Monday, March 31, 2008

an impending food crisis

The Nation in recent history has never been able to be self sufficient in food production. I don’t mean stop imports, just produce to our capacity. By recent history I mean from 1900 onwards. To be fair our population has increased 7 fold in that period, so we have actually increased our food production, but not enough to sustain the growing population.

The past 15 years has seen the lowest growth rate in population, but also the lowest growth rate in food production in volume terms. For the purposes of this discussion, I exclude the Tea Industry, which has unique characteristics of its own as a major export earner.

We have had legitimate reasons to shift focus, primarily grappling with terrorism, however this shift has led to an enormous cost in imported food to satisfy our hunger. The million plus Sri Lankans who work overseas, has somewhat alleviated an otherwise even worse situation, both by sending foreign exchange from which we can buy food and also not being in the Island to consume it.

By all accounts globally, the increase in price of food will exceed the rate of inflation in every country. We are therefore doubly affected. We have to pay an ever increasing price for imports as well as for home grown food. I am not exactly sure what our expected food import bill is for 2008, but I will not be surprised if it is not much below our oil import bill for the same year.

This is a staggering indictment of the state of the country, which is purportedly still a rural agricultural economy, if one excludes the Western Province, which contributes over 50% of the GNP, but where the cost of food has risen by every criteria by 50% in the past 6 months.

The immediate importation of 100,000 tonnes of rice by private traders, from India due to the failed crop is a further indication of the impending crisis. There is no national stockpile for unforeseen events. Living in Hingurakgoda, I see so many empty storage buildings, owned mainly by the government, but also by private individuals, so we have the storage capacity to stockpile paddy.

Clearly, merely leaving it to market forces is not working, which I can also testify to as I also produce food and despite price increases my overall output has fallen more than the rise in prices leaving me with less revenue to cover my increasing overheads. Market forces, namely increases in supply due to higher prices may come about in the long term, but the foundation for this supply increase is what is imminently required.

If one takes coconuts as an example, the severe shortage of the crop has resulted in a spike in prices and the decimation of the export industry. However all the causes have not been thoroughly investigated. The south of the country is experiencing the effects of a mysterious disease that has killed the trees. There does not appear to be a cure for this, nor any steps to prevent it from spreading north to the coconut belt. If nothing is done we will not have one coconut tree left in the country.

California has an agricultural inspection to prevent fruit coming into the state. We may require checkpoints to prevent disease from spreading, far more important than to prevent the odd bomb passing through. Has anyone even addressed this issue? What good is it to win a battle by taking over the territory currently occupied by the Tigers, if we lose the war. So strategic thinking is necessary, not short-term goals to win elections for personal gain at the expense of starving the country in the long term. This is what is happening, even if we don’t realize it.

These are just two examples I am using to make a point but the story is the same for all crops in terms of lack of a plan to increase supply with efficient and cost effective production techniques.

Before we implement a long-term plan we must have a short term plan to reduce the exposure to imports and slow the increase in prices, only then will we begin to understand how we can achieve long term progress.

I recommend steps to reduce demand. Eating rice three times a day as advocated by the politicians is a luxury we cannot afford today. We must encourage the consumption of bathala(sweet potato) and manioc(casava), more nutritious than rice for the morning meal. More marginal lands can be used to grow this if the demand is there. The immediate effect is to reduce the demand for rice, and the consequent price pressure. I know this is putting a simple face on the solution, but I am making this point just as an example for us to think about.

I will at a later stage address the structural issues with ideas of how to achieve the objectives, using the practical experience I am gaining now.

Saturday, March 29, 2008

Update on rice prices

After I wrote the article below yesterday, I heard on the news last evening, that the government has removed the Rs 20 per Kg duty on imported rice, so that there will be no price gouging by the large millers. Additionally it was stated in the news item, from the government owned media that due to this timely action the price of rice will come down for the avurudu season. This was stated by a senior minister with responsibility for agriculture and hailing from the Polonnaruwa district, whose brother is one of the largest millers in the Island,and who controls Araliya Rice Mills.

I found this rather ironic. I hope it is true, for the sake of the beleaguered consumer and we shall see.

Since January when the last time the duty was removed, the prices from either India or Pakistan, from where all our recently imported rice came, has gone up by SL Rs 20 a kg, so this rice cannot be retailed below Rs 75/- kg. This is a crude attempt to dupe the poor farmers who are looking for a few more rupees, to frighten them into selling their small paddy harvest to the big millers (we know who they are)by implying that if they do not sell at the current price, the prices will fall when the imports flood the market at much lower prices.

