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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Thursday, December 27, 2007

The Infrastructure for Development in an Agrarian Economy: The Sri Lankan Model that helps both producer and consumer

The Island: 27/12/2007" by Dr Garvin Karunaratne

The Cost of Living in Sri Lanka is soaring and the government is trying its level best to control the situation. The top priority given to this task is evident from the high powered committees appointed under the leadership of the President and the Prime Minister.

In the 1950s and 1960s, Sri Lanka established the infrastructure that could help farmers and small industrial entrepreneurs move from subsistence to commercial production. Those facilities comprised the Department for Development of Agricultural Marketing, the Paddy Marketing Board, the Cooperative Wholesale Establishment and the Small Industries Department. True, they ran at a loss but they made possible the achievement of self-sufficiency, reducing imports to a bare minimum, generating employment, providing consumer goods at reasonable prices to urban populations and also saving hard earned foreign exchange.

The most prominent IMF dictate in its Structural Adjustment Programme was that all the loss incurring public ventures should be abolished or privatized. Governments were stupid enough to do as the IMF said. No one argued with the IMF to point out that our development infrastructure helped both the consumer and the producer, helped the achievement of self sufficiency, avoided imports, etc. In the case of India and Bangladesh the Governments argued with the IMF and did not dismantle their developmental infrastructure. India and Bangladesh have stood to gain from their policy.

It is no wonder that in Sri Lanka the cost of living is soaring today and all attempts so far have failed to control it. Producers stopped producing for the market as they could not find fair prices for their produce. From 1996 to 1998, I worked on my small farm at Kadawata but could not sell the bananas I produced. The prices offered by the shops and restaurants were so low that I stopped cultivation. This is what happened to all producers. They stopped producing we had to depend on imports. Now we import oranges from India, apples from Australia and the US and this list is endless. Instead of finding employment for our farmers and wealth for our people we create employment for fruit and vegetable growers in many foreign countries.

Is there any concerted effort to produce oranges in our orange belt at Bibile , Moneragala and Wellassa? I know of this orange belt, because I have been there and when I was in charge of the Triploi Market, I handled lorry loads of oranges daily. We are now trying to plant sugar cane there! Sri Lanka got caught in the import-and-sell dictate of the IMF. The World Bank and the IMF would willingly allow loans to be used for imports. As Prof. Joseph Stiglitz has said the IMF does not care about our national interest. Its interest is to bolster the economies of the developed countries that control the IMF.

The aim of this paper is to detail the developmental infrastructure that Sri Lanka once had. I speak from sheer experience as my first appointment was as an Assistant Commissioner in the Department for Development of Agricultural Marketing. I covered the Vegetable, Fruit and Egg Marketing Scheme for five years and the Guaranteed Paddy Purchasing Scheme for over a decade. Later, I covered the Small Industries schemes for a total of five years, of which one year was spent as Deputy Director of Small Industries, in charge of private sector small industries.

The Department for the Development of Agricultural Marketing was established during the Second World War, when there was a severe shortage of essential food in the conurbation.

The Centre of the Vegetable , Fruit and Egg Purchasing Scheme was at the Tripoli Market, at the Maradana Goodshed. The staff comprised two Assistant Commissioners (I was one of them in 1957) and a number of Marketing Officers. Our task was to have close surveillance over the availability of vegetables and fruits in the Colombo market, study the quantities available, identify the items in short supply, fix prices at which the vegetables were to be purchased at the purchasing units of the Department established in all producing areas. In case of certain items in short supply like cabbage, carrots, red pumpkin, pineapple, oranges, eggs, floor prices were fixed, at which the Department would buy everything offered by producers. The aim was to avoid imports and to keep the urban populations served with goods at cheap rates. In addition, the Department also sent mobile purchasing units to the major fairs in the island like Embilipitiya, Welimada, where producers brought their crop for sale. The goods purchased were packed and despatched overnight by rail and lorry to the Tripoli Market. At Tripoli Market the goods were accepted, graded and despatched immediately to the Shops in the towns and also supplied to the hospitals. The sale prices were fixed at a level below the current sale prices in the shops. The prices were determined in such a way that neither losses nor huge profits were made.

The picture of the Marketing Department would be incomplete without reference to the Assistant Commissioner’s Conference held on about the tenth day of every month. Every Vegetable and Fruit Purchasing Depot as well as every Fair Price Shop had to compile a Profit and Loss for the earlier month and the Assistant Commissioner was pulled up if he had either incurred a loss of over 10% or secured a profit of over 10%. We were criticised for fixing too high a price for purchasing at the Fairs causing a loss or in fixing too high a price for selling to consumers causing a profit. It was a balancing act. This was a Scheme of Commissioner Basset. His place was taken over by Mr B. L. W. Fernando, a Chartered Accountant of few words but firm and smart in action. We shuddered in trepidation as his eyes scanned the Profit and Loss Accounts we submitted. It took a bare second for him to spot errors. He would warn us sternly but it was all forgotten, when he hosted us to dinner at his home at the end of the Conference. We had to be on our toes every minute and he effectively controlled all activities.

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