A global food shortage is staring all earthlings in the face. Food riots are reported from some African countries and the Indian Parliament was disrupted the other day by a spate of protests against the spiralling cost of living. In Thailand, people are holding demonstrations against high prices of rice. In this country, the Opposition is smashing pots and pans demanding that the cost of living be brought down. Skyrocketing crude oil prices which have dealt a solar plexus punch to many a small economy and given jitters even to the industrialised nations will further compound the economic woes of the world.
The global poor have suffered a paralysing blow from the mass diversion of the North American grain harvest into ethanol plants to produce fuel. This has made pro-poor activists in those countries coin the slogan, ‘We drive, they starve’, according to a Daily Telegraph dispatch reproduced in the Financial Review section today. According to UN estimates, 232 kg of corn goes into producing 50 litres of ethanol and with that amount of corn a child could be fed for a period of one year! The UN has predicted ‘massacres’ unless the biofuel policy is halted.
It is against this backdrop that Sri Lanka’s current predicament should be viewed. Her severe food problem which is likely to develop into a crisis unless properly managed is partly due to the all pervasive global food grain shortage. However, the government’s flawed policies, bungling and corruption have contributed to it immensely. Global factors are obviously beyond our control and as a country dependent on food imports, we have to import inflation as well. So, what cannot be cured must be endured. But, the local factors that have sent the food prices soaring could be obviated, provided that there is a will on the part of political leadership to do so.
The government has slapped a ceiling on retail and wholesale rice prices at long last. The Consumer Affairs Authority (CAA) had been asking for a list of rice varieties from the government to announce maximum prices. Stern action, we are told, will be taken against those who hoard rice or sell it at higher prices.
People may heave a sigh of relief that the government has taken on the rice traders Mafia, which has kept rice prices artificially high. Farmers are stuck neck deep in debt as they get a raw deal from rice millers and traders while consumers have to skip a meal or two a day due to high rice prices. Both cannot happen at the same time. Obviously, the middle man is making huge profits at the expense of both the farmer and the consumer. Therefore, price control may be considered one way of dealing with the unscrupulous traders.
However, efficacy of price controls hinges on efficiency of the government in implementing them. Traders and rice millers are a smart lot; they know more than one way to skin a cat. They are capable of creating a scarcity and a black market. Yesterday, they refused to sell rice at prices prescribed by the CAA on the grounds that they were still selling rice that had been purchased at higher prices! (Would they have put forth that argument if prices had been increased?)
How does the government propose to ensure their compliance and deal with hoarders? What if Minister of Agriculture Maithripala Sirisena’s brother, who is a big time rice miller and Deputy Minister of Agrarian Services Siripala Gamlath, who is a rice mill owner himself, resort to hoarding? Who is going to swoop on them? There must be many more traders with the right political connections and the ability to get away with anything.
Once, the late Minister Lalith Athulathmudali was in somewhat similar straits. However, being Lalith, he didn’t take long to beat daylight out of traders. He had shops forced open and within hours the problem resolved itself! Does the government have in its Cabinet a person of Lalith’s calibre to deliver the goods so quickly and effectively? Minister of Trade, Marketing Development Co-operatives and Consumer Services Bandula Gunawardana is all at sea. He doesn’t know, as they say, whether he is coming or going. Anything he touches turns into a mess. He cannot say boo to a goose, let alone crack down on errant traders. This is a government, it may be recalled, which couldn’t carry out its much advertised decision to declare hospitals out of bounds for drug reps. It capitulated to pharmaceutical companies in no time and had egg on its face. One only hopes that the rice traders and millers won’t make the government eat humble pie.
However salutary price control may be in the short term, if it is a lasting solution that we seek, local rice production has to be stepped up and storage facilities provided to farmers, who need to be delivered from the clutches of the middle man making unconscionable profits. It is imperative that the government revive the CWE and develop the Paddy Marketing Board. Most of all, steps must be taken to prevent locally produced paddy ending up as animal feed in factories of multinational companies. The disastrous fallout of the food grains being used for manufacturing ethanol in the global North has been cereals produced in the global South being used as animal feed. There is anecdotal evidence that certain traders are purchasing paddy at unusually higher prices. Are they working for multinational companies producing fodder?
The UNP has dismissed price control on rice as a mere gimmick. Whether it will be a gimmick or an effective mechanism to bring relief to the people depends on the way the government handles it. Unless the government overcomes resistance from traders and millers and implements its price control scheme, it will find itself in a bigger political soup.
The government ought to take cognisance of the fact that man doesn’t live by rice alone. Prices of other commodities are also extremely high. It is not practicable, we reckon, for prices of ladies fingers, potatoes, brinjals, coconuts etc to be controlled by the CAA. A different strategy should be adopted to deal with that problem with emphasis on encouraging people, through incentives, to contribute to the national food production. The government may make use of its cultivation drive launched some time ago for this purpose.
Finally, the problem of high food prices is far too serious to be solved through price control alone. It is like administering paracetamol to a patient suffering from typhoid. It may bring temporary relief but, as was said earlier, it is not a solution in itself.