Free Trade Zones in Ireland and Four Asian Countries | Trócaire

Trócaire

(At the beginning of the 1980s MONLAR undertook a study under the title “Export-Oriented Industrialization Strategy and the Free Trade Zones in Sri Lanka”. This was a joint study that was conducted in five countries on the same topic. They were Ireland, Philippines, Taiwan, Malaysia and Sri Lanka. This is the report of this study,)

In the 1950s, the world's first industrial free trade zone (FTZ), or export processing zone, (EPZ) was established at Shannon Airport. This experiment attracted a good deal of international interest and the results were regarded as a considerable success by UNIDO and other international agencies which urged developing countries to imitate the Shannon project. Since then some fifty countries have opened their own industrial FTZs and today well over one hundred of them ring the globe in Asia, Africa, and Latin America. In many less developed countries (LDCs) these zones are held to be a key element in their strategy for industrial and economic development.

This article very briefly presents some of the findings of a major research project on the economic and human consequences of FTZs in Taiwan, the Philippines, Malaysia, Sri Lanka and Ireland. The research was carried out in each country under the umbrella of the Asia Partnership for Human Development, a federation of twenty-one Roman Catholic development agencies from Asia, Europe, Australasia and North America. Trocaire took responsibility for the Irish study, A book containing the findings in considerably greater detail is due to be published shortly.¹

The FTZ concept

Essentially, a free trade zone is an enclave within a country into which goods may be imported or from which they may be exported free of taxes, duties and often at least some of the regulations applying elsewhere in the country. Free ports or zones, for the purpose of facilitating trade, are by no means new, but the concept pioneered by Shannon was the development of an industrial estate within such a zone with factories and infrastructure provided for the convenience of the companies involved. Thus, even in a country which normally imposes substantial taxes or duties on imports or exports, as in Ireland in the 1950s or many developing countries today, it is possible for industrial firms within such a free trade enclave to import material inputs and capital equipment and to export their products freely. The main attraction of FTZs is thus for highly export-oriented firms which import many of their inputs.

Apart from the free trade aspect, other inducements to investment in FTZs often include profit tax concessions and government grants. In developing countries, further inducements include very low wages, waiving of health or safety regulations and limitations on workers' rights to organise unions. It is this latter aspect, concerning the conditions and rights of workers, that raises the question of social justice and the human consequences of FTZs, particularly since most of the companies operating in them are branches of wealthy multinational corporations producing goods for affluent markets and making profits for shareholders in those countries.

FTZs and industrialisation strategy

Most of the ex-colonies which gained independence in the twentieth century, including the five case studies referred to here, initially attempted to industrialise by import-substitution. Their first instinct was to erect protective barriers against imports behind which they hoped local industries would develop, sheltered from competition from advanced industrial countries. Ireland, which then had very little industry, adopted this strategy in the early 1930s, as did some of the major Latin American countries which were also independent at the time, and the real but limited gains which initially resulted made it seem an attractive approach in the post-War period for new states seeking an economic model. As they gained independence, Taiwan and Sri Lanka adopted protection in the late 1940s and the Philippines and Malaysia did so in the 1950s.

It gradually emerged, however, that there was an initial 'easy' phase of import-substitution during which growth occurred mainly in consumer goods industries with relatively low technological and skill requirements. Progressing further into more technologically demanding and skill-intensive industries, particularly in capital goods, proved to be slower and much more difficult. In addition, most of the protected industries which did develop remained uncompetitive in international terms so that Ireland, like the Latin American countries, still exported little of its industrial output by the 1950s. In these circumstances, stagnation eventually set in as the scope for 'easy' import- substitution was exhausted and export development failed to occur. By the early 1950s, as the new Asian states were moving into import-substitution, Ireland's industrialisation was already grinding to a halt. Taiwan made progress for a longer period, largely attributable to massive US aid amounting to over half of Taiwan's investment in the 1950s. But Sri Lanka, the Philippines and Malaysia experienced more or less chronic problems with the strategy after having some success in the initial 'easy' phase.

