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Rice Price Crisis Due to “Mill Owner Mafia”Buying Paddy At Rs 23 Per Kilo and Selling at Rs 95 Per Kg as “Super Rice” After Processing

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By Methmalie Dissanayake

In addition to being gripped by unfavourable weather conditions, Sri Lanka is now facing a rice shortage, at least according to the authorities. The Department of Agriculture said only 250, 000 hectares were cultivated during the last Maha Season, when 800, 000 hectares are cultivated annually.

Considering this situation, the government has decided to import 10,000 metric tons of rice from South Asian countries, mainly India, in mid-January. However, the decision was severely criticized by several parties.

The National Organizer of All Ceylon Peasants Union (ACPU) Namal Karunaratne says there is no rice shortage in the country at the moment. Polonnaruwa-based Araliya Rice Mill owner, All Island Mill Owners’ Association (AIMOA) president Dudley Sirisena also stated during a press conference that remaining paddy stocks will be sufficient until April.

However, the government denies these claims saying that there is a ‘mafia’ operating behind the triggered rice crisis. Mill owners should take the responsibility for the situation, authorities continue to claim.

‘Rice drama’

The general public is confused by various claims by different stake holders in the “rice drama.” Ceylon Today spoke to them in order to get a clear view on the matter.

The ACPU National Organizer Namal Karunaratne criticized both the government and mill owners for this debacle. The government must take the full responsibility for the rise crisis, he said. It was the mismanagement of the government which led the country into this situation, Karunaratne claimed.

He added that the problem is not a shortage of rice, but the high market prices.
“There is no such rice shortage in the country despite the claims by the government. Anybody can buy any amount of rice today. There is enough rice in stalls everywhere. Therefore, we can say there is no rice shortage at the moment. The real problem is with the price of rice varieties which is drastically increasing,” Karunaratne pointed out.

Local rice varieties

In late December 2016, the price of 1 kilogram of Nadu rice was increased from Rs 90 to Rs 95. The price of Samba rice remains Rs 95 per kilo as well. It is also said that the prices of all the other local rice varieties had gone up by 11-14 per cent within a short period.

Explaining further Karunaratne stated that dealers buy paddy from farmers for Rs 43.65 per kilogram. It goes from the farmer through different intermediaries and end up at around Rs 55 per kilogram.
When the government releases paddy stocks from stores, dealers who are hired by several large mill owners buy them at Rs 43.65 a kilo and re-sell at Rs 49 a kilo at the same place. As a result, the price of a rice kilogram increases day by day, he added.

“As a result of this procedure, the benefits go to large mills like Araliya, Nipuna, and Hiru. At the moment farmers and small scale mills do not have paddy stocks with them. As stocks belong to the government are also going to the larger mills, the large mill owners can raise the prices according to their wishes.

That is why we say that they manipulate rice prices. There is a mafia going on behind the entire operation.”

‘Super rice’

“Large mill owners have about 1.5 million kilograms of rice. They have bought those stocks at a lower price like Rs 23 per kilogram. After processing, the cost of a rice kilogram should be Rs31 maximum. But these businessmen sell a kilogram now at a higher price like Rs95 under the label of ‘super rice’. There is no need to say this is totally unfair to farmers, small scale mills and consumers as well.”

Karunaratne also spoke about the price control established by the Consumer Affairs Authority (CAA). He stressed that the price control law is not applicable for ‘super rice.’ Considering the current status of the economy, the CAA can implement a price control to Rs 77 (Samba) per kilogram. But consumers are forced to buy rice for a higher price even when the authorities have the ability of controlling it, he said.

“To find a permanent solution to this crisis, the ACPU, with the collaboration of small scale mills, handed over a proposal to the government. But it is very sad to say that nobody paid any attention to it. They did not even give us an interview.”

“When the Janatha Vimukthi Peramuna (JVP) Leader Anura Kumara Dissanayake raised a question on the matter, Minister P. Harrison assured that the government’s paddy stocks will be given to small and medium scale mill owneRs But the government has failed to do so.”

“We told the authorities very clearly that rice prices can be reduced. The government has 200,000 metric tons of paddy stocks. They should give the stocks to small and medium scale mills, not to large mills. So, small and medium mills can be provided with the processing cost for a rice kilogram. The government now has paddy stocks bought for Rs 38. A rice kilogram can be manufactured for a cost of Rs 63. Adding a profit margin accordingly, a rice kilogram can be sold for Rs 70. We can prove it logically.”

