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.

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

Economically feasible extent of land

I was in conversation with some elders recently about the whole land reform process in the early seventies, where each couple were restricted to 50 acres of land, and the excess taken over by the state. In fact the veritable World Bank had advised that due to the excessively unproductive performance of the estates of a few thousand wealthy people, with in their view a return of less than 1%, that land be restricted to 25 acres per individual. Even if the UNP of Dudley Senanayake was elected he would also have imposed land reform at 25 acres as recommended by the World Bank. It was NM Perera of the Sirimavo Bandaranayaka government that came into power in 1970, who felt 25acres was too uneconomical, that hence it was increased to 50acres.

There appear in hindsight, many mistakes that lead to not an increase in productivity, but a decrease as a result of these reforms. There were two fundamental errors made. One was that the unproductivity of estates was an accounting method for the wealthy to hide their income by way of showing losses on the land by new cultivations, and other improvements, as well as fertilizing as profits from employment and other areas could then be offset against losses in agriculture. It must remembered today that agricultural income is tax free, and profits from other sources cannot be offset against agricultural losses, a completely diametrically opposed law.

Secondly it had originally been determined that the land and houses taken over would be compensated at market value, so these educated landowning classes would use this money to invest in productive enterprises, thereby stimulating the economy, and in the long run they also would be financially better off, without the weight of unproductive property around their necks. This did not happen as the government lacked the funds to compensate them and some are still waiting for compensation over 35 years later.

It is also clear that those to whom land was distributed were to henchmen and for political patronage, and the recipients had little knowledge in improving the small lots of an acre or more to increase production, and instead treated it as ranchettes to build their homes and home gardens, a total waste of previously productive agricultural land. One must always remember that this lead to huge agricultural lands that could have been turned into more productive units, by studious use of technology and investment, been turned into wastelands as the recipient received it free, with no cost to them and therefore no value attached to the property.

We have still not learned the lessons of the past and continue to make the same mistakes today.

the harvesting season a new set of challenges

After a tumultuous period where we had unprecedented rains, and many paddy fields were rendered useless, and further the rain that came once again, put paid to a good harvest. The latter was as a result of the flowering period being disrupted by rain that prevented the paddy seed from forming. Farmers therefore were left in the lurch.

I am hoping the combine harvester will come in a few minutes to harvest my paddy before the threatening thunder clouds turn this little exercise also into a nightmare. In any case I have to dry the paddy, because paddy that is harvested by the combine requires drying in hot sun on a cement floor for at least 4 hours to get to a level of moisture reduction, that permits storage without becoming mildewed and worthless.

The problem in my area has been that I have waited over 7 days for the combine to come, as all the combines in use in the area that technically could easily handle the volume of work have had a virus of breakdowns, all of them at the same time delaying the work across the village.

The story is that these Indian made combines only last two seasons before they start the breakdown season!!, and the combines came into the being in this format about two seasons ago and the story seems to fit! I mention these issues as it is very important that the reader who wishes to engage in this activity is fully aware of the pitfalls, based on practical experience of others, so that they can take the necessary steps to reduce the risks involved in the type of farming they wish to engage in.

In many previous blogs I have extolled the virtues of these combines which cut the costs substantially of the harvesting exercise, but this is the first time the delay of the combines due to the breakdowns is threatening my harvest. One must also remember that the paddy has to be harvested within a certain time as otherwise if it is too mature, then the milling process will break the paddy seed in such a way that the resulting rice will not be sell able as it will be broken. This happened to me last year and I do not want a repeat of that.

This is a further reason to go for larger farming units where such issues can tackled differently as either one is of a sufficiently large size as to own one's own machine, or has the clout to demand a better level of service due to the large size from the supplier of the machine.

I personally spoke to the owner when I met him on Thursday asking him to provide his harvester, but it has yet to come. I am told the real problem was that his schedule was disrupted due to the breakdowns. How do we minimize the breakdowns in the future. Do we have a specialized repairer of this type of machine in our area, who can come to the sight on a motor bike at short notice to fix a problem!! Obviously there is a business opportunity in it for someone here!

The case against agriculture, in an era of better opportunities- surely not!

