Despite rhetoric about raids on hoarders to bring down the price of rice, consumers continue to pay more while big-time millers are being accused of manipulating the market and creating a shortage. Last week, Deputy Internal Trade Minister Hemal Gunasekera told the Sunday Times that the ministry and the Consumer Affairs Authority would carry out [...]


Rage over rice

Prices soar as big time millers are accused of manipulating the market

Despite rhetoric about raids on hoarders to bring down the price of rice, consumers continue to pay more while big-time millers are being accused of manipulating the market and creating a shortage.

Last week, Deputy Internal Trade Minister Hemal Gunasekera told the Sunday Times that the ministry and the Consumer Affairs Authority would carry out raids on mills and shops to ensure a steady flow of rice to the market and maintain the gazetted price.

A Sunday Times investigation reveals that almost all varieties of rice are being sold at least Rs. 15 above the stipulated ceiling price while the CAA has stopped taking legal action against traders who violate the regulations.

No price tags seen at this whole sale outlet in Pettah. Pix by M.D. Nissanka

Asked why no raids had been conducted on errant traders, CAA Director General J. M. A. Douglas said the problem lay elsewhere — not with the traders.

“We raided some retail shops two weeks ago and took about 400 traders to courts. But we realised it is not their fault. So we have stopped the raids for the time being,” he said.

According to him, the prices have shot up because of a shortage created by big-time paddy millers who have not released the rice to the market though they had bought the harvest from paddy farmers.

Asked why no action was being taken against such millers, the CAA chief said the Authority had no mechanism to bring any paddy hoarders to book, but steps were being taken to address this shortcoming.

Wholesale rice traders at Old Moor Street in Colombo complained they were not getting enough stocks from millers while retail traders said their businesses had been hit as many of the customers could not afford the soaring prices.

“Millers who sent us 100 to 200 bags now send only about 15 to 20 bags and that is also at prices higher than the retail ceiling price. So we can’t afford to sell rice at the ceiling price,” G. B. Jeganathan, an Old Moor Street trader explained.

Another irate trader, S. Jeganathan, asked why the CAA was not taking action against the unscrupulous millers.

“Big-time millers are holding stocks and not releasing them to the market. But no authorities seem to care. But when we are compelled to sell rice at higher prices due to market conditions, they come after us,” he charged.

In many Colombo shops, the cheapest variety of rice, Red Raw rice, is sold at Rs. 80-85 a kilogram or Rs. 12-17 higher than the ceiling price for the variety. The Sunday Times team found out that some varieties of rice were of poor quality. In one shop, the Red Raw rice even had lumps of rice with fungi growing. It was being sold at Rs. 83 a kilo. Some shops had no prices displayed
In supermarkets, only five kilos of locally produced rice are sold to a consumer.

As prices skyrocket, many low-income people said they bought rice in small quantities while cutting down on other expenses to make ends meet.
“The ceiling prices are not observed. Sri Lankan varieties are very expensive. They sell around Rs. 90 a kilo or more. We can buy imported Basmati for that price,” said J. Vipula, who buys his rice from Pettah market.

He too blamed the CAA for not taking action to maintain price stability.

But CAA Director General Douglas said action was under way. He said he had written to the District Secretaries of Anuradhapura, Polonnaruwa and Ampara and district CAA officers, urging them to inspect paddy stocks of millers.

Last week, the CAA announced that all rice paddy buyers, millers and importers should furnish details of their stocks as at September 10 before September 15. The CAA warned that failure to do so would result in the government confiscating their stocks.
While this exercise is aimed at cracking down on hoarding, the CAA will make use of the information to prepare a data base on the market, the Sunday Times learns. At present, the Authority has no statistics as to how many paddy millers are in operation in the country.
“Millers are inquiring about how to submit the details we have asked for. We will have to wait till the deadline and then conduct inspections,” Mr. Douglas said.

But small and medium mill owners charged that the CAA would only go after small mill owners and would not even touch big-time millers.
“Even the raids on retail shops are carried out selectively. The CAA raids only the shops that sell the products of small mill owners,” said G. D. S. Somachandra, the president of an association representing small and medium mill owners.

He said he raised this issue at a meeting with internal trade minister Johnston Fernando, but the minister could not provide a plausible explanation. “The minister said the bigtime mill owners’ produce was value added, but we argued that it was not, as there was hardly any difference between our product and their product. Even some officials at the meeting agreed with us,” Mr. Somachandra said.

Trade Ministry struggles
to contain volatile
rice prices

The Ministry of Internal Trade is struggling to control the retail price of rice despite control measures in place due to inflated paddy prices, Minister Johnston Fernando said.

Admitted that there is already a shortage of locally produced rice varieties in the market due to stocking by local millers he claimed that the authorities are unable to push the retail and wholesale traders to sell rice at the declared ceiling prices.
“We fear that if we do that then they would stop releasing stocks to the market. There may be severe shortages in the market. Paddy price have been jacked up, one kilo of paddy was sold close to Rs.45 this season, so the production cost has increased. So millers are unable to sell at the ceiling price,” Mr. Fenando said.

According to the minister 175,000 tonnes of imported rice is lying in the port authority without being cleared by the importers who are waiting for a tax concession. However Mr. Fernando said that the price would be controlled within the next ten days.
He also claimed that the world price of rice per tonne has gone up from $350 to about $550 which has further impacted the local rice prices while availability of rice stocks suitable for the Sri Lankan market is limited.
“Indian harvesting season is over, and newly harvested paddy from Pakistan is not suitable for our market. So we have very limited options available for importing also”, he said.

Small and medium scale millers who have been severely affected by the shooting paddy prices are yet to receive any remedy. The ministry is still evaluating if they are able to give a power subsidy to close to 5000 small and medium scale millers, Mr. Fernando said.

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