Trading malpractices leave paddy farmers in a soup

From the pile of papers on his table, S. Hettiarachchi, the Chairman of Raja-Ela Farmers’ Organization in the Polonnaruwa district pulled out the copies of two bills yet to be settled by two other fellow farmers   for the purchase of fertilizer and some other agro-inputs during the 2011 Yala season.  Mr. Hettiarachchi, as the head of the organization, usually co-ordinates such purchases on credit. Also, he keeps accounts on them.  The season was bountiful for paddy cultivators in Polonnaruwa this time, and, with the new harvest, all of them, expected to recover from the deep economic setbacks caused by the two bouts of floods that hit the dry zone and the central hills early this year.

Yet, much to their dismay, the paddy prices dropped to as low as Rs.22 a kilo soon after the harvest was collected. With all their hopes dashed,   they had to sell their produce to mill owners at whatever meager price offered to them at the initial stage.  Their debt burden worsened.

The offer of fertilizer subsidy, in fact, helped improve the farming sector in the country for the past several years. But, today, the question has arisen whether it is economically feasible to do paddy farming in an environment where a stable price and other market facilities are unavailable.

Mr. Hettiarachchi said that most farmers in his organization are deep in debt, and some of them had even failed to settle their bills for the fertilizer purchased this time.  “There are many farmers who have mortgaged their tractors and pawned their jewellery. That is the sad part. They are trapped in a cycle of debt,” he said.

True, the government made arrangements to purchase a maximum of 2500 kilos of paddy from each farmer, and the price declared for the purpose was Rs.28 a kilo.   Mr. Hettiarachchi said that there was an inordinate delay on the part of the  government in putting  its tottering mechanism in place for paddy purchases. He added that the delay compelled farmers to sell their produce to private traders at low prices to sustain their initial costs involved in cultivation and harvesting.  

“Farmers  have to cover up their initial cost involved in harvesting. We have to pay for labourers and machines used in the gathering of our harvests.  For that, we have to sell off a portion of our harvests soon after they were reaped. We need a guaranteed price at this stage especially. The government put in place its purchasing machinery after we sold off a large percentage of our harvests at a meager price. By the time government is ready, we have been exploited by private traders,” he said.

According to farmers, a labourer has to be paid an amount of Rs. 800-1000 a day with meals. The cost for machines used in the harvesting process is equally high.

A labourer is a daily wage earner. He depends on his daily income. He cannot wait till we sell our harvest to the state and get money at a later stage. We have to pay him as soon as the harvesting is done,” Mr. Hettiarachchi said.

“Once most of us finished the selling of our harvests, the prices shot up. Today, the paddy prices are very high. But, farmers have a little paddy left with them. What is the use of having a high price when there is little paddy to be sold?,” he questioned.

Farmers strongly believe that a few mill owners enjoy a monopoly in deciding the paddy prices. This is a rice mill mafia apparently acting with the backing of leading politicians. A deputy minister of the government is the largest mill owner in the country, and next to him, is the brother of a leading politician representing Polonnaruwa. They have a huge market share in the industry. May be because of this matter, there is no political will to strengthen the market forces to ensure a better future for farmers, consumers and traders alike. Today, despite the low paddy prices, rice prices remain relatively high in the market. Both farmers and consumers are at the receiving end in the absence of strong market forces backed by the state in controlling possible trading malpractices.  

This is not the first time the country experienced such logistical problems in the paddy purchasing process.  It has become an annual occurrence now.  The 2010 Yala season was also gripped with similar problems compelling the government to hire warehouses even belonging to other organizations.  The same scenario has repeated this time too leaving farmers in frustration and disappointment. Farmers in unison ask the government to work out a sustained system so that they can sell their produce at their desired time without any complication, hassle and difficulty in the process.

For that, they highlight the need to establish warehouses at village level, and to make available expanded and simplified banking facilities to finance the industry. Today, they say, they have to endure a time consuming exercise when applying for bank loans.  Farmers want paddy cultivation to be a profitable   industry.

According to our observations in Polonnaruwa, this problem appears to be confronting  the farmers who are financially weak.  Yet, there are a handful of farmers who are well off, and do not need to sell off their harvests as soon as they are collected from their fields. They can wait till the market prices are stabilized.

P. M. Rajanayake of Perakum Farmers’ Organization in Medirigiriya is one such farmer who has a different view on the situation. “We were able to get loans. Farmers should also take care to improve the quality of their produce. They should dry up their harvest properly and reduce the moisture content,” he said.

In the analysis of different views by these two farmer leaders, it is understood that the debt burden on farmers have to be lessened, as an initial step in boosting the agro-economy. However, Chairman of the Paddy Marketing Board K.B. Jayasinghe said that private traders had started giving a high price for paddy at least being late, because of the intervention by the state. He said that the expected harvest was around 1.5 million tonnes, and of it, the Board had purchased well over 76,000 tonnes by this time.

Asked about the delay in the purchasing process, he said, “We have to make arrangements according to the facilities available with us. Anyway, we purchase around 2500 kilos from a farmer. That is fair enough.” 

When asked about measures for strengthening the market forces, he said that a new loan scheme had been introduced for farmers to get credit facilities from banks keeping their harvest as a guarantee. “Then, farmers can keep their harvest at home and apply for loans to be used in covering up initial costs. They need not depend on traders. Farmers will get used to these systems little by little,” he said.

Pics by Samantha Perera

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