As I am also a retailer of rice, and have sold this imported rice when SL rice was scarce earlier in the year, know that the consumer does not like its taste and they do not know how to cook it either to get the best out of it. So there is little competition from that.

The only truism in all this is that allowing imports duty free in a period of rising prices, is that there will come a price at which the consumer will substitute for local rice, and accordingly the price will be prevented from rising too high, say above 125/ a kg as then import substitution will take place.

Every thing has a price as they say and as usual the market place determines in the absence of artificial barriers such as duty. We can only isolate ourselves from the world market if we produce more of what we eat, by being more efficient, and more aware as consumers about how best to help our motherland.The only food of any scale we export is tea and cinnamon, it is staggering how much we import to eat, in an island so lush so rich and so blessed with growing conditions.

So farmers hold on to your stocks, consumers brace yourselves for an expensive avurudu no matter what our leaders promise, just eat less and watch your waist line it will just help you live longer and healthier and feel less stuffed.

For the record I am a rice farmer who grows his own rice pesticide free, and also buys from neighbors and stores, par boils, mills (not my mill) transports and sells direct to the eating consumer either from my shop or home delivery to the door about 12 varieties of newly milled rice. At the moment I drive my own truck from my fields to delivery points in case one thought I am just sitting at a computer all day.

Friday, March 28, 2008

Paddy farmers asserting their rights

I am pleased to report that the paddy farmers in my area are now getting a little more assertive.The paddy price has now reached all time highs, and my neighboring farmers will not even sell a few bags to me at the going market price.

The reason is that they expect the price to rise at least 50% in the next two months and they are hoping to hold on to their stock for as long as they economically can. Earlier the mill owner benefited by buying low and stocking till the prices rose. The farmer wants to do that.

If farmers across the country take this route, then they will create a shortage of paddy in the market artificially inflating the price, however if this is sustained the farmer will benefit.

It will be interesting to note what will happen. As of yesterday a 64kg bag (three bushels) of White Nadu was 1,800 and White Samba was 2,300 before milling. This is a 25% increase from a week ago, when it was at its lowest. I will keep this article updated with dates of the price increase.

On a related note I read that in Thailand owing to the rise in paddy price, people are stealing paddy from the fields, interestingly, I heard the same had happened in a field close to mine last week. In an hour one can steel the equivalent of one bag of paddy by cutting the ripe stalks at night. So it is equivalent to a weeks wages for a farm laborer.

It makes you wonder doesn't it, after my earlier stories of coconut stealing.

Thursday, March 20, 2008

Anura Bandaranayaka

Much was expected of a man born to a South Asian dynasty, to privilege and wealth. He had the opportunities, the contacts, the personality, the charisma and the honesty. He was felled by some very Sri Lankan traits; The only son syndrome being one, which does not train one to fend for one self. The other being alcohol dependency. He was very ill for the latter part of his life suffering from gout and diabetic conditions, which all thought would kill him. The cancer was just the final reason for his death, but he had effectively died as an effective person on the world stage a long time ago.

He made what in hindsight can be labeled the most foolish of political gambles that shot himself in the foot too many times. He was a Greek tragedy. He was a pitiable person with many endearing qualities of humanness. He died in a rather disheveled government guest house, where he chose to live rather than in his modest home, next to his childhood Tintagel.

Others with the opportunities given him could have scaled heights, exceeding their forebears. His achievements were modest by his lack of political acumen and determination to succeed in whatever he ventured into. The expectations were probably his downfall and this is a lesson to those who think people are born to position rather than deserve it due to effort and ability.

We are partly who we are due to our birthright, however we are more who we are from what we have achieved by using that birthright for a purpose higher than ourselves. Life is not a box of chocolates, but more a game of poker, and while the hand that we are dealt will help us its how we bluff the others to get what we want, when we have a poor hand that gives us the edge and select us from the pack. When we lose the bluff we are forgotten, but the only people who will never forget us are our true friends from whom we cannot hide and who give us friendship no matter how wrong we are or what mistakes we make. Those friends and family are worth cherishing till death and beyond and in them I believe Anura did have people who gave but did not expect anything in return and to them he will truly be missed.

preventing people from going to the middle east as housemaids

The remittances of the unskilled Sri Lankan housemaids who form 70% of those who have gone overseas on term employment is the backbone of Sri Lanka’s economy. Those who currently advocate a ban are wrong in the way they are attempting to prevent the free movement of people, in short denying a person’s fundamental right to leave the country if he of she so wishes. They should in fact try to make more attractive for them to stay.

