That the government, in slapping a price control on rice, bit off more than it could chew is now clear. It may have done so in good faith to deal with profiteers fleecing the public. But, the government finds it difficult to administer that ad hoc remedy. There are signs of its capitulation to millers and wholesalers who are behaving like the proverbial vagabond who deceived a stingy old lady into granting ingredients for a soup on a winter night. This is how he did it: Having strayed into her house as an unwelcome guest, he found her too miserly to give him some soup. Therefore, he told her that he could prepare a soup with a nail. Thinking that she could save money if she learnt the recipe, she readily allowed him into her kitchen and parted with a nail. He boiled the nail and claimed the soup would be nicer with a little bit of carrot, which was given. Thereafter, he asked for other vegetables, meat, salt etc to make the soup tastier. The lady obliged and finally he threw the nail away and drank the soup.
At Monday s meeting with Minister Bandula Gunawardena, the rice Mafia prepared a nail soup . Promising to adhere to price regulations, they sweet-talked the minister into removing the straitjacket he had put them in. Economic lessons that the Minister may have learnt for his first degree in the university were of no use in handling those hard-boiled traders with business acumen. They let the Minister score some brownie points by pretending to be ever ready to do his bidding. Then they craftily put forth their demand couched in very diplomatic language that the price control on wholesale rice be removed. The Minister fell for it hook, line and sinker.
Now that they are free from price control, wholesalers have a price cushion to be utilised at the expense of retail traders they can eat into retailers profit margin. The onus for adhering to the regulated price is now on the retailer, who will have to sell rice even at zero profit, unless wholesalers allow them to make a reasonable gain.
Politically, too, this method works for wholesalers. For, there are tens of thousands of retailers scattered in all parts of the country and they are a force to be reckoned with for any government. Thus, wholesalers have turned retailers into a buffer.
Business houses in Colombo have already warned, through the media, that they will stick to the controlled prices of rice only till the current stocks last. What does the government propose to do thereafter? It is practically impossible for the government to control the prices of imported rice. If imports were to come at higher prices than the stipulated retail prices, the government wouldn t find it feasible to make traders sell rice at a loss.
There is no guarantee that rice could be sold at the controlled prices with local purchase of paddy. For, private traders and millers can manipulate the prices of paddy as they have the freedom to purchase it at higher prices and hoard it. The Paddy Marketing Board (PMB) lacks wherewithal to compete with private traders and will be left out of the race. Or, it will have to settle for left over paddy. The PMB is also notorious for purchasing inferior quality paddy if its officials palms are oiled. What if private sector sells paddy purchased from local growers to companies that manufacture animal feed so as to create a shortage and send market prices soaring?
The government s decision to abolish the price control on wholesale rice has given rise to some questions. Why on earth was it introduced in first place? It was expected to serve some useful purpose, wasn t it? Did the government give in to pressure from certain politically backed millers to waive that restriction which prevented them from making huge profits? In our comment on price control on rice immediately after it was slapped, we predicted that the government was likely to give in to big businesses the way it had capitulated to pharmaceutical companies over a recent ban on hospital visits by their drug reps. Has our prediction come true?
Meanwhile, the UNP has challenged the government to conduct raids on some warehouses in the Polonnaruwa District, if it dares. Although the UNP politicians who issued that challenge have chosen to stop short of naming the owners of those facilities where, they claim, stocks of rice have been hoarded, their innuendo refers to Agriculture Minister Maithripala Sirisena s brother who is a big time rice miller and Deputy Minister of Agrarian Services Siripala Gamlath, who is also a successful rice trader. Both these politicians, in fairness to them, have backed the government decision to control rice prices. But, if they are to silence their critics, they must invite the Consumer Affairs Authority to search the warehouses concerned. If they have nothing to hide, they must be able to say, `Come and see!`
The UNP has a duty by the people. It must stop indulging in cheap gimmicks like looking for rice at controlled prices in shops in the city with media personnel in tow and making allegations without naming names. Since it has created a reasonable doubt in the public mind that government politicians are behind a rice hoarding racket, it ought to hold public protests to pressure the government to crack down on them. It should organise a mass demonstration in Polonnaruwa, where, it says, hoarding takes place, and mobilise people against the errant politicians.
Making noises without follow up action will take the Opposition nowhere politically. Nor will it help the public in any way.