Agriculture

Maize ‘mafia’ squeezes Sri Lanka poultry farmers with import bans, duties

Monday January 13, 2020 2:27 pm

ECONOMYNEXT- A ‘mafia’ or oligarchy of maize collectors who have been pushing the government to restrict trade in the grain have been making profits squeezing poultry farmers with high prices, a poultry farmer group has complained.

Sri Lanka slapped an import ban on maize and groundnuts (peanuts) ahead of better harvests expected in the upcoming Maha season.

Trade in maize is controlled to give higher profits to farmers, but small poultry farmers who are the main consumers of maize, are forced to pay high prices after an oligopoly of collectors buy the grain from the farmers.

Rent-Seeking

“These individuals have been at this for years, manipulating local maize farmers to sell a kilo of maize for 40 rupees,” Ajith Gunasekara, President of All Island Poultry Association of Sri Lanka said.

“They hoard all the harvest of Maha season and create an artificial shortage in the market. Afterwards they release the stock to the market bit by bit.

Even if local prices are pushed up by 1 rupee, collectors controlling 250,000 metric tonnes of supplies could make 250 million rupees in ‘rents’ or extra profits above the free market.

If prices are pushed up by 6 rupees, a rent of 1.5 billion could be made and also distributed to buy influence, an industry insider pointed out. A gap of 10 rupees above the market price would yield the maize oligarchy 2.5 billion rupees of profits.

“Sometimes you find a kilo of maize for a ridiculously high price like 85 rupees a kilo,” Gunesekera said.

“And these profits do not go to the farmers.”

Seventy percent of the costs for poultry farmers is made up of poultry feed, for which the main ingredient is maize.

“Local production is only 250,000 metric tonnes and it could only last four to five months whereas our annual requirement is 600,000 metric tonnes,” Gunesekera said.

Small and medium scale poultry farmers who produce their own feed are the ones that get into biggest trouble.

Permit Raj

Sri Lanka has a complex system for import permits, based on projected harvests, and there is no established export market for maize due to problems in quality and high cost of production due to low yields.

Like trade restrictions, permits are also a wellspring of bureaucratic and political corruption in most countries that that use them.

Critics have said that Sri Lanka’s public service became increasingly corrupt during the 1970s when trade restrictions and permits for many activities.

Chakravarti Rajagopalachari, an Indian politician who is credited with coining the term ‘License-Permit-Raj’, for policies that set the country back after independence, set up his own party to fight the corruption from permits and the creation of private rent-seeking oligopolies that came from controls.

Permits and lobbying bureaucrats and politicians to free the import requirements takes by valuable time that could be used for productive purposes.

Sri Lanka’s current administration broke a well-established oligopoly in wheat flour maintained by differential taxes on flour and grain, which gave rents to millers and also big traders in domestic rice, which is a close substitute.

But cutting the excessively high wheat flour tax, which discouraged imports of milled flour, large profits were given to the millers.

The tax was suspended as cereal prices shot up over the past two months. It is not clear when the oligopoly would be restored.

Value Chain

As a result of high prices of maize, Sri Lanka has lost the opportunity to produce chicken meat at global prices and export them and also lost a chance to export processed food at competitive prices, analysts say.

In global trade a ‘finished product’ of one sector is the ‘input’ raw material for another.

Sri Lanka has been unable to diversify its export basket partly due to import duties on practically every item, which makes producers uncompetitive, analysts say.

Sri Lanka big dairy farms are also hit by the maize restrictions. Feed grain given to cattle are not the same as the ones grown in Sri Lanka, but still they cannot import it freely, under the permit.

Many of Sri Lanka’s exported agricultural products date back to before independence, when they became competitive in a free trading environment and industrial exports are mostly from companies that have special permission to import raw materials duty free.

The so-called maize ‘mafia’ was born out of a group of collectors who supplied Ceylon Grain Elevators, the country’s largest feed mill, industry insiders who have knowledge of the matter say.

They then pushed for import restrictions and permits to get sell collected grain at higher prices.

Sri Lanka’s Department of Agriculture has said that a new cultivar for maize had been introduced, which would boost yields.

Sri Lanka’s rupee had also fallen also pushing up the rupee domestic price of most commodities including vegetables.

Meanwhile Gunesekera said Sri Lanka’s government should try to regulate maize prices to stop the mafia from pushing up prices.

However in the past the price control authority did not control maize prices, but the retail prices of chicken, as chicken farmers lacked the political clout and maize is not a directly consumed by the people. (Colombo/Jan13/2020)

FILED UNDER: Ajith Gunasekara,All Island Poultry Association of Sri Lanka,Sri Lanka,Sri Lanka maize,Sri Lanka poultry

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Weather and Climate

Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Sri Lanka Navy assisting in rescue operations (Pic courtesy SL Navy)

Monday June 3, 2024 2:17 pm

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

Politics

UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

Monday June 3, 2024 1:59 pm

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

Accidents

300 of 100,000 trees in Colombo considered high risk: state minister

Monday June 3, 2024 1:05 pm

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)