The Onion Conundrum – a peculiarly Sri Lankan odyssey

Sri Lanka grows big onions only seasonally and harvests 90% of its local production in the months August to October, before the October rains. Therefore the Government in order to help the local onion producer had slapped an import levy of Rs50/kg in August satisfying the local farmers as imports would create an oversupply.

Those traders who knew about the import levy, were able to purchase and land their onions in the country on time, so despite them not needing to pay the higher duty, they were nevertheless able to retail their stocks at the higher prices, before the full effect of the harvest and its surplus came to the market, thereby profiting handsomely.

There is a slight difference in taste between the local onions and the generally drier and larger Indian Variety. Also I believe the Indian variety stores better and can be kept for a lot longer than the local variety and is also generally larger in size.

I do not wish to go into the intricacies of onion storage except to say that it requires some purpose built shelves, to keep out moisture and preserve dryness, something that the Indians are far better at.

So when imported onions with the lower Rs15/kg was in the market in August, the price was around Rs60/kg retail, where the landed cost to the importer at the port before the duty is around Rs30/kg, if he buys in huge quantities. Then the local variety flooded the market as soon as the harvest was sent to the market, the Govt. increased the Tax to Rs50/kg, an increase of Rs35/kg.

At that point imports stopped, as the local was retailed at about Rs60/kg, when the farmer was only given around Rs35/kg, the rest being made by the intermediate players known as middle men, who also had a stock of the cheaper imports to sell off as mentioned above. The Rs35/kg farm gate price was less than the cost of production to the farmer, and many farmers were demonstrating about it. No amount of duty increase was going to help them at that stage, merely because the supply exceeds demand, and large scale storage is not possible.

If one takes a reasonable view, the product is demand inelastic as the consumption pattern as a food item is pretty steady all year round, and the price will only affect consumption marginally. The farmers are not sufficiently sophisticated in terms of numbers to store this until prices rise, when supply weakens, and therefore they receive a low price. Middle men cannot buy and store until prices rise, as the special storage is needed just for a few months and the attendant risk of spoilage,  and due to the type of onions we have. The lack of proper storage facilities that are unique to onions, and where long life cannot be assured, as one is unable to look at a sack of onions and determine if it was harvested without being subject to a recent rain or some such moisture inducing event thereby closing that option.

After a while, when the supply reduced, the price began to rise to around Rs90/kg where farmers who were able to store it were able to sell their stock at about Rs65/kg to Rs70/kg. I must mention at this time that the Lak Sathosa outlets of the Govt. owned retail stores around the country had purchased directly from farmers at Rs60 and sold at Rs65 to the customers. There were problems in disposal and Lak Sathosa had to throw away a lot as it was cheaper in the open market!

I must say when I looked at the quality of those onions in those stores, there was a lot to be desired, as their quality was bad, and only about 75% of what one bought could be used. So no wonder trying to manipulate the free market ended up costing this State owned enterprise a lot.

Now that the price reached Rs90/kg, supply being short, and a Rs50/kg import tax which also corresponded to the retail price of imports also being at that level, the consumer was left paying a much higher price. So now the consumer rights overtook the farmers.

The Govt. suddenly and without warning, reduced the duty back to Rs15/kg. It was the same for potatoes, and the duty on Red Onions was also reduced by less, as this harvest also has now ceased.

It does not take a rocket scientist to realize that the importers knew that the tax would be reduced as there was no way the local market could supply the needful, so they desisted from imports to only the minimal amounts ahead of the duty reduction. As usual again, the onion farmers who were sophisticated enough to be able to store the onions to get a higher price, were only releasing stock that was likely to go bad, and held onto the balance to sell at the top.

With the duty reduced, the market price must fall by at least the reduction in the duty, and the farmers who held on hoping this price level would continue have begun to dump their onions in the market before the imports arrive. Now they cannot even sell their lovingly and carefully stored onions for Rs30/kg as traders are now taking advantage of their distress and making a bigger margin as middlemen!

The farmers are now agitating, saying if they were given three weeks notice, they would have released their stocks to the market in anticipation of the import duty reduction. In this example one can clearly see the lack of a coherent policy ALWAYS affects the farmer, however clever or versatile he may be in the knowledge of storage methods, to keep his onions for a longer period.

The farmer is not powerful as a group to affect the price, leaving it to the Trader to do the needful.

Sri Lanka will not produce enough onions for local consumption, and cannot produce it all year long, so we MUST import it. The govt is encouraging more onion cultivation which will ADD to the seasonal woes not reduce it unless long term storage facilities can be set up at local level, but has to be done by individuals and not collectively as it is difficult to manage in a cooperative way. 

The Govt takes in a lot of tax from imports during the year to fund its other activities. Nothing will prevent the temporary price dive in August and September when the harvest comes in, as there is no way to store the excess by anyone other than the farmer who grows it who knows the quality of his own stock, store-able or not!

It is time we treated WATER with more respect – not by charging though!

People in countries and states where water is scarce, know and practice the art of conserving and careful use of this scarce commodity. People are very used to going to great lengths to use as little as possible for their daily needs. Almost all homes in those countries have water meters and people are charged under different bases for water consumption. Few wash their cars at home, and go to car washes where water is used sparingly and reused as grey water. Grey water is used for gardens.

Colombo folk, now pay increasing charges for water and are more conscious of the cost; rarely do we see a maid watering the garden with a hose, and instead see them use watering cans to water specific areas of plants and flower beds, when there has been no rain for over 10 ten days. These days the rains are heavy and thoughts of water conservation are few, however it is now time to think of conserving a larger percentage of this rainwater, that now just flows down to the sea, without prior use.

