Govt. firm on import controls on certain food items

President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa Head of Presidential Task Force in charge of Economic Revival and Poverty Eradication Basil Rajapaksa and other officials during the meeting of the Cabinet Sub-Committee on Cost of Living on Monday

• President stresses such controls required to re-build domestic economy 
• Points out much larger and developed economies such as India and the US have resorted to such methods
• Urges need to develop mechanisms to bypass middlemen to ensure both farmers and consumers get better deal
• Certain food items such as turmeric have seen sharp increase in prices in recent times due to ban

It is unlikely that Sri Lanka would roll back some of the controls in place on the import of food items even though their prices have risen in recent times such as in the case of turmeric as the government appears to remain firm on re-building the rural economy and durable growth.  

At a meeting held early this week with the first Ministerial Sub-Committee on cost of living, President Gotabaya Rajapaksa refused to lift import controls, at least temporarily to bring down the prices of certain food items, which saw spikes in recent times, reasoning that such short-term fixes could scuttle achieving the desired economic objectives in the medium to long-term. 

He pointed out that much larger and developed economies such as India and the United States also have imposed similar controls on imports to resurrect their domestic industries as well as to safeguard their foreign exchange. 
Sri Lanka imposed controls on imports of certain food items during the coronavirus pandemic, including turmeric aimed at uplifting the domestic agricultural sector, the rural economy and achieving food security in the medium term. 

But the measures have pushed the prices of certain items as domestic supply fell short of the demand, affecting the cost of living of the urban population. 

Sri Lanka reported 4.1 percent inflation for August in mostly Colombo district, easing from 4.2 percent in July, but the food prices have staged an increase. 

Prices of coconut, vegetables, big onions, turmeric, eggs and chicken have gone up during August. 

Turmeric prices hovered between Rs.2, 400 to Rs.3, 400 a kilo during August, up sharply from Rs.667 a kilo in the same month in 2019. 

The key spice has virtually become scarce now, making room for some unscrupulous traders to offer substandard products in the name of turmeric. Meanwhile, imports of maize was suspended at the beginning of the year due to a bumper harvest domestically, but the mafia middlemen were said to be hoarding 
stocks to manipulate prices of the key poultry feed. 

Last week the industry raised its concerns and said they were forced to increase prices of eggs and chicken as feed manufacturers are forced to add vitamins externally to the wheat, which they now use as a substitution for maize.

However, the Central Bank expects overall prices in the economy to remain subdued until mid 2022 and maintains its mid-single digit inflation target for the reminder of the year.

Meanwhile, the officials who took part in the meeting have showed that Sri Lanka does not have to import commodities such as cowpea, undu, peanut, ginger, kurakkan and onions as they have yielded higher crops. 

President Rajapaksa had proposed to develop a mechanism to bring agricultural produce such as vegetables and coconut directly to the consumer to prevent the middlemen from exploiting both the farmer and the consumer. 
“The President showed the importance of uplifting the rural economy while safeguarding the urban population from higher cost of living, the two objectives which must be pursued in tandem,” a statement from the Presidential media unit said.

For this purpose the government has considered obtaining the support of Sathosa, Co-operatives, Govijana Seva Centres and security forces to bring the harvest
directly to consumers. 

Further, the Committee has also discussed how to develop a mechanism to make use of the economic centres established around the country to purchase agricultural produce from farmers in an effective manner.