Prices falling, say Govt. officials

By Natasha Gunaratne

After weeks of speculation and confusion on whether the prices of essential goods will be lowered for consumers to purchase them in time for the Sinhala and Hindu New Year, Government officials said prices are already falling.

Trade Ministry Secretary R.M.K. Ratnayake told The Sunday Times that as a result of negotiations with the parties involved, prices have already come down and essential food commodities will be sold at a fixed price until April 30.

Mr. Ratnayake said President Mahinda Rajapaksa, who had some concerns, met some traders’ association representatives on Tuesday to discuss any grievances or objections raised by them.

According to Mr. Ratnayake, the President was assured there were no grievances and that there would be no food shortages.
Mr. Ratnayake said there were about 10 to 15 wholesale merchants in the Pettah who control the market.

“We have a different set of people importing sugar, canned fish and lentils. They met me and the President”, he said.
He said the idea they had that they were getting quotas and duty free concessions was wrong.

What the Government was asking them to do was to at least maintain their prices for two months without making any upward adjustments.

“International commodities have fixed prices which is why the suggestion was made to stabilize prices until the end of April after which matter would be reviewed”, Mr. Ratnayake said.

Asked about the Government plan, a disgruntled Pettah merchant said the imported price of potatoes was Rs. 55 per kilo but the Government was asking him to sell it at Rs. 50 per kilo.

He said the Government was only interested in saving its reputation, not the people of Sri Lanka.

Essential Food Commodities Importers and Traders Association media secretary Hemaka Fernando told The Sunday Times FT his association, which is the only island-wide trade association with a membership of over 200 importers, had assured the President there would be no shortages of food items as there were ample stocks and the prices agreed upon with the Government would be maintained until April 30.

“A negative factor we are facing right now is that the distribution of these commodities to the retail end user - the housewife - is not 100 percent satisfactory,” he said.

“In addition we realize that the quantum of sales compared to the previous year has come down by about 30 percent to 40 percent for all essential food commodities. This is shocking to us”, Mr. Fernando said.

He said that when prices are reduced consumption generally increases.“Now we have reduced prices drastically and consumption has also reduced drastically”, he said.

Mr. Fernando attributes the drop in consumption to the tremendous publicity given to this Government plan by the electronic and print media reaching the most rural areas where consumers were expecting prices at retail boutiques to be close to those in the wholesale market.

However, these consumers find prices at retail shops, other than at Laksathosa, much higher than the prices in the wholesale market.

“Therefore, the end user has started to shy away from the market”, he said.Mr. Fernando said his association had been blamed by the wholesale buyers who patronize its members that the associations’ support for the Government had affected their business.

“The retail market has been enjoying a healthy profit margin with great price fluctuations. Onions in the retail market are Rs.70 per kilo one day, then Rs.55 per kilo the next and Rs.65 per kilo the day after. But now, everyone knows that the wholesale market is keeping a static price,” he said.

“Onions cost Rs.45 per kilo and imported potatoes Rs.50 per kilo even though local potatoes from Nuwara Eliya are selling at Rs.68 per kilo. If this ongoing process was not in place, local potatoes would have shot up in price to Rs.75 per kilo because the Nuwara Eliya farmers also form a cartel to create shortages when a seasonal demand is at hand,” Mr. Fernando said.

He said his association was appealing to the President to revive the cooperative shops which number approximately 9000 island-wide.

“We have appealed to the President to revive the cooperative societies so that they can actively buy from the wholesale market because then they can provide competition to stop the exploitation of the middleman who is keeping a fairly high profit margin between the wholesale and retail prices, “ he said.

Mr. Fernando also said the overheads of a small retail shop was in excess of Rs.25,000 per month which compelled its owner to sell provisions to households on a credit basis.

With the rising cost of living, the retailers also end up paying off the underworld and mafias operating and the consumer ends us paying for this too, he said.

Onions are being sold at Rs.45 per kilo in urban areas but in Tissamaharama, they cost Rs.65 per kilo, Mr. Fernando said.
He said the President had agreed to look into this matter.