I do not agree with unskilled females leaving as I have seen the social consequences of this action being truly horrific. However the way this is reduced is by education and persuasion so that those who leave are forewarned of the consequences of their actions in some training program to lessen the social impact.

The men who encourage their wives or daughters to leave should also be included in the program to understand what may happen as a result. This means that they will not be surprised if the wife does not want to return home as she has found a way of life that is more suitable than the one she left and give reasons as to why it may happen, especially in the cases where the males are alcoholics and she is leaving to get away from the home fire.

I agree with the intention of sending skilled people, but that is not possible in a short while as the skills have to be first acquired and only then will there be a pool of skilled people to send overseas.

I notice all sorts of ruses to send people overseas. Politicians are famous for getting commitments from overseas employers. They then promise for a fee, can be as high as one million rupees to send a person to Italy on a 5 year contract. It should be free. The person paying this may sometimes be fooled as to the real terms of the contract and only discover the ruse once he has left and paid the charge. The reasoning is that the monthly salary is 200,000 and in 5 months they could pay it off. People should realize that the salary will hardly pay for living there and there may be no chance of saving the one million unless one sleeps on the streets, which they would not even contemplate in their own country. These job seekers should be told that costs are even higher than the income and that income really is insufficient to live on.

A lot of the problem is the misconceptions that people have and in order to educate them in this regard mandatory government sponsored programs that show the reality should be made a requirement of employment.

The agencies that send people should also be better regulated, as they give a very false picture which is only apparent once the person has gone and then the error cannot be rectified.

Encouragement of skilled males to go is a better way, so that the family bond is kept with the mother. Many countries only send males, especially muslim ones for this very reason. Now that we have already sent so many overseas and some females continue to go means it is unfair to prevent those from leaving.

Bilateral agreements of minimum wages must be set up, especially as the costs of living in the middle eastern countries is also skyrocketing especially in food and Sri Lankans are paying more for the food they want to eat which may not be provided by their employers who have different dietary habits.

All this is elementary stuff, which our people are ignorant about. This is an area where the government should intervene to educate. We are not providing the skills, even language skills, as knowledge of English can enhance the value of a worker and accordingly the pay received.

In summary, every one seeking employment overseas should undergo a mandatory training program to make them aware of the benefits and pitfalls of their choices. Skill acquisition should be encouraged and males should be encouraged to go and mothers should be discouraged from going. Minimum wage guidelines should be set on a bilateral basis and other worker health and safety measures enacted. Better consular facilities to help those already overseas as well as making every one aware of the laws and rights of labor in the country they are working at needs to be set up. While other export industries get subsidies this one needs a greater degree of funds spent, to make sure we as a country maximize its full potential with those who go overseas. The number of job agencies needs to be curtailed to enable better monitoring and supervision, and errant ones severely punished with hefty fines.

The business of media

One must never forget that in a discussion of media ethics, that News Media is a business engaged in a competitive world to grab as much attention in terms of viewer numbers so that they can either get more advertising or charge more for advertising depending on the ratings.

One can include television programs, soaps and movies as examples of media influencing public opinion and their effectiveness is even greater in poorer countries with limited choice of papers and viewing.

The journalist is therefore under constant pressure to perform and in this regard there have been instances even at the New York Times of fabrication of news. This pressure influences the journalist to word an event to sensationalize them so that it would grab the attention of the viewer or reader. Even photo-journalism can be misused in this regard, as the angle of the picture can tell a very different story from the actual.

There is a need to get a scoop and in so doing a mundane event can look like an important one. There are some topics that are hot topics and more than a fair share of news pertains to that, such as the Iraq war, and Global Warming in the international media and the LTTE civil war incidents in Sri Lanka. Media does not necessarily cover topics of interest to public as often the journalists are out of tune to the readership or viewership, coming from a different background in some cases, and therefore concentrating on topics that matter to them.

