Tuesday, June 21, 2011

Divineguma - a way to hoodwink a nation

It is preposterous for a senior minister in government to say that the above program will uplift the lives of one million households. Just think about the logic. They are supposed to provide the basics, so that households will become self sufficient in many areas including food production, but also on livelihood development. This if one takes a five person household should positively affect 25% of the population of this country. Are they dreaming in technicolor?

The hundred rupees of seeds given to my neighbor in Hingurakgoda as part of the program did not even germinate, such is the quality of the seeds they provide. You can take a horse to water but cannot force it to drink. Understand that it is just the empowering process that the govt. should get involved in, not tell what people should do. If people are waiting for the govt. to advise them what to do then those people are not in a calibre that can even take advice.

The 500 families who were forced to lease a Dimo Batta that had been lying in Galle Face overnight so that the minister could get into the photo op are now rotting corroded because the film of salt was not washed off. They are in deep trouble trying to meet the monthly Rs22,500 lease payment.

Most people know what they want, it is not up to the govt. to tell them. It is the infrastructure in order to get what they want that the govt. should assist with. Much of the infrastructure is soft loans or microfinance(the Batta lease is at full rate with People's Bank being the main beneficiary) Then the climate to operate and whatever is provided should be of good quality and not an excuse to spend money or give their henchmen contracts in selling faulty goods.

The sad fact is that I think the Minister in charge of this project really believes it can work. That is the worrying thing. He does not realize anything about the people it is directed at. You cannot make entrepreneurs out of those who have no inclination in that direction. In my opinion it is giving false hopes to people on the margin, and continuing to keep them leashed to that hope without releasing them from this hope, by getting them to take control of their own lives and not depend on the state to help them along the way.

A person who wants to plant a coconut tree in his yard will do so Divineguma or not. Freely supplying coconut saplings willy nilly is not the answer. Considerable thought goes into this, and when things are divided amongst people everyone feels entitled to it whether they make use of it or not. So only half the seedlings will be planted properly and lets bet on it that the other half will not see the light of 5 years for the first nut.

In Sri Lanka we will take anything given free or thought to be free, even a headache. It is the unintended consequences of the recipient that I am trying to explain to farmers or rural people to avoid by listening to those who are spreading this lie.

To avoid disappointment do what you originally wanted, nothing in the Divineguma program is going to help you as the officials who are supposed to assist even don't know how. The whole program is inflate an already inflated ego of a person or persons in senior govt. positions.

Take whatever a govt. person says with a pinch of salt as it is not being said to assist you, just to massage the ego of the person making the asinine statement.

Monday, June 20, 2011

The Great Tomato Soup Heist

The small people like us who go shopping for vegetables ( I am still in crutches) will know how low the price of Tomato has fallen to. While it is not that cheap at Food City, it is down to Rs20 if I buy a kilo or more at the Pola.

So now I can have tomato soup and tomato with everything without worrying about the price as most other vegetables cost more. Look at the plight of the Tomato grower. It was before my accident that tomato at retail climbed to over Rs120 a kilo, but it takes about that time for people who think growing tomato may change their lives so many people increased the land extent that they used for growing tomato.

So if one drives on the Walapana, Rikilligaskade, Hanguranketha stretch also referred to as the Tomato belt, one will see the wooden tomato boxes piled high waiting for pick up. It is quite possible that farmers who saw the price of tomato rise so high, put more land under tomato and now are facing a glut as they did a super job growing, and the weather was kind to them as well as the tomato wilt was adequately contained. There is tomato coming out of their ears!!!

What do they do when the price offered for a kilo is Rs 5 and the box deposit is Rs 60 when the box can hold at most 20kg of tomato? That is a further Rs3 just for the box. Think about it? when tomato was retailing at Rs120, the farmer was able to sell it at Rs60 per kg, so the box fetched say Rs1,800. Now they are lucky to receive Rs100. Just look at the income discrepancy. Granted at the time tomato was Rs120 their yields were about 20% of current yields. Still if their yields are 5 times now, they are receiving Rs500 for the five boxes and then they received Rs1,800 for the one box, a quarter of the income.

One can now appreciate how devastating it is to the grower who is now reluctant to pluck. No amount of increased fertilizer subsidy for minor crops will improve his bottom line.

The wholesaler of course still makes a profit as his margin is on the difference between what he buys, his transport and storage costs, and selling price. I pity the tomato growers bringing them to the Dambulla market throwing their tomatoes into the garbage for elephants to scavenge on after paying for the transport cost.

Now it should be a field day for the Ketchup makers. MD, KVC, KIST and the like. They can make a fortune with their costs so low. The problem is that they are also brainless. They were caught with their pants down, and were not able to shift production immediately to Tomato Sauce to the extent that they should. They did not have enough labels bottles and the like. Added to that their prices never drop even if the raw material drops so there is less incentive to maximize profits, and a scandal arises there where the purchasing managers buy the tomato at Rs 10 from the bulk deliverer(quality of tomato for pulping is less important as it is cooked before bottling) but book it into the company records at Rs25 to 40 and pockets the difference.

The company records don't look bad as they are buying at much lower prices, so they will show profits. the purchasing person and his sidekicks pocket a sizeable amount on this short term payday for them and in the end the consumer suffers. This is how the agri-processing business is run.

When you look at all the machinations that go on in our economy, behind the scenes is it any wonder that the average Joe in the country is thoroughly confused.

I just hope the owner of MD (Hunters) reads this, goes to their cannery in Attanagalla and checks up on the costs and production of Tomato Sauce to see if he can make another Rs10M profit more than he is currently making. I don't think so as there is little competition in this field with few players in the market, resulting in an oligopoly at whose brunt end is the Consumer