Friday, April 25, 2008

follow up of the rice price control saga

Paddy is so precious look at part of my stock-piled! by my bed

I am in Minneriya at the moment and heard that the Consumer authority has fined retailers of rice for selling above the maximum price. This is all done for publicity to frighten retailers, and indirectly tell the farmers to release the stocks of paddy they are keeping (in the government parlance hoarding) to sell to the millers. For example Food City chain that sells in over 100 outlets where they have 95% of their rice varieties above the maximum price, was fined Rs150,000/- which is a drop compared to the Rs 10Mill+ a day they get from selling rice at prices higher than the govt. set rate. Smaller retailers have been fined Rs5,000/-

If one speaks to the farmers here in Hingurakgoda and Minneriya their response is that the govt. is doing this to help their ministers who are millers, who hitherto were unable to obtain the quantity of paddy to mill, and that after price controls are able to get the paddy at 20% below the pre price control date, by frightening farmers to sell at lower prices set by the millers.

So now the millers have the ability to stock paddy at lower prices and release them when prices inevitably rise in about a month once the rumpus over price controls dies down. This sadly as noted in the article below penned as the price controls were announced, is just for media publicity that the government is doing something about food prices. All food items have risen on average 80% in a year and no other item is controlled just for this same reason, that there are no politicos to stand to benefit, unlike in the rice issue.

One of my friendly millers told me that even at the higher paddy price before the price controls came into effect, the largest millers will still be able to sell the rice and make a profit at the fixed price, so that they never stood to lose. Now with the lower price of paddy currently they are again in a position to earn mega profits even at the current price. One dreads to think the level of super profits they stand to gain once the price rises and their costs are at today’s prices.

Just for information, today’s price per kg of paddy paid to the farmer is Rs30/- Just before the price controls were announced the farmer sold his kg for Rs40/- so the difference is pure profit for the miller who could sell his rice wholesale at Rs65 with a profit even at paddy at Rs40 for retail at Rs75.

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