Wednesday, December 14, 2011

Plastic Crate Saga is not surprising bearing in mind the lawmakers are on speed!

It is hardly surprising that battle lines are drawn on the enforcement of the Plastic Crate transportation edict. I reported this a few days ago (8th December) in my previous blog entry that it was about to erupt. The government should have known better. You cannot change a lifetime of habit by an edict. It may take about 2 years.

So we all suffer due to government intransigence yet again. Yesterday 250g carrots cost Rs100. Can you think of US$4 a kilo of carrots! When I lived in the US in a farming area of the San Jaochim Valley a whole plastic crate of carrots was the same price, how ironic!!

What next? It was interesting that the Minister was extolling on TV yesterday that he has informed his officials not to prosecute farmers bringing produce in gunny bags if they come in Landmaster Tractors!! lest he would face mounting protest. He has therefore singled out the ‘large transporters’ for particular blame.

It must be said that Johnston Fernando, the Minister of Consumer Affairs maintained on TV yesterday that up to 40% of produce was lost in transport alone, and that the farmers would receive a greater income under the new policy. I dispute both facts. The farmers will receive no greater income, as they do not lose. They sell at farmgate. They are too poor to transport except in a few instances. The lower volume loss in transport may actually result in lower prices to the farmers!!

For farmers, the disadvantage of transport in crates as opposed to the current system in their tractors outweighs the advantages in a max of 5% of produce loss in their transport to the nearest wholesale purchaser. It is typical that the authorities have no clue about all the steps in the food chain, and have just taken a report out of context, without realizing all the steps in transport. I have dealt with this topic at length a long time ago as well, and my thoughts are still the same. If the Minister read my blog a while ago he would not have made such a fool of himself.

It is the trader mafia that calls the shots. The consumer and the farmer pay the price. Please keep the farmer out of this. He must have a higher unit price for his produce, and the continuing instances of oversupply that depress the prices to suicide inducing levels will not be changed by the plastic crate policy. As a transporter and a retailer as well as a home delivery specialist I can say that very often at the retail level a substantial amount of produce is wasted due to the lack of storage (refrigeration) facilities. That is a problem that is again not addressed by the plastic crate policy.

If you are a fruit stall with bunches of banana for sale, how much wastage of unsold banana do you think you have? It averages about 25%. So the trick is to educate them in the use of the excess unsold banana. Research into making some food items using overripe banana should be an important priority for ITI. I remember, making banana fritters from this but there are only so many fritters you can eat. Is there a method to make frozen fritters cheaply and popularize it?

Getting back to the main aspect of my report IT IS to find a compromise both parties can live with, as a face saving move. Now that the battle lines are drawn and Johnny does not want to look a fool in the same way he threw away thousands of coconuts from Kerala into the sea, and made a cut on cheap and unsellable eggs from India he is now into his umpteenth scandal. I also heard today that some close connection of his is involved in the manufacture or at least of marketing of the crates at Rs1750 each even though it is sold on a monthly payment basis not exceeding Rs100 a month. Who is kidding whom? People who purchase this know that the interest is built into this price already.

I was very sad to see these crates being thrown from the top of lorries yesterday on the TV news. I know they can be damaged and transportation suffers as the stackability of these crates is also an issue along with the volume that can be carried in a cost effective manner.

The Compromise should be to sell the crates at a subsidized rate of Rs500 each for immediate purchase. Anything more is prohibitive as most of the vegetables carried in each crate are of lesser value than the crates themselves. The cost of road transport is in essence the difference between profit and loss, and the market economy cannot justify the increased requirement of vehicles to transport lower weights unless someone subsidizes them. So the government which has no clue as to how the market economy works, must try and understand why these traders are protesting vehemently, and the consumers and farmers suffer for different reasons.

I am afraid in this the President intervenes and the consummate politician that he is will climb down on this demand and shift the blame completely onto Johnny who could lose his portfolio at the next cabinet reshuffle. I still believe some good will come out of this, it will get farmers, traders and consumers to think through the problems in wastage, and find solutions to all the problems, by not transferring the blame a trader led protest, and find solutions for the most cost effective means of reducing the massive wastage between what is grown and what is consumed. IT IS NOT ALL A PLASTIC CRATE ISSUE. So how about a good rail transport policy to shift volumes that the road system cannot hope to do without more congestion?


thekillromeoproject said...

Very well written sir! This is yet another example of the government appointing inept politicians to handle important portfolios.

Anonymous said...

There is a reason that people don't use plastic crates.

It is because they are not economically viable in todays SL.

The market economy is the only thing that can solve this problem.

Agriculture is VERY unpredictable. There is NO way to justify this kind of CAP-EX when people probably don't make enough of a margin to justify it.

Raigama said...

This is yet another foolish decision (wether it was taken by politicians or gov. officials). As it correctly pointed out here it may need 2-3 years before you can completely remove gunny bags. Crates are neither sustainable nor practical in SL environment where people do most of stuff but not the machinery and the farmers have very small profit margin.

Anonymous said...

To save johnny's bacon the Govt. announced a few moments ago, a ONE month stay before enforcing the rule. Let us see what happens in a month.

Any guesses. This is a too important issue to leave it to edicts. The theoreticians in the Institute of Post Harvest Technology gave the sums and the govt. in their lack of common sense pounced on the idea that plastic crates will do the trick.

Johnny thought that will reduce the price of fruit and vegetables with 40% more for sale, and that the Consumer will think he is GOD. This GOD complex did him in.

Shows the quality of the law makers. We deserve who we elect though, so we voters must collectively share the blame for their actions.

These servants of the people must be fired by the people!!

Bimal said...

Very good points made. There was a farmer being interviewed on local news and he stated that they not only use those gunny bags at the point of transporting, but they take those gunny bags to the fields and the harvest is directly stuffed into those bags. He claims that if he were to do that with the crates, he would have to employ at least 3 or 4 more staff to do the harvesting. So there weem to be a lot more dependencies and practices that gets affected with this change and I don't believe the authorities have explored the full cycles before making this decision.

N said...

I don't think Johnston knows what a supply chain is.

Rajaratarala said...

thanks all for the instant comments. all my blog entries yesterday seem to have drawn a fair number, so I wonder if the blogosphere has gone to sleep! Am I the only one with something to say?

It is obvious from the comments, that we cannot be in society where there are punishable offenses if we do not follow certain rules, even though to people it makes no sense in their respective businesses. After all this is playing with people's livelihood and making a risky business even more risky.

Free enterprise and the profit motive usually work in the best interests of all. If the government wishes certain changes in practice they must incentivize that practice and maybe they will have gradual converts, once they see the benefit in that.

After all the tomato boxes was a free enterprise practice that reduced the post harvest loss, not a dictate from the State. This benefited producer, wholesaler, transporter and consumer, a win win situation for all. That is how the debate should be tackled, not some too bit jumper trying to impress his boss and now looking like an utter idiot.

Let us see what happens in a month. Will it turn into recommendations rather than inviolability?

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