All new rural water schemes come with a water-meter, and homesteads are charged for the water they use. It comes from a central source via the pipelines that are now increasingly being laid along the roads with outlets to each building plot. When the bills come people begin to realize the need to conserve and hence are careful in their use. Many homes that have this so called mains supply also have wells and therefore use the well water when needed or as necessary.

It is now dawning on people that the well water is not an unstoppable source of free water, and that the water table is affected by over use of well water, and sometimes can lead to permanent loss, where the ground water level does not refill.

I have to pay a standard fee per season for the use of water to my fields. It is a nominal charge, which does not take into account the true cost of supplying water via the system of channels and canals from the Minneriya Tank. I have stated before that I have perennial problems of non receipt of water, as I am the last in the channel and my neighbors who are further up take the water (more than their allocation) with none left for me, resulting in my having to pump water from the river to make up the shortfall. This incurs the ire of the authorities for so doing, as it is supposed to be water that is due further downstream harvested by a system of anicuts to paddy fields. Whilst excess water seeps into the river from field ahead of me, I am supposedly prevented from pumping that back for my fields!!!

 

The attempt recently to make an annual charge for the use of a well in one’s own property was greeted with horror. However whilst I agree at present it is best not to do so, it is still worthy of a reminder that the precious water MUST be conserved.

Only 65 Tonnes of paddy have been purchased from Polonnaruwa District!!

In today’s (3^rd October 2012) Daily News it was reported that subsequent to the Yala Season harvest only 65 Tonnes of paddy have been purchased by the PMB from the Polonnaruwa District. There is no reason given as to why this amount is so low. Is it because the farmers just had no surplus paddy to sell the state? No explanations are given except for the facts.

Subsequent to last season’s bumper harvest, there was a lot of paddy in storage, as a result of the state purchasing and filling the various storage warehouses. Some of this paddy has been sold at a price lower than the state purchase price to local millers, whilst the bulk of it still remains in storage.

The state is manipulating the price. That is by not releasing the stock in the silos, and the small crop this season, a shortage of paddy has resulted. This has raised the farm gate price, a boon to the farmer, though his crop is a fraction of the previous season and is small comfort. This is the simple reason why the state has not been able to purchase the paddy. It is not worth their while for the farmers to take the paddy to the state buyers, when they can get a higher price at the fields from traders. For those in the know, a three bushel paddy bag of nadu rice sells for Rs2200 and for the samba white it is Rs2400 the latter at Rs 38/kg when the govt. purchase price is Rs30/kg. I am told the price is on the way up.

It is important now that the state does not play games with manipulating stock of rice in stores to raise the price, so as to release an excess only to fall again. In the same vein the state can create an artificial shortage by not releasing rice from their stores increasing the market price. This will help the large millers more than anyone else to increase their price, and dupe ruined marginal farmers who have decided to abandon paddy cultivation, to get back into the Maha season!

What this does is enrich the millers and make an already poor paddy farmer even poorer, cheated by a false sense of security. Please do not forget that traders make profits on the changing price of paddy. The farmers dispose of it at whatever price they can get, as they have to turn their harvest into cash. They cannot afford the luxury of storing it until the prices rise, unlike the rich traders and millers. The state is playing the enabler yet again, on behalf of these unscrupulous traders who profit from this turn of events. The customer now has to pay a higher price for rice, even though there are thousands of tons of rice rotting in the government stores, not being sold(why?). This sort of behavior by the Govt. is unpardonable, as I can see the farmers’ desire to farm, daily diminishes by such State in/action.

The reintroduction of the Crate rule – is only one reason

It was barely two months ago when the farmers were screaming blue murder that they had surplus vegetables that they could not sell. Tomato was rotting on the trees too costly to pluck. Now tomato is Rs300/kg at retail! So what gives?

Tomato was always transported in boxes to prevent being squashed so the crate law does not impact them differently. It is purely a question of good weather which brought a bumper crop, and farmers stopped growing tomato as it was not worth their while and hey presto there is a shortage, coupled with the drought that has intensified the problem. It helps to be contrary, as those people who were able using greenhouses to grow tomato expecting the shortage and price rises are making hay. However one can probably count the number of people in this fortunate state on the fingers on one hand, there are so few who took advantage.

That particular circumstance aside, there is a huge debate going on as to why there is such a massive fluctuation in vegetable prices, which are not always exactly predictable, year on year. The crate issue is not the main reason. After all only a total of 25 fruit and vegetables require to be transported by crates. That is peanuts in comparison to over 100 varieties.

Many of the price increases are on vegetables that do not even require crates, though obviously there is an added cost involved in crate transport, not covered by lower post harvest losses. Ironically due to the political sensitivity of the farm lobby, the crate law does not apply farmers. That at a stroke reduces the benefit of the crate law in the first place as there is a substantial loss in transport from the farm gate to the main wholesalers at Economic Zones where they are first transported to.

In today’s context the drought is bigger factor, as it is across the country and not restricted to an area. The only people likely to benefit from this are people who were able to grow vegetables in their home gardens, use available water from home wells to grow their vegetables for home consumption and therefore save on market prices, which mean they will now be able to eat, that which they were priced out of. Good for them!

It is clear that farmers have not been able to weather proof their production, and due to lower yields will not benefit from price increases.

Hemakumara resigns! About time! Have you finally seen the light? What took you so long?

A Presidential Advisor on agriculture and a former MP and minister, who defected to the UPFA from the UNP, and lost his seat at the last elections, Hemakumara Nanayakkara resigned his post today in disgust at the Government Agricultural Policies or lack of them. He is also the younger brother of Vasudeva Nanayakkara, an MP and leftist!