In response to the limitations of protectionist import-substitution, many developing countries, often under pressure from the IMF or World Bank, began to shift, to varying degrees, towards a more 'outward-looking' or export- oriented style of industrialisation. This change began in Ireland in the 1950s, followed later by Taiwan and then the Philippines, Malaysia and Sri Lanka. When implemented in its fullest sense, this strategy, which is now the strategy conventionally recommended by international bodies such as the World Bank, involves: (a) the dismantling of protection, moving to free international trade; (b) emphasis on export development rather than import substitution; and (c) an open door for investment by foreign multinational companies. In addition, although the state may offer general incentives such as investment grants and tax concessions, in the orthodox version of this strategy the state would rely on private enterprise and initiative rather than becoming actively involved in selecting particular industries for development and intervening directly to promote them.

Of the five countries, Ireland has adopted this strategy to the fullest extent since free trade with European countries was introduced under the Anglo-Irish Free Trade Agreement of 1965 and by accession to EEC membership in 1973. The other countries still retained elements of protection, although they were generally less restrictive than previously, but they have moved to attract foreign investment and to promote exports. In Taiwan, in particular, a further divergence from the orthodox approach is substantial direct state intervention to develop target industries, including considerable reliance on state enterprises in die modern large-scale sectors.²

Despite the variations in policy, all countries have a common programme to promote industrial exports and to attract investment by foreign multinational companies for that purpose. Industrial FTZs play a part in this effort by providing an attractive business environment free from the restrictions imposed by protection. Where protection is in operation, the zones are more attractive for many export-oriented firms than the rest of the country. The Shannon FTZ provided a unique environment within Ireland when it was established in the late 1950s, although the particular attraction of Shannon faded as Ireland's protection was dismantled, making the whole country akin to an FT2. Taiwan opened its first FTZ in 1966 and two more in the early 1970s. The other countries started later, with Malaysia opening ten zones between 1970 and 1977, while the Bataan zone in the Philippines began operations in 1972 with two more following in the late 1970s. Sri Lanka opened its first FTZ in 1978.

Economic impact of the FTZs

The experience of export-oriented industrialisation and FTZs in Ireland, Taiwan, Malaysia, the Philippines and Sri Lanka is very diverse, but at the same time the diversity suggests a general pattern of economic results. Ireland and Taiwan enjoyed certain advantages in attracting multinational firms which were probably not repeatable by most LDCs opening zones more recently, and accordingly they had more favourable results than the other three countries. At first, their advantage was partly just a matter of being among the first to actively seek out and offer incentives for foreign investment in export- oriented industries, so that they did not have to compete with a host of low- wage countries. Ireland could attract foreign firms offering wages and working conditions which were very good by LDC standards, and Taiwan was able to impose fairly stringent conditions on foreign investors, insisting on a minimum amount of value-added within the country.

Their "first-comer" advantage faded as time went on, but Ireland still had advantages over most low-wage LDCs in the form of political stability, a European location with guaranteed access to the UK market and later the EEC, relatively good infrastructure, skills and education, and a culture relatively familiar to American and European managers. So foreign firms paying high wages by LDC standards continued to invest in Ireland at a rate greatly disproportionate to the country's size. Taiwan, too, has had special advantages for attracting multinational firms, particularly in political stability (very different to Ireland in form, but still favourable to private capital) and a special strategic relationship with the USA which meant favoured access to US markets and a strong sense of security for investors.

For most LDCs without such special attractions the problem is that the available pool of mobile foreign investment is much too small to go round. If they are to get a significant share they are obliged to offer increasingly generous (and costly) incentives, to provide factories and infrastructure, perhaps to waive the application of laws and regulations, to keep labour costs very low and to provide a docile or repressed labour force. The economic consequences of this intense competition for foreign investment can be that there is little or no return on the host country's investment - the costs can be as great as the benefits. The social or human costs can also be substantial, a point discussed below.

