Thursday, December 6, 2007

fields of lime green in paradise is an illusion

Much of the country today is awash with fields of lime green, the color of young rice plants. The price of paddy having risen by 80% in two months, has resulted in most marginal paddy lands coming under cultivation. I would be surprised, unless bad weather intervenes, if we do not get an all time high (record breaking) bumper paddy harvest.

With the clearance of the Eastern Province of the security threat, many abandoned paddy lands have also now come under cultivation. Farmers all across the country are hopeful of reaping rich rewards. Much of the profit from the price increase has hitherto not gone to the farmer but to the mill owner and trader as the farmer sold his paddy at harvest time at prices that were almost at government guaranteed Rs 18.50 a kg instead of the Rs 33 a kg that the same paddy now commands.

The farmer wants to cash in on the high price and therefore have put in everything they have with hopes of getting out of debt this time. The reality will inevitably be heartache and mass suicides, as we do not have a proactive government that can forecast and make contingency arrangements now. The expected bumper harvest will leave farmers with massive amounts of paddy they cannot sell. The mill owners and traders know this before the sleepy government. They will buy the paddy at prices that are less than the cost of production. Thus the rice farmer gets nothing for all his efforts.

The government must plan now to have financial reserves to buy the surplus paddy at a reasonable price of say Rs21 a kg giving the farmer a possible small surplus to cover his labor. The farmer must be informed now of what the price the government is prepared to buy. So this is the floor price. If the market price happens to be higher, obviously the farmer would sell at the market price to the wholesale trader who comes with the cash to the field to buy upon harvest. Remember that most farmers cannot afford to hold stock, both for lack of space, and also for the need to pay off debts incurred on account of planting.

It is unconscionable that the price of rice has risen to such heights in a country where most people eat rice as their staple for three meals of the day. If it is purely a market driven mechanism, then there has been some serious lack of planning for this eventuality. I suspect more it has been as a result of the two or three largest millers, cornering the market creating an artificial shortage that has raised the price from which they themselves have only benefited. There is total lack of transparency in Government as two of them are Government ministers whose portfolio is Agrarian Services, and responsible for the purchase of the paddy. There is hardly a murmur from the press about this due to fear of these two powerful ministers.

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