This blog is full of the lack of it! And it does not surprise me that after his visits to the farming communities all over the country, it is apparent what a pigs breakfast this Govt. has made of agriculture. The agriculture ministers are confused as to what their responsibilities are, the bureaucrats in the departments are completely unhinged and the farmers left in the dark, as policies come and go in a field that requires long term planning for effective productivity in the least productive sector in our country.

I am sure that once confronted with the farmers’ woes, of schizophrenic behavior on the part of Govt. policies, he realized that he could only express his honest opinion, by not being a yes man, but by being truthful and objective that there is NO policy that is being implemented to benefit agriculture in Sri Lanka.

This lack of knowledge of the subject and the pursuance of a policy aimed at hoodwinking the farmers for votes to win elections, is grounds to be disgusted, as the Govt. takes advantage of a very delicate community facing incredible odds to make a living. It is time that he gives his frank opinion, rather than pussyfooting around, as to the real reasons he is disgusted with the current state of play.

So how about a summary: The quality of the fertilizer given to the farmers suck. The use of the fertilizer is harmful. The planting material given is not up to an acceptable standard. The weather forecasts were wrong and so the officials gave farmers the wrong information with regard to planting, resulting in a colossal loss of inputs as the plants will now die. The unannounced withdrawal of the subsidy for non paddy crops and the late availability of fertilizer. The difference between the guaranteed price to the farmers and the real price they receive. The lack of a market for the produce, and the bad advice from the department on every aspect of agriculture. To name a few of the topics to be covered.

Sustainable Agriculture – Its everywhere but in practice!

There is so much pontificating words written about sustainable agriculture and I believe very little of that comes directly from someone who earns 100% of his income from existing agriculture, sustainable or not.

Why is that? The person who is a full time farmer cannot see the practical side of the concept as he cannot contemplate doing without many of the inputs he has become accustomed to. He cannot see that he can earn a comfortable income following these principles. After all he wants a life, like all of us. In my experience it is only theoretical farmers who have other income means who practice this in a serious way, and by so doing they grossly under price in terms of the market place. The reason is that if the true economic cost was charged, no one will buy. I can vouch for that as I also attempted to do the same and discovered how expensive it really is, especially to do it on a small scale.

While I believe there are merits in sustainable agriculture, there is no concerted effort to bring the two opposing factions together or to bridge the gap. The poles are so extreme that people in either camp despise those of the other. Into this argument are those who espouse green agriculture and those who term that green is greed in a veiled guise. After all the Green Revolution whilst increasing yield had as a direct result the abandonment of thousand years of practices and techniques purely in the interests of extra yield in order to save the world from starving.

So what is the bottom line? We must attempt to explain it coming from the results of existing practices (post green revolution) that are promoted or are in current use.

Well it is that our land is being severely polluted. Sri Lanka uses 10 times as much chemical pesticides and weedicides over recommended usage. I was shocked at a picture I saw in an article by the reputable environmental advocate for agriculture, Dr Ranil Senanayake, which showed a diagram of the seas of the world and the seas around Sri Lanka were the MOST polluted of all the seas. If that is not scary I don’t know what is. I was shocked into being aghast staring at it for a while wondering how we in this country got into that state of self destruction.

Now it is up to the political will of our people. Can we ban their use? Yes but not unless we have an alternative in place which is at least as acceptable. We were a country with supposedly 3000 varieties of rice. We probably grow at most 15 varieties now. We DO NOT use transplant techniques to weed and instead use pesticides and chemicals. The Govt. in their foolish wisdom, came into power by promising the continuation of a fertilizer subsidy, that is both costing the country Rs50B per annum, but which has now resulted in a huge set of medical problems from the seepage of these chemicals into the water table, and could shortly decimate our population if not checked, like malaria never did!!

The environmental lobby advocate small farming, and decry the large farms and their control over land and also labor, by making slaves out of small subsistence farmers, but that argument is very disingenuous as there is no way if the country wants a GNP of $5000 a year, that these small farmers can remotely get to even a fifth of it!!

As long as some NGO pays their airfare to Rio and they can interact and bullshit with fellow environmentalists, the farmer in the 2 acre field is left destitute eitherway and so if we advocate NO use of chemicals, who is there to guide him in the practice? He needs his hand held for a while before he can embrace the alternatives. Along with the change of direction, go obligations, expectations, and behavior modification, which we expect the poorest sections of our society to engage in when the wealthy smugly do not even budge from their inertia, but pontificate.

Unless the whole process engages a holistic change in the food chain from education of eating habits, to the need for paying more for food items with worms as being healthy for you, to methods of storage and transport that ensure that most of the benefit accrues to the farmer and not the intermediary, it will not succeed. A rational and commonsense way of eliminating the middlemen in the food chain along with the mafia who control and therefore hype the price to the consumer, whilst at the same time pressing down the price to the farmer is the only answer.

I do believe that even if we have half the yield, we can still feed the population, by changing eating habits to healthy from volume, and from mostly closely grown than from transported from afar, to reduce the carbon footprint. We must simultaneously address wastage, reduce length and cost of transport, and ensure above all, education of the consumer.

The Drought - Tobacco Company – in the farmer’s pocket – or the other way round

There is a huge ongoing issue in the Bakamuna Elahera, Yoda Ela stretch, Mahaweli H zone I believe it is called. No water has been supplied to the farmers after a promise that water would be released on May 1^st. Water was released for a few days, which confused the farmers into getting ready for planting and then it was stopped. No water has been sent subsequently.