To concentrate on the economic consequences of FTZs for the moment: a major aim of the zones was to boost exports and increase foreign exchange earnings. But rising exports would not in themselves represent significant economic progress if imports of material inputs were also rising rapidly, meaning that little of the value of production and export receipts was being retained in the host country. For the FTZs in the five countries, the net gain of exports over imports was as shown in Table 1.

It can be seen that the net contribution of the zones to domestic production and foreign exchange earnings, after deducting the value of imported inputs, is far less than the value of exports, particularly in the three late comers - the Philippines, Sri Lanka and Malaysia. In these countries, not only are most material requirements imported, but value-added is also very low, meaning that the wealth created and retained in the country is only a small fraction of the value of total output.

A basic problem here is that the main way in which wealth is retained in the host country is through the payment of wages to the workforce since little of the material input requirements are sourced locally, government taxes on the firms involved are small or negligible and profits of the multinationals tend to be repatriated eventually. If wages have to be held at very low levels in order to attract the multinationals in the first place, their net contribution to the economy and foreign exchange earnings must be correspondingly small. The main reason why the proportion of wealth retained in the host country is so low in Malaysia, Sri Lanka and the Philippines, as compared with the higher levels in Taiwan and Ireland, is because wage levels are lower in the three latecomers than in Taiwan and much lower than in Ireland.

This problem raises a fundamental question about the FTZ policy in countries such as Malaysia, Sri Lanka and the Philippines which do not have the special attractions for multinationals of Ireland and Taiwan. Wages in such countries have to be held very low in order to attract foreign investment but low wages mean that there is relatively little benefit to the host country. So do the benefits justify the costs at all? In some cases at least, it seems they do not. A study of the Bataan FTZ in the Philippines concluded that, taking account of all benefits to the economy, there was a negative rate of return of-3 per cent a year on the government's investment in infrastructure and other costs. Net foreign exchange earnings of the zone were 85.5 million pesos in 1982, an insignificant amount for a project that had cost 3,790 million pesos in infrastructure, administrative costs and subsidies by that year.³ It remains to be seen whether this will also be the fate of the Sri Lankan and Malaysian zones but it seems possible (see Table 1).

Employment

Another major aim of the FTZs has been to create jobs, and employment figures for the zones in the five countries are shown in Table 2.

Although the absolute employment figures may look substantial, they represent only small fractions of either the industrial or total workforce in each country. Nor does this understate the general importance of FTZs in developing countries since Taiwan has more employment in FTZs than any other country and Malaysia has the second highest number in the world. Thus, even in these countries, the employment impact is really quite small in relation to other industries or the total workforce, and it could not be regarded as a major contribution to industrial transformation. In addition, employment in FTZs in the five countries has been declining.

There are, of course, other export-oriented multinational companies outside the zones, particularly in Ireland where those outside Shannon are now far more important. But even taking account of all such foreign investment, the impact is still very small in relation to the size of the economy and labour force of these countries except in Ireland, and this is true of developing countries in general. There simply is not sufficient mobile foreign manufacturing investment available to bring about significant industrial development in most LDGs, so that relying on foreign firms for a major contribution to industrialisation is scarcely realistic for most of them.

Multinationals tend to have strong preferences for certain countries, depending on factors such as political "reliability", location and access to large markets, so that they are disproportionately concentrated in certain places. For example, about 80 per cent of the 450,000 jobs in Asia's FTZs in 1978 were in Taiwan, South Korea, Hong Kong and Singapore. The stock of US manufacturing investment in Ireland was equivalent to 5 per cent of that in all developing countries although Ireland's population amounted to only about 0.1 per cent of LDGs/ Where such a disproportionate concentration occurs in a very small country like Ireland or Singapore, there can be a significant impact on the economy, so that foreign-owned multinationals in Ireland, for example, now account for close to 40 per cent of manufacturing employment and about three-quarters of manufactured exports.