It was an extremely difficult year in my agricultural endeavors, and if not for supplementing my income from additional work in Colombo, I could not have made it. It was another year of disappointing harvests, with a fresh round of crises. Upon analysis of this year’s problems, the key was one of lack of discipline and not following specific instructions. This coupled with a severe labor shortage when the need arose, meant a fall in output. It is an eye opener that I was unable to get the required results from the one area I could control. This inability to get to grips with the labor/human resource issue is one that convinces me of the desperate need to elevate agriculture to a different plain with educated, motivated and well remunerated managers who are dedicated to this field. In order to make such a task viable, it is essential to run a much larger establishment with maximum use of mechanization, and use of new capital intensive techniques.

The frustrating part for me is to see how relatively inefficient my neighboring CIC Hingurakgoda Farm of over 1300 acres is, as I cannot use it as a working example to make my point, as the profit per acre from agricultural activities on that property is arguably below mine. In my opinion, one should get a net profit of Rs50K per acre in agriculture in SL after paying for all the costs, (excluding land). So this figure can be compared with the rental for the use of the land. We must use this as a starting point when doing the business plan of agricultural activities, as otherwise the opportunity costs of going into other fields is preferable to working the land.

I can market everything I produce if the quality is consistent and superior, and have failed to get the output directly from my land, and from the outgrowers to supply my customer demand. We must therefore shift away from the perennial problem of the farmer in marketing his produce, but concentrate instead on growing quality as the increasing demand for quality will capture every item of production. The problems that are highlighted of farmers disposing of their produce for lack of a market, can be solved with a little bit of common sense, once storage, transport and logistics are sorted. The greater problem of the shortage of quality is what needs to be urgently addressed before prices go through the roof. Free marketers will say, let the market take its course, when price increases, more of the product will be grown, which will result in a drop, sometimes too much to make it a total loss.

The bottom line on all of this is efficient production at low cost will enable the farmer to wither all price fluctuations which are only temporary. A larger enterprise can be intelligently managed and current risks mitigated by planning. One should not resort to knee jerk moves such as imports to distort the market.

Getting to grips with the Food Production Dilemma – Sri Lankan Problem

We in Sri Lanka have not yet been able to distinguish fact from fiction in the food production dilemma. There was a time, when it was thought that we should not bother with growing any food, as other people can do it better and cheaper, so lets do what it is that we can do better, and effectively let all our agricultural lands go to forest, where we can encourage tourism with the growth in the National Parks!

I am not one to subscribe to that viewpoint, though I do agree that our agricultural practices are inefficient and outmoded. I have belabored this point right through the blog as any reader would notice. So all I am advocating is a complete change in the way we operate, being focused in all we do, and remove as many of the risk factors as possible, because agriculture has the most unknowns in any venture.

The government MUST work with one purpose, without encouraging grape growing for a wine industry, or importing ostriches to increase meat consumption. Such fantasies are by those unaware of the ground situation aka ‘politicians’. We have a lot to learn from the agricultural practices of the plantation industry, as well as those of the outsource success stories of companies like Ceylon Tobacco Company for their management of labor and outgrowers. We must also learn from the past mistakes of large scale agricultural failures that led to the small holder emphasis. This issue demands so many resources and thought put to it that no one appears to have the time or patience to attempt this, least of all politicians.

In my opinion, lets take product by product and have a definite national plan to encourage or discourage as well as the preferred size of operation. It was noticeable that once again, people were encouraged to apply for blocks of land in the Mahaweli zone in 50acre lots for agricultural projects, as if it was some kind of panacea for these ills. We know what happened to the original leases granted thereon, and once all the trees were cut, the top soil eroded, you cannot give this land away free if you wanted to. It is important to have a goal, as to what will be suitable for that land. Then assistance subsidy and sound business plan must accompany this as well as follow up thereon. So many agricultural projects in SL have floundered even with the best of intentions, that only a concerted effort can arrest this likelihood.

Let us begin with paddy production and have a national plan for that. Let us all understand that this plan should encompass all varieties of Paddy and different objectives for high yielding and organic varieties as both have a market, but at different levels. Then understand the workings of the farmer, best practice, work ethic and develop a practical plan, first by selecting an area which can be replicated nationwide if successful. In order to be selected, various criteria must be in place, and then the subsidy and education of the farmers and best planting practices can be implemented. People will say we already have Bathalagoda Rice Research Institute for training and imparting knowledge. If so look why it has failed and look at methods of turning it around. They have recently set up a Rice Research station to advise farmers, but I would like to know who have obtained training, and how much land has been cultivated by them, and see how their yields have improved due to the training, as that is the obvious measure of its success.

