Traders millers rule the roost in rice mafia

Prices of rice are seen displayed

• With the CAA announcement of the extraordinary gazette, the price of rice hiked to 130 rupees
• Former Director of the Department of Agriculture Department K. B. Goonarathne underscores the possibility of selling Nadu at 90 rupees a kilo
• If the Government can grant concessions to the millers for milling and transporting rice Nadu could be sold at 90 rupees a kilo
• When the PMB delays buying paddy private traders have the opportunity to buy paddy 
• Now farmers have no paddy at all because they have sold every stock to private traders
• The mill in Pallewatta, Hasalaka, which is the best mill in South Asia, has been left to decay
• Since these traders made their purchases at higher prices they have to sell rice at high prices
• 15000 metric tons of rice has been imported so far

The Government of Sri Lanka (GoSL) issuing a gazette on September 2 announced that a maximum retail price for rice would be imposed to regulate the increasing price of rice. The gazette was issued on the orders of Consumer Affairs Authority (CAA) Chairman Maj. Gen. D. M. Shantha Dissanayake under Section 20(5) of the Consumer Affairs Authority Act No 09 of 2003 imposing a price of 125 rupees for a kilo of Keeri Samba, 103 rupees for red and white Samba, 98 rupees for white and red Nadu and boiled Samba and 95 rupees for white and red raw rice. 

However rice was not available in the market at those prices. The selling price of a kilo of Nadu rice which was made 115 rupees subsequently started to rise as a result. The Cabinet decided to import hundred thousand metric tons of rice on September 28 to regulate the price of rice. However the Government later decided to remove the maximum Retail Price (MRP) for rice issuing gazette no 2247/16. With the CAA announcement of the extraordinary gazette, the price of rice hiked to 130 rupees.

"The price of rice would be controlled in the coming two weeks as the Government is importing rice. Even though the Government withdrew from regulating the price of rice it does not mean that we will allow for any price increase which would be unfair for the consumer -  Lasantha Alagiyawanna State Minister”

Even though the Government said that 15000 metric tons of rice had been imported so far that does not seem to help regulate the price of rice. The price of Nadu has increased up to 140 rupees a kilo. While several parties are accusing the Government of being unable to regulate the price of rice former Director of the Department of Agriculture Department K. B. Goonarathne has pointed out the possibility of selling Nadu at 90 rupees a kilo. “Paddy is cultivated annually in around nine hundred thousand hectares during the Maha season and five hundred thousand hectares in the Yala season with a total of 1.4 million hectares being cultivated. A farmer has to bear a cost of 125,000 rupees to cultivate paddy within a hectare and it can further be reduced by 30,000 rupees when using his labour and handwork. The harvest amounts to 4500 kilos of paddy per hectare. If the harvest is sold keeping with the Government regulated prices an income of 270,000 rupees can be generated. However there are several conditions and steps to that process such as retaining 14% of wetness, transporting paddy to the buying area, storing paddy in bags provided by the Paddy Marketing Board (PMB). Other than that receiving money might be delayed and farmers would have to remain in queues. Therefore farmers are unwilling to give paddy to the PMB,” said Goonarathne who added that even if the farmers supply PMB with paddy what is received limited.
“Large-scale paddy traders commence buying paddy less than at the state guaranteed prices with the commencement of harvesting. When the PMB delays buying paddy- despite the presence of state guaranteed prices- imposing their conditions, private traders have the opportunity to buy paddy at low prices. When the Government begins purchasing paddy the large-scale traders increase the price of paddy. The Government does not purchase all the stocks at high prices, but merely pretends to buy and makes plans to regulate the price of paddy. The Government bought paddy this time at a price ranging between 38-48 rupees. Most farmers had sold paddy during the last season at a price low as 48 rupees. These traders who buy stocks of paddy at low prices tell everyone that paddy was purchased at 60-80 rupees. Millers who buy paddy at a low price do not take the stocks straight to stores and instead store them in farmers’ houses and release them to the market whenever necessary. Now farmers have no paddy at all because they have sold every stock to private traders. However the PMB and the Government claim that farmers are earning a healthy income at present by selling paddy at 60-80 rupees per kilo. Farmers do not earn the stipulated profit. The paddy stocks belong to private traders and large scale millers. “Private traders profit by selling paddy stocks at prices ranging from 60-90 rupees after purchasing the paddy stocks from farmers at a buying price ranging between 38-48 rupees. Since these traders made their purchases at higher prices they have to sell rice at high prices. Hence they profit excessively from both paddy and rice, said Goonarathne. 

"The Government knows well about this mafia and will not take any steps to put an end to that. The Government itself is engaged in a fraud. People were deceived using the media when the state claimed that paddy stores were being raided. The fine for those who sell rice at higher prices was increased to 100,000 rupees. However the law was not enforced - K. B. Goonarathne former Director of the Department of Agriculture Department ”

“The Government knows well about this mafia and will not take any steps to put an end to that. The Government itself is engaged in a fraud. People were deceived using the media when the state claimed that paddy stores were being raided. The fine for those who sell rice at higher prices was increased to 100,000 rupees. However the law was not enforced. In the end the price regulating gazette became a joke,” Goonarathne said.