Such results must be regarded as exceptional and cannot justify the prevailing orthodox recommendation for LDCs in general of outward-looking policies, with a major role for multinational companies, nor the pressure imposed on many countries by the international financial organisations to adopt such policies.

Lessons for industrial strategy

To conclude on the economic aspects of the study, the five country case studies suggest a number of conclusions for industrial strategy in LDCs. First, as mentioned above, most countries cannot expect a really major contribution to overall economic growth and employment from foreign export-oriented industries. Special advantages in attracting foreign investment combined with a small size seem to be necessary for this to occur. In countries which do not seem particularly attractive to multinationals, there is a risk that any benefits from schemes to encourage their investment may notjustify the costs, and there are likely to be better ways for a government to invest its money.

Second, looking at Ireland, which went furthest in adopting the full free trade, free market approach, there seem to be serious risks in abandoning protection in a relatively weak late-developing economy. Ireland did experience fairly strong industrial growth under free trade in the 1960s and 1970s, but this was due to new foreign investment on a scale which most countries could not expect. Formerly protected, native Irish-owned firms lost ground steadily to competing imports once the dismantling of protection began, so that their employment stopped growing in the mid-1960s and Irish- owned firms now employ considerably less people than they did then. This is the experience of only one country, of course, but there are actually few examples of other late-industrialising countries with free trade policies from which to draw lessons, and the international trade performance of native- owned industries in these other countries, such as Singapore or Puerto Rico, does not inspire confidence.⁵

While protection alone may not provide a satisfactory solution to the problem of industrialisation in LDCs, the full free trade, free market approach is likely to be a very risky alternative for many of them.

Third, if LDCs are to industrialise successfully, most of them will have do so mainly by building up their own native-owned industries. Even in Ireland, where foreign multinationals have made proportionately the greatest contribution to industrialisation among the five countries, it has now been officially recognised in the White Paper on Industrial Policy (1984) that future progress must depend far more on native-owned industries, because competition for a declining volume of mobile (multinational) investment is constantly intensifying from both industrialised and developing countries.

Whereas Ireland has been presented at times as a model of one type of industrialisation strategy, depending on much foreign investment, it clearly does not have a great deal to teach the world about development of competitive native industries. Of the five countries, Taiwan has had most success in this area, with industrial growth rates among the highest in the world coming principally from native industries. Taiwan's strategy (as in South Korea, and Japan at an earlier stage) involved selecting priority or target industries for development, protecting them at first while actively nursing them to competitive maturity, and then breaking into export markets. More than just protection, it involved active and selective state intervention, with a good deal of direct state investment. There may be something to learn here.

Finally, it should be acknowledged that these conclusions are open to dispute, and many would not agree with them. But, at the least, it must also be admitted that the evidence in favour of the conventionally recommended outward-looking, free market strategy, relying heavily on foreign investment, is questionable and less than conclusive. In these circumstances, it is a matter of serious concern that international financial agencies should be pressing LDCs so hard to adopt such policies, often against the judgement of many people in the LDCs, so that, in the Philippines for example, major political crises have revolved around such issues of economic and industrial policy. Concern about this external pressure is increased by the fact that the agencies in question are controlled by the large developed countries, particularly the USA, whose major corporations have an obvious vested interest in opening up the LDCs for their activities.

Workers and their conditions

A full assessmentof the impact of FTZs should go beyond an economic analysis and look at the social impact, and accordingly the study of FTZs in live countries on which this article is based included surveys of workers in the zones. These surveys found major differences in the composition, conditions and attitudes of the zone workforce in Ireland, and to a lesser extent in Taiwan, compared with the other countries. Table 3 shows some basic data on the workers.