Firstly the farmers who jumped into preparing their lands were left high and dry licking their losses. Then the Tobacco Company reps jumped in and offered an alternative of growing tobacco where they will supply all the inputs without having to lay down any money and will only deduct the costs once the harvest is in from the final proceeds, which suited many farmers. Many of the people with connections to the local politicians, who promised them the minimum water, got into that line and are continuing this cultivation to the disgust of the farmers who did not, and the anti tobacco NGOs who are complaining that there is a mafia controlling the limited water supply to supply the tobacco plantations.

THERE IS NO DRINKING WATER let alone water for cultivation. The Problem is acute, within a month the people will explode into violence against the inability of the government to act and their continuing to help their own friends and connections in the Tobacco Cultivations.

WE MUST DO SOMETHING TO HELP THEM. They have NOWHERE TO TURN. GO SEE FOR YOURSELF THIS IS NO JOKE.

No one to hear their plight. They believe the politicians are far removed from their daily problems and as the politicos cannot solve their immediate problems prefer to stay away in 5 star AC comfort in Colombo. Even the President who turned up at Elahera about a month ago, hooked it back to his Helicopter and flew away into the sunset, and did not wait to make the speech he was supposed to, as he would have been lynched by the people for saying things that do not mean anything to them.

The problems have got so acute as even drinking water is at a premium with wells running dry as the traditional Yoda Ela Canal is not supplying even a trickle of water for bathing as there is no water in the Mahaweli system to supply the diversion through Polgolla that comes into this area.

The Govt. DOES NOT give subsidized fertilizer for tobacco so the tobacco farmers are completely on their own, with advice from their reps to manage their plantations, and the necessary help within their own organizations. The farmers not in this cultivation allege that the District Secretariat staff assist them in breaking rules to provide them with water. It is possible that violence may be directed at these people before long.

Don’t say I did not forewarn of the impending catastrophe. When you are thirsty and see no way of buying water, when you have no way of paying for medicines or for food as these people have used all their savings already, you do not understand the seriousness of the situation.

Any politician who goes there without a solution at hand with them, will be lynched so no one dare go there. You cannot promise anything anymore as people will not believe any promise as they know they are mere words.

Added to this the sudden withdrawal of the fertilizer subsidy for other crops has spooked farmers who did not know in advance that this subsidy had been withdrawn. So for their corn, green gram, soya cultivations, they will have to purchase their own or manufacture their own fertilizer at market prices. Today that is a moot point for the Mahaweli H zone farmers as they are facing a bleak future at least until the October rains.

Why do we wait for the problem to get worse before we take steps to try and help? The Minister of Disaster Management, don’t say you have not been informed.  If we assist in helping them with something like emergency tube wells we may at least alleviate the drinking water problem. I was suggesting a bowser of water but then when one village is helped, the other village will say they did not get water and get angry with the giver. This will be considered just a band aid to prevent the deep cut that needs stitches.

Tobacco cultivators be warned, along with Pradeshiya Sabha members of the area, your plantations face the first of the blows. More importantly anyone who is willing to help DO NOT go to the Government departments who will take all you have to give and more without any of the needy people getting anything. Go direct, give each a bottle, tag their fingers so they cannot come for seconds and give as much as you can.

A case for a close look at the Fertilizer imports – quality sucks!

I missed the 7am SLTB bus to Hingurakgoda, because it left the Ratmale junction at 6.45am and so took the Private bus at 8am. Rs37 is the bus fare and it was packed with the locals going to the Sunday Pola (farmers market) including those who missed the earlier bus.

I got the chance to chat with my friends in the Pola, where I used to go every Sunday when I was in town in my farming days. I had not seen them in a while and many had not even heard of the accident so were pleased to see me hobbling just with a walking stick now!

I was chatting with a farmer friend, who had brought his produce to the pola for sale. Boss Mama is what I call a professional farmer, in a small way intensively farming about 5 acres and has tried almost everything. So it was him, I used to go for advice in the past, and was generally talking about the state of farming, and the problems he was facing.

Now though the fertilizer subsidy at a lower amount is given to the farmers for other crops, I was asking him about some of the issues. He was quite firm in that the Urea he uses is a little suspect now. The quality has dropped substantially. It is all imported, mainly from the Middle East as it is a by-product of the Oil Refining processes. I checked the international prices at the moment, being US$550 a ton which works out to Rs72/kg or over Rs3500 per 50kg bag for which Rs1000 is charged, the rest being the government subsidy. The actual cost is now higher as it must include the transport, and retailer margins when one buys it locally.

Either way there appears to be some fraud that goes on in the procurement processes for this. There is a tender board through which the urea is purchased, and I read in today’s Sunday Times about serious irregularities in the tender process being highlighted. Be that as it may and remembering how the tea small holders are also demonstrating about the poor quality of their fertilizer, urea being the main component for the lush growth of the tea bush, it boils down to a problem! These tea smallholders were complaining the fertilizer they purchases actually killed the tea bushes a serious allegation.

Another problem in using state procured fertilizer to which the government must accept full responsibility.They must right these wrongs. 

Another disaster in the offing. The hapless farmer is in the thick of it

I am in Minneriya during the Poson weekend, for some rest and relaxation, but I have been confronted by a problem that the local farmers have brought to my attention that I believe needs to be noted at the national stage and I do not see the prominence given to it as it deserves.

As I came by bus to Minneriya at dawn last morning, I was shocked at the low level of water of the Minneriya tank, which was full at the same time last month when I was here a for a few days over Vesak. It shows that there is no water to be sent from Polgolla via the Yoda Ela down to Polonnaruwa as the Victoria Dam is empty and the water level has gone down to a depth that the old Teldeniya town which was submerged is now on dry land!

