News
Small-scale rice venture meets its use-by date
In March last year, an ambitious rice brand called ‘Shakthi’ came into the market through a cooperative society mechanism of small and medium scale (SME) rice millers to ensure quality rice at a reasonable price. The rice venture did not last long.
A week after the new government took office, buffer stocks that were to be released by Paddy Marketing Board (PMB) to the SME rice millers were stopped and the manufacturing of Shakthi rice brand ended. Why it was halted was not explained to the All Island Rice Producers Co-operative Society (Rice Corp) which oversaw manufacturing and distribution from its headquarters in Polonnaruwa.
Another objective of the Shakthi project was to protect consumers from the manipulation of rice prices by the so called ‘rice mafia’, the oligopolies.
Dr. Harsha de Silva, then non-cabinet minister of economic reforms and public distribution, was the architect behind Shakthi rice.
During the eight months of its existence, Shakthi had a positive impact and even forced oligopolies and large-scale mill owners to reduce prices.
“The Shakthi rice was formed to create a win-win situation for paddy farmers, rice millers other relevant stakeholders, while ensuring quality rice in the market where for years, the prices were dictated by oligopolies and other large-scale millers. We wanted to challenge that situation for the common good,” Dr De Silva told the Sunday Times.
When over 2,000 SME millers went out of business in recent years due to the collapse of the co-operative system, the previous government allocated Rs 1 billion from the Treasury to provide interest-free working capital loans for SME mill owners to purchase paddy directly from farmers and revive the co-operative society. And SME millers would have to sell the milled rice back to the co-operative at fixed prices.
Under the guaranteed paddy purchasing price system, white nadu and white samba were purchased at Rs 38 and Rs 41 respectively. Following the rice formula of 2:1, the maximum selling prices were fixed as Rs 80 and Rs 85 considering transport and other expenses.
As the Shakthi rice brand came to the market in March, the retail rice prices at the time were at the exorbitant range between Rs 114 and Rs 120 as prices were dictated by large-scale mill owners and oligopolies. With the Shakthi rice making a subtle impact on the market by May, others were forced to reduce prices to between Rs 90 and Rs 95.
“The oligopolies and large-scale millers manipulated prices by artificially creating a shortage. Some senior government officials were also involved in this corrupt process. Soon after the new government took office, these big players got together and ensured the closure of the Shakthi rice brand,” Dr De Silva said, while noting that he had faced difficulties. Once, he has had to intervene to make sure PMB issued buffer paddy stocks as agreed earlier.
W.D.K. Mudith Perera, chairman of All Island Rice Producers Co-operative Society, told the Sunday Times that the sudden end to Shakthi put some 300 hundred SME millers of the co-operative society at risk, along with 40 officials, including graduates who had been employed. The staff do not have certainty over their jobs and salaries over a month.
“This is clearly an act of political revenge of getting rid of projects that were initiated by the previous government. This project was well received by consumers where we were manufacturing 300,000 to 500,000 kilos of rice per day,” chairman Perera said while noting that there was a misinformation campaign against Shakthi by the ‘rice mafia’, corrupt politicians, and even government officials.
A week before the past Christmas season, the final stocks of Shakthi came on to the market. Packed in five and 10 kilo bags, the rice was available at Sathosa outlets and in leading supermarkets. An online retail store also sold at the guaranteed price.
The bagged Shakthi rice was also accredited with Sri Lanka Standards (SLS) Grade One quality along with a Quick Response (QR) code from which a buyer could find out the source.
As co-operative societies are known for effective coordination at the grassroots level coupled with their extensive reach and efficiency, the Rice Producers Cooperative Society in Puttalam, also used allocated funds targeting maximum output to serve the needs of the middle class and low-income families.
The All Island Rice Producers Co-operative Society formed an island-wide network of more than 300 SME millers across the eight paddy producing districts to ensure quality samba and nadu are sold at guaranteed prices, while protecting the interests of paddy farmers.
K.A.D. Abeyakeerthi, a SME rice miller and president of Rice Producers Cooperative Society in Puttalam, said his rice mill is largely idling.
“It has become a norm to stop all progressive projects initiated by the previous government once the new government came into power without considering the facts and grassroots reality. Ultimately, it’s the consumers, farmers, and millers like us who suffer most,” Mr Abayakeerthi said, while emphasising that the new government should reconsider the decision.
Dudley Sirisena, chairman of Araliya Group of Companies, which consist of large rice mills, refused to comment on the so-called ‘rice mafia’, and its alleged role in the closure of Shakthi rice brand. “I’m just a businessman. I don’t want to comment on this, let me do my job,” he said.