A striking feature of the table is the extent to which the zone workforce in Malaysia, the Philippines and Sri Lanka is composed of young, single women from rural backgrounds, and in each of these countries this is quite different from the composition of the broader industrial labour force. Rates of pay are also very low, below the poverty line in Malaysia and the Philippines, and although official minimum wage rates are observed in Sri Lanka, wages there are even lower, the minimum rate being calculated as no more than enough to provide for a worker's most basic needs. In Taiwan, too, a very high proportion of the FTZ workforce are women, also younger and tending more to come from rural areas than in the rest of the country, although these aspects are less marked than in the other three countries. Wage rates in Taiwanese zones are considerably higher than in the other three Asian countries, but are nevertheless below the national average.

Only in Ireland does the general profile of the FTZ workforce correspond quite closely to that of the industrial sector in general, with wages and conditions also being comparable to the situation outside the zone, if not better in some respects. The survey of Shannon workers found most of them to be broadly satisfied with their employment, apart from a prevailing concern with long-term job security given the unemployment situation.

The situation of workers in the Asian zones is thus very different, and the country case studies suggest why this new proletariat of young, single, rural women has been particularly sought out by multinational companies there. Foreign firms investing in Ireland see a variety of attractions in doing so, especially ease of access to major European markets and, by comparison with alternative European locations, favourable tax concessions and grants, as well as relatively low wages by European standards. But they are not primarily attracted to Ireland by low labour costs and, indeed, if that was their main requirement they would go elsewhere in the world. Those investing in the Asian FTZs, on the other hand, are primarily seeking low-cost labour for unskilled labour-intensive production processes. Thus, they mostly employ young, single women because in each country their wage rates are lowest. Such workers are also considered more compliant, easier to discipline, more patient doing repetitive tasks and easier to dispose of than an older, predominantly male workforce, perhaps particularly with rural women who are new to industrial employment. In all respects labour costs are lowest with such workers.

The composition of the workforce in the Asian FTZs reflects the primary importance of the lowest possible labour costs in attracting foreign investment. Rising wages and agitation by workers for better conditions might scare away mobile multinational operations and so, in order to support an industrialisation strategy identified as central to economic growth, governments have acted to ensure that labour costs do not rise and workers do not challenge their employers. In the four Asian countries, zone workers were strongly discouraged or prohibited from forming workers' associations or joining unions, and this suppression or tight control of workers' organisations has in some cases carried over into general labour controls outside the zones.

Such suppression of workers' organisations is not peculiar to LDCs with an export-oriented strategy or FTZs. But there does seem to be a certain inexorable logic in it in such countries, given that the strategy depends quite fundamentally on offering cheap and tractable labour in order to attract highly mobile multinational companies which are free to choose from a wide range of possible locations. Governments in these countries are drawn into the paradoxical situation of suppressing groups of workers in their own population in the name of economic progress and development, despite the fact that the main benefit for their economies from foreign investment comes through the payment of wages. This situation results from the intensity of competition among so many LDCs in trying to attract foreign investment, so that the clearest beneficiaries are ultimately the multinational investors, and in some cases - indirectly - local employers.

The dissatisfaction of the workers themselves has been most evident in the Bataan FTZ in the Philippines where most of the workforce has unionised and strikes have occurred, despite the legal controls and deployment of the security forces within the zone. Even in Taiwan, where wage rates were much the highest of the four Asian countries, the researchers found evidence of considerable dissatisfaction. Although their survey collected generally positive responses to direct questions about working and living conditions in the zones, this could well be largely a reflection of the generally conformist and highly controlled cultural system. There was a high rate of employee turnover, with about 5 to 10 per cent of women workers quitting every month, while the young women employed in the zones commonly regard themselves as "students" temporarily employed to support their further education.

