Rice millers last week said that over 1500 small and medium scale mills had closed down due to financial woes and acknowledged that the solution for the Government with regard to solving the rice crisis and curbing the ‘rice mafia’ was to economically empower the small and medium scale rice millers.
One of the solutions for the financial situation faced by small and medium scale rice mill owners is for banks and financial institutions to reschedule loans and the repayment of debt.
It must be noted that the small and medium scale rice mill owners are not asking that their debts to be written off.
Previously, approximately 35% of the rice market was supplied by large scale mill owners while the balance 65% came from the small and medium scale rice mill owners.
“Due to the monopolizing efforts of the large scale rice mill owners (less than 10) the market has shrunk for the small and medium scale rice mill owners,” Attanayake charged.
According to the United Rice Producers Association of Polonnaruwa, the Minipe Rice Mill Owners Association and the All Ceylon Small and Medium Scale Rice Millers Association, of the 2500 small and medium scale industrial rice mills situated in villages throughout the island, over 1500 had closed down.
Chairman of the Minipe Association and Convener of the All Ceylon Association, Nishantha Attanayake said some such mill owners had moved out from engaging in production, while some mills were in the process of being removed or being sold by the owners for scrap metal or being auctioned off by the mill owners or the banks and financial companies.
“Similar incidents have been reported from Anuradhapura, Polonnaruwa, Trincomalee, Kurunegala, Kantale, Mahiyanganaya, Matale and Minipe with production work limited to only 200 to 300 such mills, all of which occurred and is continuing before successive Governments which have turned a blind eye and deaf ear,” said Attanayake.
He further said the jobs of those employed in the mills throughout the country have also been adversely impacted.
In addition to the general electricity bill they incur, they have to pay an additional tariff of over Rs 1000 as a payment for drawing electricity (a charge per kilowatt) for running the operation of milling in the property.
While it is lawful to charge, the small and medium scale rice mill owners say that it is a cost they find difficult to bear and requests the Government to provide some relief in this regard.
“In certain instances, the Department of Agriculture too instead of encouraging and motivating farmers via the provision of relief and subsidies has requested paddy farmers to refrain from farming as there was either an excess of stocks or due to the inability of the State to provide much needed water to farmers to continue agricultural production during periods of drought,” he added.
In addition to deficiencies in the technical knowledge needed to maximize the efficiency of the operations and inadequate paddy storage facilities, the lack of new technology and the latest machinery have plagued the production related work of the small and medium scale rice mill owners.
The Minipe Rice Mill Owners Association and the All Ceylon Small and Medium Scale Rice Millers Association noted that while they accepted any short-term solution provided by the Government such as the imposition of maximum retail prices, what was essentially required was a long-term solution which required the Government to responsibly look at how the crisis arose, how it could be prevented, where the stocks were and with whom, who engages in hoarding, what was the intervention of the Paddy Marketing Board and what should be the Board’s intervention moving forward. According to them, another reason why no long-term solution emerges is because the solutions are thought of solely by members of the academia and accountants (who incidentally don’t even know the difference between Kekulu red rice and parboiled rice) sans any stakeholder discussions including with field officers and officials.
The small and medium scale rice mill owners propose that a representative of and from among the small and medium scale rice mill owners must be included in the Government’s cost of living committee. Through the District Secretary, the relevant State and Governmental authorities can get in touch with the millers. They request urgent solutions with the direct involvement of the Government, especially the President, the Prime Minister and the Minister of Finance.
Elsewhere, the Minipe Association and the All Ceylon Association met Minister of Finance, Ravi Karunanayake this week to discuss these matters including the uplifting of the livelihoods of millers.
Attanayake said that the rice millers in Polonnaruwa should rightfully be able to purchase the paddy from the farmers in Kantale, but could not do so, also due to the fact that they did not possess the monetary wherewithal for milling, sell to wholesalers and retailers without expecting money with immediacy. Farmers have to be paid spot cash by the millers, at the market rate or an individually agreed upon rate, when the paddy is being bought and at the point of sale by the farmer and purchase by the millers.
Thus, when the small and medium scale rice mill owners attempt to sell the rice they milled to wholesalers and retailers, and thereby alleviate the problems arising out of costs incurred thus far in a context where there is no income coming in, the wholesalers and retailers refuse to buy as they too are expected to make an immediate payment.
Instead, if they purchase the rice from the large scale rice mill owners, the wholesalers and retailers are afforded a grace period of one and a half to three months, to pay back the large scale millers.
Thus, the wholesalers and retailers opt to buy from the large scale millers. The small and medium scale rice mill owners cannot afford to loan the rice to wholesalers and retailers, however short the period.
There are also issues in the market with regard to the quality of the rice produced with substandard rice also being found for sale in the market and the substandard rice being sold at the same price as the rice that meets Government standards.
The farmer that produces rice must also be motivated to farm paddy by facilitating agricultural activities and increasing the facilities needed for agricultural production and resolving market issues and farming related difficulties faced by farmers.
“One needs to have ample funds to engage in this business, otherwise one cannot,” Attanayake maintained.
Meanwhile, Chairman of the Polonnaruwa Association, Mudith Perera pronounced doom, in that according to him, the day that a kilogram of rice would be sold at Rs 150 was not too far into the future. He said that hoarding of rice stocks and the setting up of maximum retail prices being taken for the benefit of the consumers without looking into aspects concerning the millers, wholesalers and retailers, were the reasons.
“The solution was the deciding of retail prices and increasing competition within the market,” Perera noted.
“According to Government statistics for January this year, the consumption of wheat flour has risen to 50%. What is the point of the Moragahakanda and Kalu Ganga multi-purpose development projects, the renovation of small tanks in Wayamba and such projects in the North and the East, if the paddy farmer has to become embroiled in the rice mafia? This is unfair. State backing must be provided. The price of rice must be maintained below the price of wheat flour. There is no need to import stocks. There are sufficient existent stocks. What is being imported is not to fulfill the country’s consumption requirement.
Those involved get commissions. Expired stocks have not been systematically destroyed.
Elsewhere, according to the Marandagahamulla Rice Producers Association, existing methods to curb inequalities in the distribution of paddy stocks for milling were not being utilized, thus creating an unnecessary issue.
While noting that large scale millers purchased more stocks of paddy as they had the capacity to store, the result of them improving their business through their hard work and business acumen and savvy within a free market economy, Chairman of the
Marandagahamulla Association, D.K. Ranjith pointed out that there were persons and groups, equal in number and size to large scale millers, who were not millers but simply engaged in buying up paddy stocks as a business and profession, and after hoarding, subsequently sold them at a higher price while the small and medium scale millers were forced to buy paddy at a higher rate. This is the network.
He said what is termed as the ‘rice mafia’ is merely the inevitable nature of the business while adding that there are no laws in place in the country to stop large scale mill owners from earning a profit. “The Government however can criminalize excessive hoarding,” Ranjith said.
“The Government should look into this alleged rice shortage and why the price is increased when there is sufficient stocks in the market. The stock in State possession should not be sold or given. Instead, the Board should release Government stocks simultaneously to small, medium and large scale rice mill owners. Giving more stocks to only one segment doesn’t work. A maximum retail price must be imposed on imported rice. There are mafias in every sector. Rightfully, there however cannot be. The Government must find an answer. The Government must bring them to book. The relevant public servants must be empowered and be brought to a certain level. The best weapon the Government can use in this regard is to increase the competition in the market by uplifting the state of the small and medium scale rice mill owners,” Ranjith further explained.