Selling paddy at 48 rupees was profitable for farmers and they were quite satisfied. They earn an income of 216,000 rupees from a hectare by selling paddy at 48 rupees. A kilo of Nadu paddy produces 65% of rice which amounts to 650 grams of Nadu rice. 64% of raw rice, 63% of Samba, 61% of Keeri Samba can be produced similarly. Around 1.4 kilos of paddy is required to produce a kilo of rice. The machinery expenditure and other expenditures to produce a kilo of rice is considerably less. Goonarathna said that the cost of transporting rice is calculated at 2 rupees per kilo.

The production of rice costs 95 rupees per kilo when paddy is bought at 60 rupees a kilo. But Nadu is sold in the market at 140 rupees a kilo. If the Government can grant concessions to the millers for milling and transporting rice, Nadu can be sold at 90 rupees a kilo. If the guaranteed price for paddy is 50 Rupees, rice can be produced at 80 rupees a kilo and can be issued at 90 rupees a kilo; guaranteeing an extra profit of 10 rupees. If the Government can bear the cost of milling and transporting rice and price of rice can be regulated and the rice mafia could be defeated. Goonarathna said that imposing a guaranteed price on rice as similar to paddy during harvesting can help regulate the price of rice. 

State-owned mills left to decay

“The Government only has to follow a simple procedure to break the rice monopoly. I have informed the officers of the Ministry of Agriculture, but all that was in vain. The rice mafia can be defeated by giving farmers’ associations under the Department of Agrarian Development milling machines at a concessionary price and by allowing them to operate their associations. There should be a procedure to strengthen small-scale mills in the country to halt the rice mafia which is operated by around ten large scale mills. The Government should establish state mills in areas such as Ampara, Batticaloa, Anuradhapura, Kurunegala, Hambantota and Mahaweli. There is no need to have new mills, but instead the state-owned mills left to decay should be taken in for use again. The PMB mill in Ampara can be reused. The mill in Pallewatta, Hasalaka, which is the best mill in South Asia, has been left to decay. Sathosa has a mill which can produce 100,000 kilos of rice per day. None of these mills are operating at present. Milling the paddy stocks purchased by the PMB using them can benefit the Government. The Government has closed down those mills and are using the service of private millers to mill state owned paddy stocks. 

"Even if the Government says that paddy would be bought at 50 rupees that does not happen. Large scale millers increase the price of rice claiming that they had purchased paddy at high prices. If the paddy purchasing price and the price of rice can be regulated rice can be sold at 90 rupees a kilo. The Government is allowing large scale millers to carry out a rice mafia - B. A. Susil Jayatissa Badulla District Cooperative Paddy and Rice Producers Society Ltd President”

The rice control price since 2013 had been 68 rupees and it had remained unchanged for years. But it has changed now. A total of 15,770,285 kilos of rice were imported in 2020 incurring an expense of 1,936,087,679 rupees. The rice requirement for this year was 2.36 million metric tons and the expected rice production was 5 million metric tons. The expected harvest in the Yala season from 500,306 hectares was 20,774,721 metric tons and during the Maha season it was 360,000 metric tons from 800,000 hectares. It is questionable whether the expected targets could be met in the Maha season given the fertilizer crisis.” he added. 

Speaking regarding this issue the Badulla District Cooperative Paddy and Rice Producers Society Ltd President B. A. Susil Jayatissa said that Nadu paddy is sold at 80 rupees a kilo and Samba paddy at 90 rupees a kilo. “Now farmers have no paddy. Even if some have paddy that is just a small amount. Small millers were not given money to purchase paddy after the regulated price was removed. Large scale millers possess paddy now. They buy paddy at 35 rupees during harvesting. Even if the Government says that paddy would be bought at 50 rupees that does not happen. 

Large scale millers increase the price of rice claiming that they had purchased paddy at high prices. If the paddy purchasing price and the price of rice can be regulated rice can be sold at 90 rupees a kilo. Wet paddy was purchased during the previous season in Ampara at 38 rupees and dry paddy at 42 rupees. The Government is allowing large scale millers to carry out a rice mafia. They said rice could be issued at 110 rupees per kilo as the wholesale price and 115 rupees as the retail price after buying paddy at 62.50 rupees a kilo. But the the price of Nadu had gone up to 140 rupees within a month.

“Now traders have paddy which they have bought at 55-60 rupees. They sell Nadu at 80 rupees, Samba at 90 rupees and Keeri Samba at 100 rupees a kilo. Farmers sold their paddy at 38-60 rupees per kilo. Farmers do not earn any profit. Consumers are also exploited. The Government is helping the rice mafia. The traders released rice at a wholesale price of 110 rupees a kilo produced from paddy bought at less than 55 rupees. Those paddy stocks were purchased during the previous season at a low price. But the traders said that paddy was bought at 62.50 rupees. It is true that some stocks were purchased for that price. This season’s paddy has not been milled yet. They are trying to show that all the stocks were brought at higher prices. Small-scale millers cannot sell rice at 110 rupees a kilo after purchasing paddy at 62.50 rupees. 