The Taiwanese study, in particular, exposed the psychological stress experienced by workers enclosed in an alien and unnatural environment. Indeed, the Asian studies in general highlighted the social and cultural dislocation experienced by young rural women drawn into this form of industrial employment. Living conditions, often in cramped dormitory accommodation, can be almost as stressful as working conditions.

Assessment

To conclude, how is one to assess the general benefit or value of foreign investment and the FTZ strategy in promoting the material and social welfare of the people in LDCs? One clear lesson from this set of comparative case studies is that the answer depends on a country's circumstances. The Irish case showed that the strategy can produce some quite positive results in a country with particular attractions for multinationals, even though this alone is insufficient to promote adequately the country's overall economic development. It is also clear, however, that in larger countries with no particularly strong attractions for foreign investors, the contribution of FTZs and 'multinational investment to economic development is very limited and may not even justify the costs to the government of the host country.

The pay, conditions and limitations of rights of workers in FTZs in such countries represent further objections to this strategy. It might be argued, however, that industrialisation is inevitably a painful process initially and that the workers of the Third World must endure social disruption and economic sacrifices similar to those borne by the working classes ofindustrialising Europe in the nineteenth century. In response to this, it is worth pointing out that Europe's industrialisation in the last century involved the accumulation of capital, skills and technology which eventually laid the foundations for far more prosperous societies. But in the Asian FTZs the unskilled, labour-intensive operations of foreign multinational companies, who develop and control the technology and receive the profits, promise no comparable long-term benefits for the host countries.

Furthermore, in retrospect, most Europeans would regard the conditions of workers in the early Industrial Revolution as deplorable and unjust, and there are similar grounds for concern now about the situation of many industrial workers in LDGs. It should be remembered that the exploitation of cheap labour convinced European workers of the need to organise and struggle for a more equitable place in their societies, and if that could be regarded as a legitimate objective the same applies now to those in the LDCs who are struggling for similar aims.

It might also be argued that the conditions of workers in the Asian FTZs at least represents an improvement on the rural poverty which is widespread in most of these countries, since the workers themselves have chosen to move from rural areas to work in the zones. This may be so, but rather than simply establishing that the FTZs represent real progress, it should draw attention to the causes of the apparently even more intolerable situation of many in the rural areas.

The Sri Lankan study looked at the conditions which pushed young rural women into the zone workforce, finding that the great majority of farm families work less than five acres, while there is considerable inequality in the pattern of land ownership.

The fact that zone workers might choose their employment in preference to living in conditions of deprivation in rural areas gives little cause to applaud the "progress" and opportunities presented by the FTZ. Real progress would be represented by reform in the rural areas so that people would not be attracted by such very low-paid employment. In Taiwan, for example, where a comprehensive land reform was carried out several decades ago, it is highly unlikely that people with an adequate living in rural areas would enter industrial employment for the sort of wages paid in the FTZs of the other three Asian countries.

Finally, it is evident from the five case studies that much of the exploitation of workers in the poorer countries results from competition between countries trying to attract a share of the relatively scarce amount of mobile multinational investment, and from competition between workers for the resulting employment. Competition and division between countries and workers keep wages very low and limit workers' freedoms. This is an international problem requiring an international response.

Footnotes

1. Dennis Shoesmith (editor), Export Processing Zones in Five Countries: the Economic and Human Consequences,Asia Partnership for Human Development, Hong Kong (forthcoming). This article draws heavily on this study for information and some conclusions, summarising selected parts of it, although Dennis Shoesmith is not necessarily responsible for any views expressed here.
2. See Robert Wade, "Dirigisme Taiwan-Style", IDS Bulletin, Sussex, Vol. 15, No. 2, April 1984.
3. Peter G. Warr, "Export Promotion via Industrial Enclaves: The Philippines' Bataan Export Zone", Australian National University, 1984.
4. Shoesmith, opcit., and US Department of Commerce, Survey of Current Business, October 1981.
5. See Hock Beng Cheah, "Export-Oriented Industrialisation and Dependent Development: the Experience of Singapore", IDS Bulletin, Sussex, Vol, 12, No. 1, December 1980; and JoseJ. Villamil, "PuertoRico, 1948-1976-Tkt Limits of Dependent Growth", in Jose J. Villamil (editor), Transnational Capitalism and National Deoelopment Harvester Press, Hassocks, 1979.

