By Garvin Karunaratne

The Common Candidate declaring that he could bring the Cost of Living down requires a last laugh because he does not know that it was the United National Party his main supporter that abolished and closed down the infrastructure that our country had to control the cost of living.  President Jayawardena abolished the main part and Premier  Ranil Wickremasinghe abolished what was left of the great infrastructure  that Sri lankan political leaders and administrators had carefully built up since independence. I was myself a party to build up that infrastructure in my service in the Administrative Service.

This infrastructure comprised:

            The Marketing Department for controlling the prices of local produce- vegetables, fruits, eggs etc..

            The Guaranteed Price Scheme for controlling paddy and rice milling. This was implemented by the Marketing Department and later by the Agrarian Services Department,

            The CWE(Cooperative  Wholesale Establishment) for controlling the prices of imported produce that was considered essential.

            Price Controls

            Weights and Measures Control.

 All these programmes were implemented on the basis that the Government had the right to intervene in all commercial activities in the interests of citizens. 

This infrastructure  was intact till 1977 when at the behest of the World Bank and the IMF(International Monetary Fund) this entire infrastructure was abolished or  under funded because the tenets of the Open Economy was for the Public Sector to give up all commercial activities. That was left to the Private Sector. 

In 1977 when President Jayawardena came into power he embraced the Open Economy as advised by the IMF which meant that the Private Sector was the engine of growth. He dismantled the Marketing Department and the Guaranteed Price Scheme for paddy and other cereals including Rice Milling and the major part of the CWE was also abolished. What was left of the CWE was abolished during the Prime Ministership of Ranil Wickremasinghe in 2002 and 2003.

 Thus to expect the Cost of Living to be controlled or brought down by anyone who is working with the United National Party is a non runner. It cannot and will never happen.

Let us go into the working of this infrastructure because it appears that the leaders who are supporting the Common Candidate and the Common Candidate himself appear to be ignorant of the methods of controlling the cost of living. 

The writer worked as an Assistant Commissioner in the Marketing Department from 1955 and in the Agrarian Services Department from its inception in 1958 to 1967. Later he was in charge of these Departments and in charge of Price and Weights and Measures Control as the Government Agent of a District.

 The Marketing Department.

The Department for Development of Agricultural Marketing of the Fifties and Sixties under the able leadership of Commissioners Basset and later B.L.W.Fernando ensured that prices of all essential local produce was indirectly controlled and the traders were compelled to offer fair prices to the producers and the retail shop keepers were compelled to sell at fair prices to consumers. As the Assistant Commissioner of a Province I visited all major producer fairs, purchased produce at some and dispatched the produce to the Tripoli Market in Colombo for sales overnight.” (Karunaratne: How the IMF Ruined Sri lanka…, Godages) During my years in the Marketing Department at least on three days in the week my day started at four in the morning  to visit producer fairs that opened at six. Then we did not have the infrastructure of roads built by our President Rajapaksa and we laboured on narrow roads for hours on end.

In detail,

This Department had Assistant Commissioners in all the major districts where local produce was grown. It had a staff of Marketing Officers and Managers of Vegetable and Fruit Purchasing Centers and also had Sales Depots in the main conurbations. In Colombo there were over fifty retail outlets.