People are often not told the whole story, the important story and are influenced to give importance to topics they would otherwise not be interested in as it does not affect their daily lives. One must bear in mind sensational gossipy stories are now commonplace on the grounds that news is also entertainment and therefore the under the sheets activities of the rich and famous also become news. The word is to dig dirt on people to bring them down a peg, a human frailty.

When news or programs are viewed in this light, then a more balanced opinion can be formed, but the problem still remains, that there is a lack of perception and cynicism in what is presented and a lot of believing what is fed in a literal sense of the word.

Media responsibilities: a perspective of two specific examples

I will start by looking at the delicate balance of having to report on the campaigns of Hillary Clinton and Barack Obama for the right to represent the Democratic Party at November’s general election. With the two candidates running neck and neck, a balanced reporting aim by the large news media outlets is extremely difficult to ensure. A reporting journalist, by his very words could sound biased. A news editor by choosing the news story can influence one side over the other and either party can make claims of unfair reporting leaning to the opposing side.

I am certain that there are behind the scenes meetings to ensure that there is balance and duration of news clips and angles carefully calculated to back up the claim of fair reporting. Obviously if a media outlet comes out backing one candidate over another, it will get easier to justify reporting angles and biases.

Of course the alert listener, reader or viewer may interpret a bias in a different way to the editor who includes a piece of reporting. The subtleties of reporting can influence the user and in this tight race make a difference, which will eventually determine the candidate and in an indirect way the future president and the course of world events.

Only when one carries through this argument all the way can one realize the importance of the responsibility the media outlet has in influencing world affairs, through the future leadership of the US.

In Sri Lanka on a completely different note, the current controversy of the government and private media reporting on human rights abuses is worth looking at also. The state denies and refutes all allegations, blaming it all on LTTE backed NGOs and unpatriotic reporters sensationalizing incidents to promote their agendas, making the conduct of war much harder.

Even here some form of responsible reporting is necessary in a framework of informing and educating the public on what is happening. Private media also self regulate in order not to rock the boat too much and incur the wrath of state control, and the loss of state largesse in the form of advertising revenue.

It is noteworthy that there has not been one incident of the abuser being caught and owning up to who his patron is so that a finger can be pointed at the state. The seeming ability of the state machinery to get away with killings, and abductions is emboldening these methods of intimidation and abuse with the investigative arms of the police being singularly unable to prosecute any of these cases.

Therefore while the news of abductions is reported, it is up to international bodies to point the finger at the government. The recent incident where the US government country report cited Sri Lanka very poor in terms of Human Rights violations, which was vehemently denied by the government, maintained as fact by the Embassy, is a case in point. Of course one sides view of what is a Human Rights violation is another’s right to refute. Some appear to condone others to castigate depending on the moral stance taken. In a time of war the criteria can change from that in a period of peace.

When the reporter is culturally different it adds another dimension to the problem, bringing race bias into the argument because an outsider usually reports with a normal bias towards minority communities. It is done with the knowledge that power is on the side of the state and it is up to the state to defend the accusations if untrue as there is assumed the other party has less of a chance to present their views.

In the current furor over the reporting of the uprisings in Tibet, China has banned and censored all reports. The average Chinese takes the governments line and international media through the new technology of I reporting by amateurs, using mobile phones and uploading direct to the Internet from the site, to sensationalize reports without verifying the extent. An isolated incident in a village can seem in the news to be extensive.

In the same light, the Tibetan groups in Tibet, exiles outside the country and ethnic Tibetans in China seem to have come together in a planned uprising to bring world attention to their plight at a time when this is embarrassing to the Chinese government in the light of the impending Olympic Games and the disruption it may cause. It is an opportunistic move on the part of the Tibetans and here again it is up to the Chinese authorities to deal with it fairly, so as not to antagonize world sympathy for an ethnic minority that has been agitating ever since the Chinese takeover of Tibet for over 50 years. There is no doubt as to the outcome, as the might of the Chinese military will quell the agitation. The way in which China deals with the issue, will determine how they are perceived with respect to Human Rights abuses and tolerance of dissent from within.

In the instances referred to here, it is apparent that the Media is very powerful in shaping public opinion, and with this power comes responsibility to be as fair as possible to all sides as both sides present a different view-point. It is also true that journalists are mere employees trying to become more prominent in their fields and sometimes sensationalize a report to advance their personal agendas, just like any other employee in any other job trying to get a promotion.

The use of proportionate reporting is not possible as each news item carries a similar weight irrespective of the importance of the news, as that is the nature of the beast called News Reports.