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It’s time to allow the hungry to feed themselves and the rest of the World

(October 17, 2010) The world is commemorating the WFD ( Oct.16 ) this year in a state where the food situation in the world is precarious . The lessons we have to learn from the experiences in trying to feed the world are very important. This is not because of the successes but because of the failures. The world leaders have almost come to a situation in which they need to admit that their efforts so far in trying to solve world’s hunger has failed and they are not in a position to find effective solutions.

In the year 2000, the world leaders met and decided to set up the Millennium Development Goals ( MDGs), when they promised that they would reduce world’s hunger by half by year 2015. There were 840 million people then, who were going to bed hungry every day. They should then have realized that all these 840 million people would be dead when they reached this target. But they went ahead. Now the number of people who were hungry have not reduced although two thirds of the target period has elapsed, but it has increased to 1.2 billion. The discussions that were held at the world conference on Food Security convened by FAO to see what could be done by the year 2050, when the situation becomes much more serious, ended up in not working out any effective strategy.

So, the task of the people on food and on the Food Day should be to emphasize that the present leaders of the world are unable to find solutions to the problem of hunger. Some other strategy and some other agencies must undertake to find solutions to the problem of hunger. The world fails to solve hunger not because the world does not produce enough to feed all, not because the technical capacity to produce enough food is lacking. It is simply because food is produced not mainly to solve hunger but to make profits. The entire activity of food production, processing and marketing is largely dominated by big companies ( TNCs ) who are more concerned in making greater profits rather than feeding the hungry. Much of the land and other natural resources that are necessary to produce food are in the hands of big companies, they also have a strong control over seeds and inputs and also technologies utilized to produce food. The process of land grabbing by the rich has got more intensified.

The recent crisis of price increases of food was caused due to food being used for production of bio fuels, more meat production leading to much food being produced to feed animals rather than to feed people and also due to large migration into cities making the populations in the cities compared with rural areas reaching 50 : 50. Another factor that is affecting food production is global warming resulting in climate change leading to lower yields. If you examine each of these reasons they are due to food production being controlled by profit motivated producers. The reasons for failure of world leaders to find effective solutions are due to the fact that they do not want to change this situation of allowing the big profit makers to have control and ownership over food production, seeds,marketing and food producing resources of the world.

This situation can be changed only by taking over the task of feeding the hungry away from these profit making controllers into the hands of those who are genuinely interested in solving hunger. Who are they ? They are the hungry people of the world. How can they do it ? If they do not have the capital presently needed to produce food, they have to think of strategies that do not depend on financial capital. Can the world think of a strategy that does not depend on financial capital to produce its food ?

In solving this issue it is necessary to recognize that the type of agriculture that is prevalent today is very heavily input dependent. The ecological impacts of such external input dependent agriculture has been found to be drastic and very damaging. World scale studies that have been done recently such as the IAASTED ( International Assessment of Agricultural Knowledge, Science and Technology for Development) completed in April 2008 showed that the present day prevalent agriculture, though capable of producing much food and much diversity of food has committed two serious mistakes in ignoring the social aspects of agriculture and also the environmental aspects of it. This was a very important research that was done by 400 prominent scientists, commissioned by world’s leading institutions, who studied this in a large number of countries, over a period of four years and it was finally accepted by nearly 60 countries of the world. There is an alternative approach advocated by very large farmers movements such as Via Campasena ( world peasants movement ) and very large movements of small and landless farmers such as MST in Brazil who are promoting small scale ecological agriculture by small farmers as a more effective way of solving the problem of hunger.