If there is no serious rain, then the farmers who have sown will lose their crops as I do not believe there is enough water in the Minneriya Tank today to tide them over till the harvest. So at least the farmers who were not allowed to work their land in the Elahera Bakamoona line are spared this disaster, though they are agitating for a greater share of land to be ploughed, not realizing why they have been asked to keep the land fallow. There is not proper information flow from bureaucrat to farmer.

It is a mess that does not have a solution, as the farmers have ploughed in everything literally into the land and if they are not able to harvest, there is no real relief, which is enough to turn the area into a disaster zone with farmers not being able to feed their families. It is a possibility not worth contemplating, but needs to be addressed sooner rather than later, alerting them to the impending disaster rather than them having to face the music later. It is important therefore that the water to the land is reduced immediately to save it for a later date rather than hope for rain that may not transpire. We in Sri Lanka are poor communicators and it shows.

Let us begin with a water index in the newspapers and highlight the value of water conservation immediately especially for farmers who waste water as they do not pay for it directly. It is only then that farmers will not waste water unnecessarily in a way I have pointed out time and again here in the blog, to prevent other farmers from getting water. I believe that we MUST ACT NOW before it is too late for this season. The young paddy plants look so lush and green today hiding what might be in store!!

The vast areas of arable land that is not cultivated in Sri Lanka

I would like to point out that in my travels in the Gampaha district lately, I see huge swathes of land that remain uncultivated. They are mainly the paddy lands which we see all around us. This is simply a shame. The government as usual tries to make rules for people to follow, not make the foundation for a solution. So what they do is say they will take over uncultivated lands, unless the owner cultivates it. By making such rash and unsound statements, they are laying themselves open to ridicule.

It is simply not practical to farm these lands in small units. In order to achieve a profit the whole field, some with over 50 owners must be cultivated as one, and the renter can pay the owners of the land, an amount based on that person’s allotment size. The problem is one person’s opinion of what is a reasonable rent may differ from anothers, so there may be some form of set rate, and as all the owners have to participate, as otherwise the tenant farmer will not take up the opportunity, it is not an easy one to solve, but is doable.

It is this out of the box approach that is now needed for cultivation, as we are only realizing a minuscule amount of productivity from our lands due to the small intensive agriculture we have practiced for generations, which does not make economic sense today.

On the legal side, what they need to do is to reinforce the ownership of the land, so the owner does not lose his rights if someone else rents that land for any purpose, even to graze their cattle. If one just takes the latter as an example, if I am able to rent a large paddy field for a period of three years to grow grass, and then use this new variety of grass that is high in nutrients for the cows, I may be able to run a profitable dairy business.

If I can do this in the Gamapa district close to the areas of consumption of milk, it will serve many purposes. It will help us become self sufficient in Milk production for domestic use. It will also help us utilize unutilized land for a constructive purpose without using it as fallow. A mix use of growing grass can turn the soil fertility round and be a good intermediate crop before the owners retake the land once the leases expire and grow their agribusiness after taking learning from the current tenant of the self same land.

Most agricultural advisers see this anomaly, and have suggested that they get involved in the projects currently in existence. It is very important that we understand, that the land lies fallow because the owner is otherwise engaged in a career however the interpretation of the law precludes him from renting out the land either, due to the fear that it could be taken over.

In conclusion, we must enact legislation without delay to preserve the ownership rights of property and permit renting out of land for a fair rate that provides the high risk farmer a certain level of knowledge that he can farm the land for the term of the lease without any encumbrances other than simply making the annual payment in advance. In this system all stakeholders will be empowered to make a difference by using their land wisely to maximize the productivity and benefit the nation.  

I believe too few people understand the potential of this land, because we are still stuck in the 18^th century as far as agricultural practices are concerned and must take a few leaps of centuries to get to the current date and implement practices adopted now. What is worse a lot of emphasis is on going back to past to copy from what was done then.

Once must learn from the past so the same mistakes are not made by a new generation and adopt the relevant practices for the present.

The whole of the Gampaha district is becoming a place littered with single family dwellings on one level, some with large plots others with just enough room for a home, and many in between. Of course the in between ones appear to use the land area for growing food to feed the family, whilst the larger plots are generally under utilized as it requires a large labor input if it were to be cultivated intensely. They nevertheless have an assortment of trees that produce different fruit depending on the seasons for personal consumption, surrounded by the fields I referred to which are not economical for the owners to attempt to cultivate and which they dare not give to another farmer to work on for fear of not being able to recover the land.

So I believe the law must be clear, and one should not have to go to court to retrieve the land once the lease expires and must automatically revert to the owner unless there is a new lease agreement from scratch as a new rental that is agreeable to both parties.

The guaranteed price – Is it a win win situation for both parties?

In my blog entry yesterday I reported on how once farmers were given a guaranteed price for their produce, in this case corn of Rs35/kg they were able to produce a bumper crop, which for the first time made Sri Lanka a net exporter of corn. If this is a real life example then we must adopt it for other crops, especially if we can guarantee export at a quality and price the importer in the foreign country wants.

It is worth remembering that if the price in the local marketplace was higher than Rs35/kg, I wonder if our farmers would stick to the agreement or try and sell their produce elsewhere! Either way, it is a start and has proven to work and the farmer who grew this crop definitely wins hands down over the farmers who planted paddy.

It is also worth remembering that the fertilizer subsidy extends to all crops now and so the urea used by the corn farmers now costs Rs1000 a 50kg bag as opposed to the Rs4000 which is the world market price at which the government buys it to sell to these farmers. I would dearly like to know what the average use of urea was per 1000kg of corn. If it was two bags then this extra cost of Rs6000 must be added to costs to determine if the nation as a whole benefits as the 35,000 per effectively incurs an export levy of Rs6000 a tone. As today’s spot price in NY is Rs 33,000 for corn, then one wonders how beneficial it really is! We are effectively giving the exporter a subsidy of that amount. The flip side of this is would the farmer have grown this product if he had to pay full price for the Urea, an essential component input in the growth of corn as a little is put into each planting hole at planting to maximize weight and plant growth?