Rice price equation

“If the government cannot take that step, they can use the ‘rice price equation’ to solve the problem. The equation is very simple. You should multiple a price of a paddy kilogram by 1.6% and then add 8%. That is the processing cost of a rice kilogram. In other words, it is the wholesale price of a rice kilogram. Then a fair amount of profit margin can be added to it. After considering everything a price of a rice kilo comes as Rs73 maximum, according to this equation.”

Namal Karunaratne lashed out at Minister P. Harrison and other top level ministers saying that everyone of them is receiving commissions from large mill owneRs Therefore, the government does not want to solve the problem in favour of farmers and consumeRs The whole scenario is a result of manipulating the rice market by a very few large mill owners, he asserted.

He slammed the government’s decision to import rice from India and other South Asian countries. “It will take one or two months for the imported rice stocks to arrive in Sri Lanka. When the rice stocks arrive harvesting season will begin. It is true that paddy cultivation decreased this time. But there is a considerable harvest to be gained from cultivated lands. In the Ampara District, over 90 per cent of the 800, 000 acres of paddy lands have been cultivated during the Maha season.”

Imported stocks

“By the time the imported stocks reach the country, newly harvested local stocks will also be available. After that, large scale mill owners can buy them from farmers for a minimum price. Then they will manipulate the market in a similar way and increase the price of rice. That is why we say a rice mafia is going on in the country.”

On 29 December 2016, the Deputy Minister of Power and Renewable Energy, Ajith P. Perera slammed those who are responsible for skyrocketing the price of rice. His criticism targeted Dudley Sirisena, the owner of Araliya Rice and a brother of President Maithripala Sirisena.

The minister said larger scale mill owners should take the responsibility for the crisis. However, they make public statements and deceive the people, he said.

Fisheries Minister Mahinda Amaraweera, during a public event, also stressed that the government had received information that large scale rice mill owners have hidden paddy stocks with the intention of manipulating the prices. However, the government is not afraid of them and the government will take every measure to protect consumers, the minister said. He added that the government decided to import rice to control the prices.

“The government will teach the larger scale mill owners a lesson they will not forget,” Amaraweera stressed.


Rural Economic Affairs Minister P. Harrison vehemently rejected the allegations made by Namal Karunaratne that he received commissions from large scale mill owneRs

“I will resign from my post within 24 hours if Karunaratne proves that it is I who manipulate the prices of rice,” he said.

Furthermore, he elaborated that imported rice stocks will arrive within two weeks on the tenders selected by Lanka Sathosa. The President and the Cabinet will impose a price control on imported rice, he added.

“Several mill owners failed to supply rice to Sathosa. That is why the government decided to import rice. We issued paddy stocks to nearly 138 rice mills, but only received rice back from 28 mill owners Other mill owners had sold their stocks to the private sector. We took steps to blacklist them and filed cases against them.”

Moreover, rice mill owners were behind the rice mafia in the country and are attempting to gain a huge profit through the rice market, the minister said.

Pointing fingers again at Dudley Sirisena, Harrison stressed that the largest stock of 17, 000 metric tons of paddy was released to Araliya Rice Mills. But it is because Sirisena placed a higher bid, not because that he was a brother of the President, he elaborated.

Incorrect method

Dudley Sirisena also refuted the allegations levelled against him. It is not him, but the incorrect method that is being followed in order to earn profit privately that has caused the crisis situation, he said. The person responsible for the situation is the minister in charge of the subject, Sirisena hit back.

“Minister P. Harrison is not releasing the stocks of paddy which are in the possession of the government, in a proper manner. The President and the Prime Minister decided to distribute stocks of paddy to the open market. However, Minister Harrison did not release the stocks of paddy, following a proper tender procedure.”

“Nadu was not issued to us. I was not given even one seed of Nadu paddy. Rice Mill owners have in their possession stocks of Keeri Samba and Samba sufficient up to April. The Paddy Marketing Board purchases a kilo of paddy at Rs 43.65. That is sold to rice mill owners at Rs 50. Then, apart from the other costs of producing a kilo of paddy, a sum of Rs 80 has been spent on paddy only.”

The owner of ‘Araliya Rice’ mills refused to answer the allegation of former MP Namal Karunaratne that rice mill owners give commission to top level ministers including Minister P. Harrison.

The politicians, he said, always try to gain political benefits from any given situation. They do nothing rather than pointing fingers at each other when a problem arose. As leaders they should be able to take steps to solve the problem. Blaming me is not the solution, he added.

Courtesy:Ceylon Today

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