The method was to buy vegetables and fruits from producers, paying the producers a higher price than what was offered by the traders at the village fairs where producers brought their goods for sale. Very often at producer fairs the purchasing traders get into a ring and offer low prices. At the close of day the producers are compelled to sell to the traders at whatever price because otherwise they will have to incur transport costs and moreover the vegetable produce will waste away and become unsaleable.  The goods  purchased by the MD  was dispatched to Colombo and other cities overnight. The entire scheme was controlled by the Tripoli Market in Colombo. There was a Marketing Officer at the Wholesale Market in Pettah, Colombo who reported the availability and the prices to the Assistant Commissioner in charge of the Tripoli Market.  The Marketing Officers and the Assistant Commissioners in the  Districts  reported the availability of produce and the prices at which the traders purchased the goods. The Assistant Commissioner at Tripoli Market  analysed the prices in Colombo and in the producer areas and fixed a purchase price which was higher than the rate at which traders bought from producers.  A very small margin of around 10 to 15% was kept for wastage and transport costs and a retail price was fixed for sales in the sales depots in Colombo and other cities.  This retail sale price  was lower than the sale rate at the wholesale market in Colombo. The aim was to make available vegetables and fruits at cheap rates to the dwellers in the cities. The traders at both the producer areas as well as the traders at the wholesale markets in Colombo had to adjust their rates according to the rates fixed by us if they were to be in business. In other words the traders who purchased at the producer fairs had to adjust their prices upwards as otherwise no one will sell to them because the Marketing Department Depot was open and buying. In the cities the wholesaler had to sell at a lower rate because the MD retail units were selling at a low rate. While the margin we kept was in the region of ten to fifteen percent generally the trader at the purchasing unit kept a fifty percent mark up and the wholesaler in Colombo also kept a fifty percent mark up.

I was in charge of the Tripoli Market in 1956 and I not only fixed the prices to purchase produce in the producer areas  but was held responsible to ensure that all the City Stalls were full of stocks. I can yet remember the names of stalwart  officers- RFC Livera,  Kulasingham, Adhikari, who could be trusted and  who ran round in circles to ensure that all City Stalls had stocks.  

The MD actually purchased around ten percent of the crop but we were able to manipulate the prices that the Private Sector purchased and sold because we did not keep any margin as profit. The small margin we kept was to cover transport and wastage. We really did control prices. For instance  The Marketing Department  at Ambalantota purchased curd from Ridiyagama at around twelve in the morning. This was immediately dispatched to Matara by van. This was brought to Triploi Market  by overnight train  the next morning and offered for sale both at Triploi Market and at our depots.  We fixed a low margin to cover transport costs only.  This effectively controlled the prices of curd in the entire city.

  The entire system was based on service and making a profit was not a concern. In fact we Assistant Commissioners were found fault if we incurred a profit  or incurred a loss. We were expected to be able to avoid making a loss. 

The MD Scheme was successful in reducing the margin that traders kept as profit,  This enabled ensuring  low prices in the cities. The abolition of the MD Scheme enabled the traders to rule the roost and prices skyrocketed because of the high profit margins they kept.

This is a scheme built up in Sri lanka which I have not found in any other country and I have traveled in almost all Asian Third World countries.

It is to the credit of the Sri lankan  Army that they did  purchase vegetables and sold at lorry sales in the City to bring the cost of living down a few years ago.  The Marketing Department had a bakery that made bread, rolls and sold at cheap rates and this effectively controlled bakeries. Today the Sri lankan Army had opened food outlets at Battaramulla etc where meals are available  at cheap rates. I have taken meals there and can vouch for the quality.  When I worked in the South I was in charge of the MD Canteen at Kataragama where we made and sold rice and curry, chappaty and thosai all at cheap rates to ensure that the hoteliers there could not sell at fanciful rates.

It is sad that the United National Party killed this effective method and it is hoped that someday this system will be restored. But that will never happen with the Common Candidate.

The MD Cannery

In 1954 the MD established a Canning Plant and commenced canning fruits. The fruits used were offered a floor price – a price at which we would buy everything that was offered. Traders generally bought an amount that their wholesaler needed and if the supplies were more they would  reduce their price.  The MD offered floor prices for totatoes, red pumpkin, ash pumpkin, organges and pineapples. The tomatoes were made into tomatoe sauce and juice, the Red Pumpkin made into Golden Melon Jam, the Ash Pumpkin made into Silver Melon Jam,  Oranges made into Juice, Passion Fruit made into Juice, Pineapple made into Pieces, Rings and Juice.  With this the Chena cultivators made good money with the sale of their crop. On the other side Sri Lanka was able to become self sufficient in Jam, Tomatoes sauce, and Juice.  And save foreign exchange by avoiding imports.

The MD was even able to build up exports of pineapple pieces and rings and  Assistant Commissioner Oswald Tilkekeratne  went abroad often for this purpose.

