Minister’s relatives behind rise in rice prices - JVP

By Malik Gunatilleke

The JVP has blamed relatives of Government Ministers for manipulating prices of rice and called on the government to take immediate action to stop the soaring prices. JVP MP Vijitha Herath commenting on the rise in price of rice, blamed certain politically backed private millers for increasing rice prices according to their whims and fancies while the JVP’s General Sectary Tilvyn Silva said that brothers of government ministers were running certain mills and this was causing an increase in the price of rice.

“The international oil prices and the world food shortages are not affecting our local rice prices. This is the work of two politically supported traders who have a monopoly over the rice market,” Mr. Herath said. Agrarian Services Minister, Maithripala Sirisena’s brother owns the Nipuna rice mill while a relative of the Deputy Agriculture Minister also owns rice mills.

Manipulations in the market by corrupt private rice mill owners, paddy being used for animal – feed production, flooding in the dry zone and government restrictions on private rice importers have been attributed as the main reason for soaring rice prices. Rice prices shot up to as much as Rs.85-a kg at the beginning of the year as the government struggled to combat a rice shortage in the market. Prices of samba rose to between Rs.70 and Rs.85, while red rice increased to Rs. 65- a kg.

Consumers were faced with not only the daunting prices of Sri Lanka’s staple food, but a fear of food scarcities in the coming weeks. Dr. R.M.K. Ratnayake, Secretary Ministry of Trade and Consumer Affairs told The Sunday Times that a few private millers were responsible for withholding their stocks which created an artificial shortage in the market which in turn created a situation resulting in the price of rice rising.

“A few traders and millers purchased paddy locally for about Rs.18 a kg. They are now selling it at Rs.75 so there is a large profit” he said. He added that Prima Ceylon Ltd (PCL) was also buying locally produced paddy for animal feed instead of importing it as the local product is sold at lower rates than world market prices. This further aggravated the shortage in the local market. He said Minister Gunawardena had taken immediate measures to ban private companies from purchasing local rice for animal consumption in the future.

Officials of the company were not available for comment. With the inclusion of rice to the list of essential goods by the Minister of Trade and Consumer Affairs Bandula Gunawardena, government hopes to punish those who have withheld stocks. It has been emphasised however that government will not be involved in price control.

“The government will not look into price control at the moment because we want to maintain free trade. Intervention in price control could have a detrimental effect on the trade. At the moment we are concentrating on finding the parties involved in withholding stocks and pressurising them to release their stock into the market” he said.

Meanwhile, there were growing concerns among local paddy farmers as government had imported a shipment of 10,000 metric tonnes of rice from India last week, while another shipment of 30,000 metric tonnes was due to arrive in the next few weeks in a bid to make up for the shortfall of nearly 200,000 metric tonnes of rice.

Dr. Ratnayake said government had only imported sufficient stock to control the shortage in the market and that the imports would not harm local farmers in any way as the imported rice would not substitute the local produce.“The government should maintain a buffer stock of at least 100,000 metric tonnes in the future so that situations such as this could be prevented,” he said.

Mr. Herath

The Executive Director of the Consumer Affairs Authority (CAA), Mohideen Bawa said that the CAA had issued a directive to ban all purchasing of locally produced rice fit for human consumption for animal feed. This directive was added to the Consumer Rights Act No.9 of 2003 and was put into effect on Friday. Mr. Bawa said an artificial shortage that was created in the market would soon pass as local production of rice would reach the market in February.

“We are confident that the price of rice will be reduced within the next two or three weeks because the local produce will help to meet the rising demand,” he said. Private importers were shocked that amidst the pandemonium concerning rice shortage government had failed to waive the duty on rice imports even though the President recognised the urgent need to import rice. The Media Secretary of the Essential Food Commodity Importers and Traders Association (EFCITA) Hemaka Fernando, explained that due to the high price of bread the demand for rice had risen to nearly 200,000 metric tonnes a month.

He said that flooding in parts of the Dry Zone severe damage had been caused to stocks of paddy stored in warehouses by mill owners. This too caused prices of locally produced samba to soar. Mr. Fernando attributed the steep increases in local prices to the government’s decision to cease the duty waiver for private importers of rice on January 1, 2008 which affected the small-time importers in the country.

“Rice imports for the month of December fell into the hands of a few importers. The distribution of rice imported by the government was made only through the co-operative stores. There are nearly 5,000 retail stores island wide and these retail traders will have no option but to jack up prices when they do not have the supply adequate to meet the demand,” he said.

EFCITA brought this problem to the notice of the President after which he called a meeting of local rice millers, the Ministers of Agriculture and Trade as well as other top officials on January 17 at which the President accepted the need to import rice to meet the shortfall. However, the decision allowed only government enterprises to import rice with a duty waiver whereas private traders were exempt from this benefit.“Had approval been given to the private sector rice would have flooded the market in quick time,” he said.