So, on the same vein if paddy farmers are guaranteed Rs35/kg for a quality paddy that will be used for export, then we again must take into consideration the fertilizer subsidy when counting the cost of export. In this case the per ton subsidy is greater as the fertilizer subsidy for rice is much greater as the same bag is sold for Rs350 to the paddy farmer and not Rs1000 as sold to the corn farmer.

When the Rs50B subsidy for fertilizer per annum is accounted for I wonder whether our calculations of the success are true!! It is something for the policy planners to think about when making rash statements of the success of this type of export. What if this subsidy is removed? Will the net benefit to the economy be plus? Only good paddy land will be cultivated and the surplus will not arise, and possibly give rise to shortages and price rises. Another interesting possibility for consideration. I really wonder if this sort of analysis is undertaken by the planners in making important decisions that affect the lives of ordinary people.

Exporting Corn to Taiwan and Canada! The sweet smell of success

I must confess that I am pleasantly and unbelievably surprised that after many years of Sri Lanka being a net importer or corn, we are now a net exporter of this product for the first time. If the government statistics are to be believed, our annual consumption of corn is 180,000 tonnes and this year due to a harvest of 200,000 tonnes we have a surplus of 20,000 tonnes for export. That is an extremely creditable achievement which we hope can be built upon, firt for corn and then for other products. I Understand that Wyamba Traders have entered into forward purchasing agreements with up to 2200 farmers in Anuradhapura District at Rs35 a kg for the maize/corn  which takes 75 days from planting seeds to harvest and this has helped the farmers earn a reasonable return as compared with paddy cultivation.

I have grown corn myself and know if it is grown in large quantities one can use many labor saving tools to harvest and separate the corn from the cob, which is obviously the reason for this success. Most of the corn we produce goes for animal feed, and in the past we imported this to make the animal feed. There is no doubt that we have used high yielding varieties of seeds bought at high cost, from international suppliers who amy also have used GM seeds, though our seed control people are blissfully unaware that we are unable to market GM produce in the Island!!

Nevertheless credit must be given to the farmers for producing corn in abundance so that we have sufficient for export too. I hope we do not see a day when we import this commodity if we have ideal soil and growing conditions to grow it at a cost that is lower enough where we can compete in the world market with other suppliers. I am at a loss to know why we are sending corn to Canada, surely a very high producer of the item! I guess there is a reason for that.

On a related issue I am currently not in the loop on the price of corn in the market. All I know is that egg producers are losing money hand over fist with the drop in egg prices to Rs6 wholesale which would be the price the producers receive no matter what we pay at the store! If the feed cost including corn is so high, I do not know how they can sustain purchasing this product, and if they cull their flocks due to the losses, then the demand for corn would drop further.

This success in our agricultural products could be a fore runner of more marginal land going from paddy cultivation to growing corn as the latter does not require that much water and in the Yala season a perfect intercrop to complement paddy, and once harvested the spent trees can be ploughed back into the soil to improve the humus content of the soil as well the natural nitrogen content. I have fed the newly harvested plants to my cows as animal feed also so I am sure with some ingenuity many uses can be found to enrich the soil of paddy fields with this crop.

Divi Vinashaya – why there has been no plan

I was asked why I was so harsh on the Divi Neguma program. It is simple. It was designed by fools who can’t think beyond their noses. They have fooled everyone for what? Let us just take an example of the two aspects of farming. One by those engaged in it for a living, the GOVIYA! And the other the kitchen garden. The latter is only encouraged to grow, for improving the diet at home, by eating healthy fruit and vegetables and having a surplus to exchange with neighbors, take to relatives, or sell in the local pola or to local kades, to supplement income.

One example of how we must get rid of the surplus.

Since the end of the war the North has opened up to agriculture. Farmers there appear to be more efficient in their production techniques and are giving a run to the Nuwera Eliya farmers as they are competing to produce up country vegetables. Then they are giving a run for the red onion farmers in the East, as they can also produce this, thus reducing the price from the Rs200s per kg to single figures. The produce from the North coming to the Dambulla Economic Zone, has reduced the vegetable prices significantly putting a lot of farmers in the South who were less efficient out of business permanently. They cannot compete with more productive, and efficient producers.

Sri Lanka must make an arrangement with the Maldives to fly produce from Jaffna airport to the South Atoll and then to resorts closer to them. The exporters in Colombo currently find a big problem in supplying the orders for their Maldives customers, so it would be a method of directly supplying fresh produce from the North to them, and reduce some of the bottlenecks in bringing it to Dambulla. 

The Government should engage in this if it is to find solutions to these problems. They are simply unable to think outside the box and so get into a situation, where they have encouraged people to produce with no means of marketing the produce. In the end the relationship must be a direct one with the farmer and the exporter, who will produce to order, knowing that prices and quantities are guaranteed. The farmer at the same time MUST understand that in order to get a guaranteed price, when there are shortages, and the prices in the market exceed the guaranteed price, he must fulfill his commitment to the exporter, who has stood by him, rather than sneaking out the produce to the local market for higher prices.

The surpluses created could just as soon DRY UP and become shortages. The Govt. will be to blame. They have not been able to find suitable markets, and in the meantime the farmer has gone belly up leaving it to the survivors to prosper.

There is very little information on the plight of the farmer in the Press, as it is a topic that very few reporters understand. We are creating a very hard working underclass that are misled by this government as regards to their entitlements, without adequate explanation as to what we wish from them and the promises made to them. We have therefore let the farmer down, by lying to him and taking advantage of him.

