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| Tuesday, 16 March 2004 |
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Merchants make hay while paddy farmers toil for survival By Shirajiv Sirimane While the paddy farmers toil hard to produce a kilo of paddy the merchants earn 90 percent of profits with the least effort, said the Co-Secretary, Movement for National Land and Agrarian Reform, Sarath Fernando. The government provides interest free loans for merchants purchasing paddy and farmers have to take loans at the rate of two percent. While merchants are given a grace period of six months to settle the loan, the farmers are given only three months to settle their debts. If the farmer fails to settle the loan in three months, the interest rate would increase to seven percent thereafter. It is estimated that around Rs. 50, 000 is being spent by paddy farmers to cultivate an acre of paddy which would yield around 1500 kilos of paddy. Forty percent of the cost is for manure and pesticides while manual labour and threshing are the other main overheads. The farmer also faces the risk of drought and floods. When the paddy is harvested, the merchant would buy it at around Rs. 11, though there is a government certified price of Rs. 13 50 per kilo. Only under 10 percent of the total paddy harvest is being sold at the certified price. During the paddy harvesting season the Banks advance around Rs. 50 million to merchants as non-interest loans with a grace period of six months. After the merchants purchase paddy (under the certified price,) it is then milled and stocked. The merchants have to spend around Rs. 18 to convert one and a half kilos of paddy to rice. This is then sold at around Rs. 32, which gives a net profit of 12 Rs. per kilo to the merchant. In addition the merchant also earns a profit by selling milling waste (cumin seed) mainly for livestock purposes. Unlike the farmer who would sell around 5,000 kilos per season the merchant deals in larger volumes and his profits are far greater than the farmer. Fernando said that the industry is centered around seven or eight prominent merchants who own large mills and storage facilities. Their influence is so high that in recent times over 10,000 small-time millers have gone out of business. One of the main reasons for the farmer not to earn a larger profit is the lack of storage facilities. "Due to this as soon as paddy is harvested they have to sell it. Since harvesting is done all over Sri Lanka at the same time there is an increase in the supply of paddy. This is where the merchant exploits the situation," he said. The withdrawal of the subsidy given for Urea also had a major negative impact on farmers. Fernando said that one way out of the situation is to increase the certified price of paddy. "The newly formed JVP, SLFP Alliance has come up with a solution with a promise of a certified price of Rs. 18 50. However, this should not be only an election promise," he said. Fernando said that if the government purchases paddy at the certified rate, the merchants would have no other option but to match that price. The development of indigenous seed, a non-governmental organisation is also in the process of introducing a new seed, which would have high yields. The organisation hosted a workshop jointly with the Humanist Institute for Co-operation with Developing Countries, (HIVOS) of Asian Paddy growers last weekend in Polonnaruwa with the participation of Indian, Malaysian, Indonesian, Thailand, Vietnam and Sri Lankan paddy researchers. Several visiting experts also shared their knowledge at this seminar. |
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