The manipulation of news is common in all countries especially the West, with specific regard to the US, which is even more savvy at it than say either Russia or China and in my opinion, India has the most balanced reporting bias, with democracy and journalistic ethics to be admired and emulated. No one is perfect and the public should learn to be more cynical and able to sift information fed to them rather than believe everything they are told.

To conclude we should be aware of the power of all arms of media, and learn to read between the lines to take a proportionate view of the content and come to our conclusions based on our best guess as to the accuracy of what is being reported.

Bear in mind that what is not reported is also news, which we are not told about, and we cannot even imagine what we are not told! One can therefore subscribe to my current opinion that it is not worth watching reading or listening to news as it is not worth it as I can make the news in my head to suit my point of view at any time. This from someone, who was a news addict, not too long ago knowing what was happening in all parts of the world on a daily basis.

In fact my mind is now not clogged with news, and I am free to think.

living true to oneself

There comes a time in a person’s life when one can be very clear about one’s opinions and how one can live according to those opinions formed from one’s life experiences.

Many people don’t have time to form those opinions and therefore feel they have yet to find the true meaning of life, and never finding it even at their deathbed.

Life is very simple but we have complicated it unnecessarily and therefore have to suffer the consequences of this complication. It is hard enough for most people to live, to eat, to earn and go about ones daily duties to one’s vocation, family and livelihood.

We seem to make a business out of complicating our lives and this is particularly so the more people we associate with as we have then to interact with different personalities and opinions. It is therefore simpler to be cutaway from society than be in society, but the trade of is that of being content with ones company as opposed to with others.

In reality due to the busy life we lead with time being a precious commodity, any leisure time with friends and family is always appreciated. However too much leisure with too much interaction with either family or friends, brings with it another dimension of complications and therefore this too should be managed effectively.

Spiritual freedom where you can form your opinion on morality, religion and ethics, based on your life experience and not be a slave to someone else’s dogma is the ultimate release of mind over matter. Thereafter your coping skills are firm and unwavering but you are able to continuously evolve your opinion based on your personal development as you age and change.

We all want to be happy within, whatever show we put for others and how we define happiness varies from each individual, and what makes us happy can also change from day to day. If one is true to oneself one can find a measure of happiness and contentment as we are not all fortunate to receive all we would wish for in this life and have to settle for what we have managed to acquire in mind and in kind.

towards a more holistic but focused agricultural policy

Amongst the many mistakes made in the past, the agricultural policies adopted by various governments stand testimony to one of the most colossal blunders in the history of this island.

I would venture so far as to say that the country would not have suffered this ethnic strife had a farsighted policy been adopted at the outset, ensuring those in this field are fairly compensated and therefore are encouraged to produce to an optimum.

I believe a fundamental problem has been that policies have been set up by armchair academicians and politicians not in tune with the realities on the ground as far as farming is concerned.

To take an example from the past. In the 1920s a Minneriya Agricultural Company was set up with shareholders much in the way of a quoted company to open up vast stretches of the land in the Polonnaruwa district that had hitherto been thick forest after the fall of the Kingdom based there over a thousand years previously.

It was as disaster, for many reasons. Malaria being one, but the lack of foresight of the planners to take into account all the contingencies. We suffer from a similar lack of foresight even now.

If one takes transplanting of paddy as another example; 30 years ago transplanting was the rage, as the new high yielding varieties had much higher yields when it was transplanted. Workers used to be brought in from places such as Matale for the few weeks to transplant as even then there was a shortage of labor for these periods. Today no one transplants as it is too costly, having to pay a female worker Rs450 a day and provide, morning and afternoon tea and cakes in addition to lunch. I can attest to that as it cost me Rs 4,000 per acre for this a few months ago.

In Japan all farmers transplant, and they work their own small acreages with no hired labor, but use transplanting machines for the task. Admittedly their cost of production is high and rice is subsidized, but they definitely maximize yield per acre as they are short of land. There are no such machines even in the marketplace, presumably either because it is too expensive, lack of demand or sheer ignorance.
The policies must take account of all stakeholders in food production, be they the traditional one of tea, rubber, coconut and paddy or vegetables, fruits and spices. The tragedy is that there has been a strong demand for all our produce all over the world as the quality is generally very good, though the quantities available remain small.

There is one area we should not even attempt to get into, namely that of bulk exports of any item, because our units of production are small and therefore economies of scale required for efficiencies to compete in that scale in the world markets are not present.