Only time will be a luxury to show the error of the present direction and the need for an equitable solution

Divi Neguma has turned into Divi Basuma – do not screw the farmers more!

I have maintained that there is no one in the policy making bodies who understands farming and its practices and practicalities. Bureaucrats and Ministers who own land, farmed by others think they know what the real problems are. This is not like running a plantation, this is a hand to mouth existence and lying to them merely makes the liar a hypocrite also. This is a serious problem not to be taken lightly.

So it was with interest that I read about Basil Rakapakse meeting with Agribusiness Leaders (minor industrialists) about how they should use the raw materials from the success of the Divi Neguma program that has provided huge surpluses of food and turn that into export products or other forms such as preservation, canning and such like. It goes to show his lack of knowledge of how the inputs into Agribusinesses are collected.

To those not in the loop, the Divi Neguma program attempts, though not at all successfully as I have pointed out in earlier entries here, to help each household, produce healthy food, in the way of a home based activity, both for consumption, and the surplus to sell, and to provide unneeded expenses, such as Dimo Battas to take this business a stage further by using that means to market their products or other similar products from their fellow brethren in the village.

I am not repeating the scandal of the Dimo Batta here, with these poor folk being forced to pay Rs30K a month just as the lease payment for 56 months, but to show that impractical ideas are put into people who first need a basic understanding of how to engage in an economic activity.

The Agribusiness leaders know, that in order to run their operation, they need a supply of raw material close to their factories and at a reasonable cost. Small economic units are very inefficient in this. That is why there is no practical solution for the desperate need of pol-katu,(coconut shell) to be taken from each household say once a month to the company that needs the raw material in bulk to make charcoal. Forget Divi Neguma, it is the Farmer who you should engage in.

The same principal applies here. Then we have the farmer who really needs to engage in a relationship with the processor in order to find a market for his produce. At present he is losing heavily by not covering his cost in income he receives from the wholesalers for his produce, due to the oversupply by the Divi Neguma lot, which has decimated the prices of most everything the farmer currently plants except for “TOBACCO”. SO PLEASE first decide on policy that is HOLISTIC! and not ad hoc.

Tackling agricultural surpluses – a new dynamic!

I was taken to task by a one advocating export of surpluses by my criticism in yesterday’s blog entry about the efforts of the agricultural department to export varieties of rice. I know I was rather harsh on the Secretary to the Ministry, who in the past would have initiated a common sense approach, but in the current heavily politicized climate, is just doing the bidding of his Minister, even though he may vehemently disagree with him.

That took me back to 1950 when CP de Silva who was in the Ceylon Civil Service, and was working in the Land Development Department (historians please correct me on some of these facts) had a disagreement with his Minister Mr Dudley Senanayake who was the Minister of Agriculture under the DS Senanayake administration and promptly resigned from the Civil Service, when he could have just requested and got a transfer to another department under a different Minister.

Just for the record DS tried to persuade him to withdraw his resignation, but he refused, and left on the second anniversary of independence. He bought a 50 acre plot of land in Tabbowa in the Puttalam District where he had served many years ago and began a simple life of a farmer, when in 1952, SWRD himself personally turned up into his shed like cabin, and persuaded CP to join him in Politics. CP went on to win the Polonnaruwa seat in the 1952 election which UNP won with Dudley. It is also worth noting that Dudley asked CP to be the Prime Minister when he won the 1965 election, so even disagreements do not make enemies!!!

I am sorry I digressed completely from my point, which is to illustrate that I am not anti export of agriculture. In fact I am a proponent of export of our produce. It is the cynical way those who do not understand the topic go about it that angers me.

There is a huge export market for our produce, fruit, vegetables, and rice. I know vegetable and fruit exporters, whose daily grouse is that they do not have SUFFICIENT QUANTITY of standard quality products to meet the demand. We do not have enough large scale producers who will use the latest techniques to get productivity and consistency to supply the export market. The Govt, is giving incentives to foreigners, by leasing them large tracts of land for projects (they sold Polonnaruwa farm of 2000 acres a few months ago to an Israeli company, to bring in cows to produce milk.)

A person in SL with 50 acres is considered big. The average peasant cultivator only works about 1 hectare(2.5 acres) as a maximum. Given this reality, we cannot cater to all comers and try to save the smallest farmer from going under as well.

In my previous entry, I recommended a guaranteed minimum price for export quality crops, of the varieties required for export, of Rs50/kg as a way to go. The reality is that the efficient farmers anywhere in the country, will work productively to produce that quality, and make a lot of money, however the small farmer who we are targeting to help will only marginally benefit. That is the nub of the prob!

This comes back to the point of productivity and economies of scale in agricultural production. The govt. must have a policy on how each segment is treated, incentivized and compensated. Agriculture being a high risk venture requires high reward to encourage private sector investment. Land is the scarce resource for the large scale investor who does not want to tie up large amounts on buying up land. So leasing large tracts to the private sector is a way to go to solve some of the pressing problems, but with it one has the costs attached to it, of local people working for a wage, who have had to give up farming due to their inefficiencies. Intensive mechanization, so that few benefits accrue to local villages, with most of the profits going to the providers of capital who live elsewhere and overseas can result. No wonder the JVP views on equality hold so much sway in the rural areas, but which never gain traction, as they do not have a viable method of getting them out of poverty due to the lack of critical mass in the market to make a difference.