"The current price of paddy is 70-80 rupees. We bought paddy at 55-56.50 rupees a kilo. We did not increase the price of paddy competitively. When private traders buy paddy at high prices, farmers earn a profit. We should not interfere as a Government when farmers earn a good price for their paddy but we should interfere only when they get a lesser price, - Duminda Priyadarshana PMB Vice-Chairman”

We have no chance in this competition. The programme on buying paddy through District Secretaries was also discouraged. We are not given loans or the loans we have applied for are delayed. By the time we get money to purchase paddy, large-scale farmers would have already bought paddy at a low price. They also increase the price of paddy and as a result we fail to buy paddy. Even if we buy paddy at those prices, we cannot issue rice at low price. If the Government can at least grant concessions covering milling and transport fees we can sell rice at 90 rupees a kilo. Small-scale millers have withdrawn from buying paddy and producing rice. The Government is not offering any concession. Even if a concession is given it is delayed. Most of the small-scale mills have closed down. Some are used to make coconut fiber. In some mills the buildings have been flattened and the lands are sold in lots. This is the present situation.” Jayatissa  added. 
When inquired on this matter Dudley Sirisena, a major rice producer in the country, turned down a request to talk to the media.

PMB Vice-Chairman Duminda Priyadarshana said that 1.6 kilos of paddy is required to produce a kilo of rice. “When paddy is bought at 50 rupees a kilo the cost of rice production is 80 rupees. 9-10 rupees are spent on milling and on other expenses. A mill has to spend 90 rupees to produce a kilo of rice with 2 rupees set aside for transportation. Wholesale traders sell rice at three rupees more than the actual price and the retail traders make a profit of more than two rupees which results in a total profit of around 10 rupees being made. It is unthinkable to sell rice at 90 rupees a kilo after purchasing paddy at 50 rupees. The PMB has never had mills. The one in Ampara is used to store paddy. Our paddy is also milled in private mills. If we milled them, it would cost 8-10 rupees. But Nadu is milled at 4.50-5 rupees a kilo. When small and medium scale millers do not have paddy, we mill the stocks we have and release them to the market; usually in December. Raw rice is milled at 2.50 - 3.00 rupees a kilo and if we were to do that it would cost us 5-6 rupees.

“The current price of paddy is 70-80 rupees. We bought paddy at 55-56.50 rupees a kilo. We did not increase the price of paddy competitively. When private traders buy paddy at high prices, farmers earn a profit. We should not interfere as a Government when farmers earn a good price for their paddy but we should interfere only when they get a lesser price. If the rice price is regulated properly, the paddy price would not have increased like this. Paddy is no longer available at 55-60 rupees in the country. Nadu Paddy is priced above 70 rupees a kilo. That is why the price of rice has increased. 

15000 metric tons of rice has been imported so far. Rice is issued at low prices through Sathosa. The Government has given concessions to millers when they obtain loans and pay tariffs. Yet the price has increased. A price hike is good for farmers, but it affects the consumers. The price of paddy has increased owing to the competition between millers. 35% of the harvest would be obtained during the Yala season and 65% during the Maha season. Farmers did not sell paddy given the fertilizer crisis. There was a price hike for purchased paddy and the price of rice is decided upon relatively. The price of rice has increased at present because paddy is bought at high prices. If concessions are to be given to control prices of rice to whom should they be given? Both farmers and millers are given concessions.

“The CAA imports rice and regulates the price. If a regulated price can be imposed on rice similar to paddy, there will be a solution to this matter,” said Priyadarshana. 
Our attempts to contact the CAA Chairman Major General D. M. Shantha Dissanayake were futile. 
Speaking regarding these issues State Minister of Cooperative Services, Marketing Development and Consumer Protection, Lasantha Alagiyawanna said that the price of rice had increased amidst the presence of a regulated price. “The price of rice was subject to a hike as the price of paddy, which was at 32 rupees, increased to 70 rupees. The price of rice would be controlled in the coming two weeks as the Government is importing rice. Even though the Government withdrew from regulating the price of rice it does not mean that we will allow for any price increase which would be unfair for the consumers.

“Small-scale millers do not have facilities to dry wet paddy. We have made plans to provide them with those facilities. The plans for that are underway. Our plan is to protect the small and medium-scale millers who consist 65% of the total number of millers. Around 400 small and medium-scale millers have faced difficulties in repaying bank loans. They do not get any more bank loans. We cannot interfere in this regard. But we have given concessions to those who have been unable to pay back loans on time by decreasing interest rates. These millers are in difficulty as rice was imported by the previous Government during harvesting. I have interfered in matters regarding unfair price hikes as the Consumer Protection Minister to protect the consumers. It was proved recently that gazettes cannot regulate prices. Several large-scale millers are influencing the price of rice. Therefore we imported rice to control the price of rice. Nadu is sold at 99 rupees a kilo at Sathosa outlets. The price of rice would eventually go down.” the state minister said.

Different types of rice sold at the market