An Australian farmer with a thousand acres of lentils can produce that at a far lower cost than the Indian farmer, and that is why all our dhal comes from Australia and not India, which is just next-door.

I am one of the most inefficient farmers in the land, as I am trying to grow too many different crops, in a very tiny extent of land, using paid labor. The only reason I am able to survive is that I sell my produce direct to the consumer and try use the minimum of chemicals, especially herbicides and pesticides. Unfortunately I do not get adequately compensated for my produce as the consumer is not willing to pay the premium associated with a considerable reduction in yield and a much increased cost of production. Moreover the quantities I produce are too small and erratic to warrant being a supplier for export markets in the Maldives or the Middle East.

What my venture has taught me, by experience and evaluation, is that large tracts of efficiently mechanized monoculture units can yield a greater profit if the markets for the produce are clearly defined and supplied. However this requires labor that must be properly managed and compensated in a way to maximize yield. Scientific techniques, hybrid seeds, and a mixture of organic and chemical fertilizer should then be used.

While I am an advocate of organic agriculture, it is not practical in the present context as far as producing for the local -market is concerned as it is currently constituted.

The other type of farmer who is able to sustain themselves is one who has a small amount of land, less than 5 acres which he works on and sells his produce directly at the local pola, or to a wholesaler if some items are in too large a quantity for that. A small family can live quite comfortable on this basis. It is however a different picture for those who use paid labor and cultivate small extents as in 5 to 25 acres.

The problems then are the management of labor, to get the maximum, the lack of work ethic and productivity of our labor. The expectations of pay scale out of proportion to their productivity, and the set scales, irrespective of the ability of the individual. This model is not economical as the price the farmer receives for his produce is variable and cannot be counted in until the product is sold.

Those who advocate guaranteed buyback schemes for these farmers and pre agreed costs, must realize, that farmers will only sell when the market price is less, and will sell outside if higher, resulting in the guarantee being merely a floor price. I personally know many farmer who have abandoned this method, on the grounds that labor and other input costs, like urea being Rs4000 for a 50kg sack, are just too high. This abandonment will raise the price of labor-intensive crops.

There are so many different stakeholders in the food chain pulling in different directions, and how the orchestra is played to increase the performance is the key to satisfying all parties.

I buy onions to sell in my shop and to deliver to my customers. This week, the cost of the large onions went up 20% and small onions by 50%. I do not know if this price rise has been created artificially by the traders or due to very real supply and demand balancing. The fact that it happened within a period of a week, seems to suggest it is created by the traders, as these are all imported items, and a delayed shipment can affect the market, especially if importing is done by one or two parties only.

Big onions are only produced in August and September, and in that period the government plays God by imposing a duty on imports, but I have seen the price vary from Rs 25 a kilo to 75 a kilo just in this short period.

State attempts at imposing price stability through Sathosa have not been successful and price controls on food just does not work as the supplier can just withhold supply and a black market is then created.
Using normal market forces, floor prices, and access to delivery points, post harvest storage methods and streamlining transport to minimize costs are all ways to increase the farmers income whilst at the same time giving the consumer the best value.

It can be argued that this is exactly what the Food City chain with their 100 outlets is attempting to do. They are taking advantage of their requirements, to tie up farmers to produce for them, guaranteeing them price stability whilst improving on their post harvest wastage and distribution techniques to keep their prices reasonable for the consumer.

A sound agricultural policy must address all these issues as it has to be congruent with the ground realities and not set in isolation. The increased cost of labor has been created by the migration to the middle east as well as the war effort that has sucked in large numbers, leaving a dearth of people in the agricultural areas. This problem is set to get worse, and we have to address this before it happens, with use of mechanization and land policies that will enable more efficient use of land available for larger scale agriculture.

Mahaweli tracts were given to people who had never farmed. Some cut the trees and left the land fallow and failed to pay the annual lease. Others simply abandoned the projects as they made gross miscalculations about harvest and yields as well as costs of production. This has been a constant issue since the 1920s and people are making the same mistakes.

One only has to travel overseas to see how mechanized agriculture is. Land policies prevent blocking and selling property and carving it up to build homes, thereby preserving the agricultural use. Most non farm populations live in apartments. In Sri Lanka, the government allocates state lands to people on political patronage, who build homes and then commute hours to their non-agricultural work place, such as a security guard position in Colombo.