When President Jayawardena abolished the Marketing Department the Cannery was privatized. It is being run today by a private company but it does not offer prices for local produce. My estimate is that fifty percent of the crop is wasted for lack of buyers today. We are not self sufficient in fruit juice today purely because of the waste due to the lack of sales and the lack of a Cannery..

The CWE

The CWE imported all essential items and sold them at their Retail sales Depots at low rates keeping a low margin. The CWE had a large number of retail sales depots.  This did not enable the Private Sector to import and keep high profit margins. The main items imported by the CWE were lentils, chillies,  coriander and other curry stuffs,

The CWE was partly abolished during the days of President Jayawardena and the rest was abolished during the time when Ranil Wickremasinghe was Prime Minister.

The Guaranteed Price Scheme

In order to enable farmers to obtain a maximum price for their produce like paddy , kurrakan  etc the Government offered a premium price, The concentration was on paddy as Sri lanka was not self sufficient.

Paddy was accepted from genuine producers   only through Cooperative Societies. The aim was to ensure that the high price went to the producer.

The paddy was milled in Rice Mills that were run by the Department as well as through rice millers. This rice was issued on the ration and any excess was sold to traders.

This was an intervention into commercial activities and this Scheme was abolished and the Rice Mills were abandoned and sold for a song.

Once I gazed in amazement at the ruins of the Ambalantota Rice Mill that was broken up and parts sold for a song and parts left to weather and die. That was my home for a full year when I controlled the Southern Province and then we milled rice on a 24 hour basis and employed over a hundred people. Now with the dismantling of rice mills we are slowly  importing rice mills.  

After this Scheme was abandoned paddy purchasing was commenced and then paddy was purchased not from genuine producers. Anyone that brought paddy to government stores were paid the premium price. In the GPS days paddy was purchased only from genuine producers on a list approved by the village level officers and then the premium price offered went directly  to the producers.  After the Scheme was abolished, when purchased were made, as we do now,  the premium price goes to the traders, mostly rice millers and not to the producers.

Price Control

The prices of all essential goods like Lentils, Sugar, Chillies, were controlled. These were imported goods and a reasonable margin was allowed for the traders. 

Price Control was  officially abolished. Though at a late stage some prices are controlled  the situation is far from the days when goods were available at cheap rates., The items like Sugar and Chillies were also sold at MD Sales Outlets. 

Weights and Measures

There was effective control over weights and measures. Inspectors were active.

We as administrators were heavy weights. The bakers in the cities knew that we were on the look out for any bakeries that sold short weight bread. If any bakery tried to,  then the wrath of the Government Agent was leashed out on them with  frequent raids by Price and Weight Control Inspectors.  If the Government Agent charged bakeries for short weight the bakers were certain of a maximum punishment at the hands of the Magistrate.

Under the open economy which has been followed since 1977 by the United National Party and which the Common Candidate has vouched to uphold the weight is for the Public Sector to be in the back ground and allow the private Sector to make a fanciful profit.  

This entire infrastructure was abolished by the Jayawardena Government at the behest of the IMF and up to date there is no mechanism to control the cost of, living.

The very fact that the final blow to the CWE was done during the time of the Prime Ministership of Ranil Wickremasinghe should be realised by all parties supporting the Common Candidate.. 

Once this entire infrastructure was  dismantled, it is extremely difficult and very costly to establish it again. 

This infrastructure was abolished at the instance of the IMF and now because  under the open economy we have become an indebted nation, it is impossible to re establish this public sector activity because we will displease the IMF whose blessings we require to attract foreign investors and  obtain loans to keep ourselves afloat. The culprit for this is the United National Party of President Jayawardena  that made Sri Lanka follow the open-liberal economy and paved the way for Sri Lanka to become an indebted country and Prime Minister Ranil Wickremasinghe. 

Thus for the Common Candidate  to state that he will control the Cost of Living is  something that deserves a last laugh. His very statement that he will try to control the cost of living proves his ignorance.

Garvin Karunaratne,

Former Government Agent

13 th December 2014