The transfer of the pricing determinant from the Miller, the wholesaler and intermediary to the grower, is what economists the whole world over are even now grappling with without answers, leaving agriculture to Market supply and demand dynamic that is only in the farmers’ favor when shortages are in the horizon. The farmer must be equipped with the tools to understand this complicated risk and to mitigate it in his favor. The answer we can give each farmer heavily depends on his or her personal circumstances, there being no cookie cutter formula that applies to all, to resolve individual differences in this sector.

Anyone who comes with a satisfactory solution will be the farmers’ savior. So let’s begin by challenging the price fixer to increase commodity prices. The productive producer has an incentive to grow. The smaller producer is encouraged to get to that level of productivity or perish. There is no point designing a system to help the marginal producer, which only helps the big boys, as the butter, milk and beef mountains of Europe have shown as clear examples of policies gone wrong.

I was only yesterday asked to start by accumulating a cash reserve, purchasing quality paddy at a higher price, and converting to rice and selling, forcing the Millers to raise the price they offer, thereby being able to take credit for the act!!!

I have to restrict my purchases to only buying from a pre-agreed list of people who are those that are dependent only on paddy farming, and farm less than a hectare each. I offer a price higher than that the Govt. say Rs30 but conditions have to be met. Cash on the table when the product is supplied. The model is similar to that which Food City currently use with its farmers and the product they purchase from them. However if they offer more than the State for the paddy, will the big Millers really raise the price they offer as they are the oligopolist price fixer?

The answer is NO. They know there are enough farmers who can supply, and even if I offer a high price, I can only buy so much, my economies of scale are much less, and my distribution costs also are higher, resulting in much smaller margins to my enterprise that will not sustain me for long enough to be a threat in the long term. Even the Govt. dare not take on this role of competing with the Miller on price as even they know from past experience they end up holding stock of paddy that just rots. The intricacies of Govt. inefficiencies and greasing of palms that compromise the quality of the paddy that is bought and all the good intentions of helping the farmer and the consumer both at the same time is just a costly exercise of losses to the state enterprise that engages in this.

The alternative I fear is that we will see many small farmers going out of cultivation, and the threats of the Govt. forcing them to cultivate will create tensions that boil over into a full scale agitation. This is a distinct possibility if sufficient people are badly affected.

Do we then go for the other option of increasing the price level of the commodity, by removing the surplus from the market place? We would otherwise not be able to keep the price high if there is leakage at lower prices. The big Miller’s profits will rise still further giving him unassailable clout to market manipulate even further, by forcing a temporary rise in prices, to suck up the supply and then dump the farmers by lowering the asking price later, when there is no one else to help them.

As one can see a proper management of the surplus to achieve macroeconomic goals of price stability and the survival of small farmers is a very tricky one. They are two issues and cannot be combined. Export markets are the only solution to surpluses so they do not either waste produce or have an overhang which will lead to price instability, that may wipe out an entire sector. The protection of the small farmer is an entirely different issue as his survival depends on productivity and efficient and productive units. For that the marginal farmer will have to disappear, replaced by a professional farmer from the ranks of the educated youth, who will be able to manage an economically feasible lot profitably in the long term.

The latest insult to Lanka’s paddy farmers – export of rice

It was reported a short while ago today, April 18^th 2012, that the Secretary to the Ministry of Agriculture, KA Sakalasooriya, has announced the creation of four zones for export. One in each of Mannar for growth of Keeri Samba, Hambantota for growing red rice, (presumably long grain) and Polonnaruwa and Anuradhapura for growing BG 357 a variety of white rice. It was further announced that in the next Yala season this paddy would be purchased at Rs40/kg.

Why is this announcement insulting? He has no clue about rice farming, about yields on different soil and growing conditions, and on different varieties of paddy.

I have planted 6 varieties of paddy, and I have personally sold door to door, 14 varieties of rice arising from this paddy. I have also grown keeri samba a particularly fine grained white rice. Its yield is usually a lot less than other varieties and I have sold the rice for around Rs100/kg which is about what the price is for the par boiled variety even now. I like to say they look like ‘podi muthu ata’

Rs 40/kg is not enough to compensate for the lower yields. At this price I can buy the paddy, and mill it and sell it at Rs80/kg and still make a profit of Rs10/kg, after taking account of transport. A large miller will make a profit of Rs20/kg as he has other cost savings that I do not have as I pay a small miller to do so. Further I wish to reiterate that I grew Red basmati as an outgrower for CIC and lost a lot of money. I was promised Rs 42/kg for paddy, for rice they sell at over Rs150/kg.So I do not trust these statements.

I really suspect that if farmers produce paddy at this price for the quality that is required for export, it is the Miller who will make the profit again, as he has the market sown up, and all the Government is doing by making this promise is doing the bidding of the Millers who have given the Govt. an undertaking to buy this paddy at this price, something they cannot do at the moment, due to the lack of sufficient quantity of paddy of these varieties to meet export orders.

I trust the reader can understand where I am getting at with this argument. The Miller has seen a greater opportunity using the auspices of the Govt. to try an ensure sufficient quantity of product to meet their market. So they can increase the profit they make. I ask him to pass on the commission he makes on this to the farmer by offering the paddy farmer at least Rs50/kg for the paddy of these varieties to ensure sufficient supply. There is NO way farmers will fall for the Govt. ruse in sufficient quantity for export to ensure viability in economies of scale. SAKALA go back to your drawing board please and TRY AGAIN

A Govt. that presents itself as the friend of the farmer has been the one that has ruined farmers forever by their lack of a comprehensive agricultural policy. Due to their expert media effort at fooling the Agricultural community, they have successfully hidden their deception from the public, and I am attempting by using actual real world examples to show that they have no idea of what they are doing. The farmer is being crucified by this government and the farmer seems to be going to his crucifixion like a lamb to slaughter, what a sad sad reality!!!