As an expert recently told me, that unlike other countries that have regions where certain crops grow and where there are plantations of monoculture obtaining maximum yields, we have a climate where almost everything grows everywhere. We therefore have never learned the art of specialization to maximize output, which have contributed to the low productivity.
In today’s papers there was an article about the plight of the clove farmers who cannot make a profit, despite the record high price of cloves. The reason cited was the huge cost for skilled labor per kg of cloves harvested. Here again, the low productivity of labor is the issue and the increase in the labor cost exceeding the increase I the price of cloves. They have to therefore find more cost effective means by using a combination of mechanized and more productive methods of harvesting.

One can therefore see how all these factors contribute to the present malaise. To get to grips with the issue, the factors mentioned have all to be addressed and not in isolation, as has tended to be the case.

We can with a few innovative and novel policies increase the agricultural output significantly, reduce our dependance on imported foodstuffs by substituting alternatives, and sucking the excess production out to exports as necessary and get a handle on this grossly underperforming sector without further delay.

If we do not do it now, it will be too late, and we will regress, having to buy ever more expensive food just to satisfy our consumption patterns.

Monday, March 17, 2008

far thinking or elitism

I may sound patronizing and elitist when I say that as a nation we do not think things through, especially our actions and inactions. We make trouble for ourselves and then try and find a way out of it. It is human nature to behave in a hot headed manner sometimes and then regret ones actions, but in life one has to have an element of planning as there are so many imponderables that one cannot control, it is better to control what one can and therefore limit ones exposure to risk.

You may wonder what I am going on about. Just to quote an example from today. Sudath one of my staff who is in charge of the operation in Hingukagoda, I thought was a responsible person. He has two children who he has to in some way take responsibility. While they live at his ex-wives family home, and his wife deserted him, his sisters immediately arranged a marriage for him.

Sudath has no savings or money, and with the advances he has taken from me actually owes me money. However he agreed to the marriage and brought his wife to live with him in my property. His wife has some personal possessions she wants to bring, and frankly there is no space to put any of it here. Even I am living off a suitcase not having even a cupboard for my clothes.

In addition he gets her pregnant within days of marriage, and looks to me to advance her the money to get her the fortified milk powder she is supposed to need to see her through the pregnancy. The latter at 750/- a can is not a joke. So I have to advance him the money for that as no one else can. In this situation, and this is just an example and all my staff are no different and I am not just using an isolated case, I do not know why he has not thought out the process of how he is going to fund all this expenses.

I have had to forfeit all personal expenses in order to build a business under a lot of very tough obstacles, mostly unforeseen that I have had to and continue to face. Any enjoyment or recreation I may seem to enjoy is thanks completely to the generosity of my friends to whom I owe an incredible debt, and have to repay in some form once I make it!!

While this carefree life is part of the culture borne out of being thoroughly spoilt as a race, never having to really suffer, and constantly complaining if something small is not to their liking, we cannot conitnue along this path too long as we seem to have exhausted all our resources by wasting and not investing in the future. It is endemic to Sri Lanka, like we used up a surplus in the treasury soon after Independence to waste it on giving free rice to the people in an election ploy for a government to get elected on promises, in this democratic system of government where no one takes responsibility for ones mistakes and blames someone else when they occur.

Humility is a sure fire way of losing elections. Making promises that cannot be kept is a great way of ensuring longevity and continuity.

I would like to give another example. There is a road that connect two main roads. Namely the Habarana Polonnaruwa road to the Habarana Trincomalee road. It runs between Minneriya and Hatharakotuwa and is about 12 KM long. The main train station of Gal Oya junction where the Trincomalee and Batticaloa train lines meet is on this road as well as the Kaudulla National Park entrance.

This road is in a sorry state. Two years ago it was repaired in the tried and tested way we repair the roads in Sri Lanka, namely patching up holes. This road is used by cement lorries carrying 50 tons of cement as the Cement is off loaded from the Mitsui plant in Trincomalee and loaded on to lorries for the journey to Batticaloa and Polonnaruwa. Apparently Mitsui had offered to build and concrete this road at their cost as they are the heavy users. The local government or Pradeshiya Sabha had rejected this offer as the officials had seen that the yearly contract to repair the road would now not be needed and the money they make from that will not be forthcoming and rejected it on those grounds.

