Poly sacks, post-harvest loss and profiteers

Last month, in the middle of the Christmas festive season, the price of vegetables in Colombo and other urban areas skyrocketed. The reason was that the government introduced a regulation requiring the transport of all vegetables to be carried out in plastic or wooden crates rather than gunny bags (hardly ever used nowadays) or polythene sacks.

The regulation was introduced in order to reduce the incidence of spoilage in transport and handling and was expected to benefit farmers and vendors in the long run. This followed on from studies which showed that about half all post-harvest losses, which ranged from 16 percent (ladies fingers) to 41 percent (cabbages and leeks), in the steps in the marketing chain between the

The sources of post-harvest loss in the collection and transportation stages were identified as exposure to sun, rough handling during loading and unloading, transportation in poly sacks, tight packing and overloading, compression damage during packing and stacking, damage due to vibration and heat build up during transportation.

Vegetable farmers

The Institute of Post-Harvest Technology (IPHT) found that transportation losses could be reduced from 15-20 percent with the use of poly sacks to 3-6 percent with the use of plastic crates. The profit from a single lorry load was found to increase by 25 percent. Three-wheelers and Land-Masters were exempt from the law, which applied only to lorries. The transporters, refusing to comply, went on strike (and in certain areas, also on the rampage) until the regulation was put on hold.

Vegetables for sale

This episode illustrates the extent to which vegetable farmers are still dependent on middlemen. Even in times of glut, the middlemen, while buying the farmers’ produce dirt-cheap sell it in Colombo at very high prices. Consequently, Sri Lanka has one of the highest levels of retail vegetable pricing in the region, surpassed only by Maldives.

Not so long ago, when farmers were receiving only about Rs 10 per kilo of Tomatoes, the price in Colombo was Rs 50 per kg. It does not take much arithmetic to figure out that the Rs 35 difference is far higher than warranted by the cost of transport from Dambulla or Nuwara Eliya (which is in fact about a rupee per kilogram).

The old Marketing Department (MD) was established to combat the extreme exploitation of farmers by middlemen and to reduce the occurrence of debt-peonage. At the time, most farmers were in the thrall of the middlemen, who advanced them money at usurious rates for their produce and collected it very cheap.

The problem of usury has been alleviated somewhat as banks (particularly the state-owned banks) have proliferated in rural areas, so that finding credit is not as big a problem as it used to be. Nevertheless, the problem of exploitation by the transport-middleman remains.

Capital accumulation

Given the small average size of Sri Lankan agricultural holdings, transport to the market remains the central obstacle to achieving high rates of capital accumulation in the sector; the surplus from cultivation is taken mainly by the profiteer in the middle.

The IPHT research indicated that the implementation of the packaging change from poly sacks to crates at the farmer’s level was impractical. Farmers could not afford the cost of crates – an almost 18-fold increase over poly sacks, even though the overall lifetime cost is only 15 percent of the latter.

Indeed, the average farmer cannot afford to invest in all the measures the IPHT says can reduce post-harvest loss; for example, packing house facilities having basic requirements such as washing tanks, sorting and grading devices and cold storage facilities. They could not even afford to install the low-technology (using a clay pot!) evaporative cooling unit, developed by the IPHT and the University of Peradeniya.

Obviously the onus should be on the middleman to introduce new technologies and better practices to reduce post-harvest loss. However, it appears that the middlemen, the collectors, transporters and vendors are chary of doing so.

Their reasoning is not hard to find. The profit levels estimated by the IPHT for the operations of middlemen were far below the actual figures.

Packaging technology

Loss in transportation is minimal in comparison with the return, so investing in more technology is a mere burden without commensurate returns. The levels of profit can be measured by the fact that the big supermarket chains are often able – despite higher overheads on such things as air conditioning and refrigeration - to supply vegetables at the same or lower prices as at retail greengrocers’ boutiques.

This is because they buy direct from the producers or from collection centres, thereby eliminating the bulk of the supply chain. The MD was established on precisely this premise, with the additional aim of providing storage and packaging technology (for example its canneries) in order to have year-round goods supply. Since the MD is no more, the government shift its emphasis from the private sector to the co-operatives.

The Co-operative Marketing Federation (Markfed) could become much more active and step into the breach. It could establish the necessary packing houses (complete with cooling facilities) close to the producers, say at the central point in a village. This would enable better packing and storage practices to be implemented at the base level – as well as improved hygiene.

The co-op system could then become the hub of a vegetable supply system oriented towards both producer and consumer - giving the former high prices and the latter low ones.

Unfortunately, this is predicated on the response of the mafia of vegetable middlemen. If this body of gentlemen can wreck such a small thing as a regulation on the transport of vegetables, how far would it go to prevent an effective solution to the needs of both producers and consumers of vegetables?