Without learning the lessons of the past we can never improve for the future and as a working paddy farmer I can honestly tell you I learn something new every day, and blame the lack of common sense of the farmer for a lot of the ills we are faced.
I have digressed somewhat from the main point of the article, namely to find away out of the mess. By way of example I have highlighted the problem in one instance, but am convinced that there is NO attempt YET at arriving at a comprehensive agricultural policy to match all the suppliers and consumers, and improve productivity as all this will contribute to the growth of the GNP at a far higher pace than simply relying on the service sector to take up the slack.

I firmly believe that this is the key to economic growth that has completely eluded the planners and politicians, one that will directly flow into the hinterlands, if only we can harness sufficient interest. With the hotel sector also growing and willing to pay a premium for quality produce, even they are struggling to get the variety of produce at the exorbitant price they are being asked to pay. We cannot play catch up with supply and demand and wait for that to come to equilibrium. Proactive steps must be taken immediately. I recently read an article where a prominent Buddhist priest was exhorting people to realize the value of growing some of their own food at home in pots or in a small plot, just to mitigate their food cost, and gain an appreciation for quality food and value of agriculture, something that is desperately needed, but which is not the solution to the problem per se.

You only have to go to the Pola at any village to realize how little is grown locally as in local to the village, and how costly the food items are with much having been transported from afar, from dried fish to coconuts. If today’s Rs60/- coconuts are any indicator of the future, we have no idea what we are in for, are we waiting for the coconuts to reach the magic Rs100/-? This to me is the most important task, surpassing the cost of living committee, which are all playing to the gallery. Only an immediate focus on food security and the plan to insure against it will suffice.

Here we go again with re-imposition of Price Controls on the sale of Rice

Today’s papers announced the establishment of a high powered Cabinet Sub-Committee on Cost of Living, chaired by the President, with 15 Cabinet Ministers and including the Prime Minister. Concurrent to this following on from the import of Chicken and Eggs recently announced, they have imposed price controls on Rice, the single most essential ingredient in the diet of the average person.

One does not stick a bandage each time the wound bleeds, one has to find out why it is still bleeding and try to prevent the causes, like controlling the diabetes!
I have intimate knowledge on Paddy and Rice as I am a farmer who grows more varieties of Paddy than anyone else I know and converts that into multiple varieties of Rice and sell it direct to consumers, so I have both a stake in this subject and an opinion on what needs to be done, without this unforeseen edicts from above.
I know from my area, a lot of paddy was purchased by the state at the guaranteed prices from the last harvest, as the market price was lower. However some of the paddy was substandard, due to moisture levels being higher and were purchased not having regard to basic norms for storage. Now 70,000 Tons of paddy will be released from these stores, to be converted to 45,000 Tons of rice. This will then be issued to the market. I dread to think how much paddy will have to be thrown away due to substandard that may not even be good enough for animal feed, as that is what happens when the paddy spoils it ends up in Chicken Feed.

By imposing price controls on the most popular varieties of rice, the best quality of these will go underground, or the millers will not produce them. In my case, there is no incentive for me to spend the extra money, get the paddy par boiled to a high standard, by a neighbor, so I can sell quality Nadu, that tastes good, and sell at a loss for the Govt regulated Rs60/- a kg. Especially these days with wet weather, sun drying this is out of the question, and the risks associated with getting the required quality are not worth taking when losses result in so doing.

It is typical of leaders who don’t understand supply and demand, who try to control prices and thereby reduce the choice to the consumer, and put the producer in jeopardy, when in fact their whole focus should be to improve productivity, which helps both producer and consumer. A government whose slogans are “rata hadamu, api wawamu” should take heed from a farmer, and not from price controls, that further impoverish the retailer and producer with the real culprit the big miller again set to cash in from the failure to issue paddy from the stores earlier. Why wait till now when prices began rising a month ago, due to non release of paddy stocks by Govt.