Mafia, monopolists and citizens held to ransom - EDITORIAL

Mexico has become infamous for its notorious drug wars, where drug cartels fight to control Mexico’s lucrative drugs trade. The aim to control and hold a monopoly over the trade.   
Here in Lanka, we too have business groups holding monopoly status over various sections of our economy. Fortunately they do not get involved in killing off their rivals.   

However, holding monopoly over sections of the economy especially in the food chain, in the long term has an equally devastating effect on the poorer sections of our community.   
In the late 1970s former President J.R. Jayawardene introduced the market economy to this country. In a market economy the private sector takes decisions regarding the market. It is supposed to ensure prices and services are controlled through competition.   

While Government does not involve itself in the process, government does have a role to play -to ensure that this freedom does not permit the formation of monopolies.   
Government’s job is to ensure a level playing field where all players have equal opportunities, and through competition consumers get an advantage.   

In this aspect, the governments of our country have completely failed.   
A number of important segments of the economy -especially in the food chain are firmly in the hands of monopolistic interests, a good example of this can be clearly identified in two sectors -paddy millers, who today control the price of rice in the country.   

Sadly, there is no competition, a few mill owners have a monopolised rice trade over the entire market. It is a sellers market -the few middle men- decide prices, not market forces.   
This has not been a sudden phenomenon. These mill owners solidified their stranglehold over this commodity over a period of time, with political patronage.   

A similar situation exists in the marketing of eggs. Here the entire egg production industry is concentrated mainly in the Kurunegala district. Again it’s in the hands of a small number of poultry egg sellers/farmers who have a monopoly status over egg distribution and are making unconscionable profits -with a single egg ranging between Rs. 55/- to Rs. 60/- today. It means, that though government introduced the market economy, they have not regulated it. They have not treated all competitors even-handedly, preventing competition; leading to consumers being fleeced by monopolists.   

In the aftermath of the financial crisis, with many people facing wage cuts and still many others having lost their employment, families are finding it difficult to make ends meet. UNICEF studies reveal an estimated 6.2 million people (28 per cent of the population) face moderate to acute food insecurity, while 66,000 people are severely food insecure.   

This segment of our community is unable to provide their families even two nutritious meals a day. As such government has been forced to step in to help bring prices down.   
Government’s solution to break the stranglehold of monopolistic egg and rice sellers, has been to use part of the Indian credit line to import eggs and rice and supply them to consumers at affordable rates.   

A better strategy may have been, to broadbase production units, increase competition and ensure prices are brought down to reasonable/affordable levels.   

However be that as it may, just a few days ago we witnessed a strange phenomenon. A motley crowd of protestors demanding they be supplied with only Lankan products. It brought back memories of the dark days in 1989 when a particular political party demanded -on the pain of death- ‘Bombay Onions’ be not brought into the country.   
Even today we refer to the same commodity as ‘Big Onions’, the commodity is still imported from the same source.   

Similarly over the years other monopolies too were created as for example in the sale of wheat flour where two companies enjoy monopoly status. Today these companies are refusing to comply with the state demands to lower the price of this commodity despite import prices having been lowered.   
It is time government allowed the play of free market forces rather than help kith and kin to siphon off unconscionable profits at the expense of the majority.