This petty reasoning has resulted in a severe loss to the people, the road users and merchants who ply their trade, to say nothing of the tourists who have to use it to get to the park. The time it takes to go on this road, the buses that refuse to travel and the kids who have to walk instead of taking the school bus are all factors that the politicians and the bureaucrats take no note of. The long term benefits of a motorable road to anyone is so elementary. There are mounds of soil now heaped on the sides of the road for the next repair and filling a mound with soil before putting tar when a 50 ton vehicle goes over it on a wet day is tantamount to a surface patch that will last a matter of hours. Who passes these projects, recommends them and overseas them is a mystery and no one likes to take responsibility for their actions.

This is another example of the culture of not planning effectively and looking forward to making life simpler and easier for one and all before plunging into something.

arbitrage another interesting coconut story

Arbitrage that happens in a market. Another interesting coconut story

I have referred to many a time before of the plight of the coconut industry, the price of coconuts and coconut related industry, which will result in a 100/- a nut scenario before too long.

In order to fulfill the demand for coconuts that I cannot supply from my own trees I used to buy from my neighbors in Polonnaruwa and take them husked to my shop and sell it there. The price discrepancy started at about Rs 15 per nut, which paid for me to buy here and sell there. However in time, over a period of about 4 months, this disparity has narrowed to Rs2, which is the same if I buy it wholesale around my shop, as the retail price of a coconut now exceeds the retail price in Colombo.

I have referred to earlier why the price in Colombo, is lower, because half the coconuts sold there are stolen from the estates by the lorry load. I have also noted earlier that a lorry of 12,500 coconuts has a retail value of Rs 500,000 a life times earnings that can be had in one day. Coconut stealing is a big business, whether it is one man climbing a tree and earning more than the average daily wage in a ten minute exercise or whether it is done collectively.

I have a man with me in Polonnaruwa, who decided to leave a 50acre coconut estate in Arachchikattuwa north of Chilaw, where he was a watcher, because of the incidence of theft, which he could not control, and his superiors were unable to provide him with adequate support to do his job. It interesting to note also that the superintendent was also playing a game with the owners in explaining crop shortfall, by pinning it on a whole host of reasons. The fertilizer purchased as per the books were not all applied by siphoned of for personal use, with nuts also siphoned off through a sorting process.

In addition to this they are sold to traders wholesale at prices below market so there is some payoff for that. For example the price shown to owners as being 20/- a nut for large quantities should in fact be 30/- which is the current going rate in his area. There again the landowner is shortchanged. These watchers are paid just a basic of 5000/- a month, and they do not want to risk their lives battling people stealing coconuts.

I am highlighting this problem, which is becoming more acute each day as the price of coconuts rise and it is a self fulfilling prophecy if one is not able to control theft at all stages and thereby regain control of the industry. There is another way of tackling this problem, which should be an experiment.

If we decide it is in the country’s interest to increase production and large efficient estates is not the answer, as being impractical, then lets give the people in the village a number of trees for an annual rental. Say the contractual period is 5 years for the experiment. They will then be responsible for their trees to sell the nuts and fertilize the property as they can be fully compensated for their sales, or being guaranteed a market price for their nuts. Actually the best alternative would be for them to be responsible for selling their nuts, but then again the trader will intervene to buy at a lower price, but it will still guarantee them an income and guarantee the landowner an income.

A fair deal would be to give the landowner Rs 1000/- a tree per annum, where a 70tree acre would yield 70,000 to the landowner. (even a 500/- a tree payment will give the landowner much more than he currently receives. If the tenant can get 5,000 nuts from that acre selling it at Rs 25/- he can gross 55,000 after paying the rental and then in addition use the land to grow intercrops for his sole benefit. Please bear in mind that if they are able to sell the nuts at 50/- which is very conceivable bearing in mind the direction such prices are heading, it is then a no brainer for the tenant.

The problem again would be how the tenant would control theft, as he wish to live in the property which would not be practical, without cutting trees. Petty theft has been a thing of the past where people around the land used to steal a few fallen nuts for their home consumption. It has now become a much bigger problem where it is becoming a marketable commodity like it has never been before.

Two things are worth remembering. We have to first attempt at all costs to increase the output of coconuts available in the market than is currently the case. So policy makers should determine how best to do this. Secondly, enforcement of the rule of law, to punish theft and therefore deter it is essential to promote entrepreneurial leanings to make the devised policy effective.