attempts to contact him afterwards failed.

Paddy Marketing Board

Deputy Chairman of the Paddy Marketing Board Duminda Priyadharshana said that the Board has directly purchased 10 million kilos of paddy and has stored them. “The price of rice has recently escalated, but it will not increase further during the New Year days. We expect 65% paddy from this season’s harvest and according to data provided by the Ministry of Agriculture the harvest will amount to 2 million metric tons. 1.7 million kilos of that will be released to the market and will suffice for 6-7 months. 
“There is a huge demand for paddy this season and farmers can sell produce at higher prices. By March we were expected to buy 45% of the harvest from Polonnaruwa, Anuradhapura, Kurunegala and Hambantota districts and store them. The Trade Ministry should take steps to control the price of rice. As we can protect farmers by buying paddy at reasonable prices, the Consumer Affairs Ministry should necessitate selling rice at controlled prices to protect consumers.
“We buy rice at 56.50 Rupees a kilo. We initiated a new programme where we visit the houses of farmers to buy rice at 55 Rupees a kilo. 
When selling rice at controlled prices we have to bear a loss of 1-2 Rupees. The Government will take steps to protect consumers while bearing such losses in future,” he added.

cheque taken back 

Meanwhile it is said that a cheque worth rupees 50 lakhs and issued by the Uva Province Co-Operative for the purchase of paddy in the Uva province had not been utilised. According to Badulla District Paddy and Rice Producers’ Cooperative Society President Jayasinghe this cheque was not released to 12 selected members of the Uva Province to purchase paddy. The funds were to be provided as loans with a payback rate of 4 % (the Co-Operative bearing the rest of the 2.25 % loan interest), but according to Jayasinghe the Uva Province Co-Operative Chairman had held back the cheque for two months. The cheque, which was presented to the Uva Province Co-Operative at a ceremony which was attended by state officials including Trade Minister Bandula Gunawardene, had been taken back by the Co-Operative on April 4. It is said that the cheque was not released to the 12 members because they had not settled previous loans obtained in a similar manner. But sources say that these members still have time to repay previous loans and it’s surprising why they couldn’t benefit from the present loan facility.