The major difference in this approach is to make use of nature’s advantages such as maximizing the use of sunlight, maximizing bio diversity, improving the soil fertility by preventing erosion, by maximizing the benefits of microbial activity by adopting techniques that maximize the presence of microbes in the soil and also utilizing methods of integrated pest management instead of chemical pest control, chemical weed control and use of chemical fertilizer etc. Utilizing mixed farming rather than monocropping is another technique. This approach is fast growing in many countries in spite of the massive propaganda by agribusiness TNCs to continue their previous techniques that only bring profits to the larger operators at the cost of making a lot of farmers poorer and also destroying their livelihoods while making more and more people hungry. Introductionn of genetic modifications etc. have been done not so much due to their effectiveness in sustainability of agriculture but for the possibilities of maximizing profits in the hands of big companies.

We have been able to contact some practices that are developed in India by people such as Mr. Subash Pallekar who has done many years of research in developing the technique that he describes as “ Zero Budget Natural Farming”. This strategy is now being adopted by around 4 million farmers in India.

It is a simple technique that utilizes the basic principle that farming is done free of charge by nature. The technique utilizes only a simple formula named “jeevamurtha” a mixture of deshi cow dung, cow urine, some sweetener such as juggery or coconut water and some powdered cereal and a handful of soil from the neighborhood that contains microbes that are present in the said environment. A similar mixture named beejamurtha is utilized to prepare seeds for germination. What is important is that this application requires no financial input and it utilizes natural farming totally. These mixtures require only two days of fermentation to be ready for application and the result are immediate.

On the whole what is important in feeding the hungry is to allow the people who are threatened with hunger to develop their own techniques of finding their food by going back to nature and benefits of natural farming. What is necessary is to remove the policy obstacles that are existing against this strategy. Already much has been achieved by way of techniques of natural farming. Sometimes these techniques are called organic farming, or ecological farming, it can also be named regenerative agriculture since the proper techniques of natural farming will also help in restoring the ability of nature to regenerate itself.

Restoring the capacity of nature to regenerate itself is a need for survival of all human beings and all other life forms. From this point of view, this restoration of agriculture back into its natural process of regenerating nature is an essential requirement to ensure survival. This is being highlighted in the other crises such as the crisis of climate change and global warming too. Therefore these tasks that should be achieved in our techniques and policies of food production needs to be highlighted on the World Food Day. Any approach that restores the capacity of nature to regenerate itself has the moral right to claim ownership and control over agriculture. Thus, the poor and hungry people have a moral right to claim control over agriculture technology and resources of land and nature for production of food. Those who destroy this potential has no right to claim control and ownership.

In Sri Lanka

In Sri Lanka the need for this transformation of agriculture is very high. There are many factors related to food and agriculture in Sri Lanka that can not be effectively solved without this transformation. In summary these needs are to reduce the cost of food to the poor, reducing the present rates of malnutrition that has prevailed at unacceptably high levels for over twenty years , which damages not only the physical growth of children but the development of their brains too. A study done by the Ministry of Health, UNICEF and WHO in March 2010 showed that rate of malnutrition in the plantation children was as high as 40 %. Even in other agricultural districts it was higher than 20 %. Another serious issue that is found in relation to food in Sri Lanka is that much of the food that is available is unhealthy, chemically produced and chemically contaminated. Food marketing is entirely in the hands of private companies and artificially processed food is heavily promoted. Sri Lanka depends unnecessarily on imported food, imported seeds and imported agricultural inputs. Introduction of Commercial seeds of F-1 variety that cannot be used repeatedly is destroying the natural seed potential in the country. Unless we change this pattern Sri Lanka’s agriculture and food situation is doomed.

The potential for adopting ecological and natural farming in Sri Lanka is very high. We have enough sunlight through out the year and also enough rainfall and water. Bio diversity and food diversity in Sri Lanka is very high and can be further improved too. The fact that we still have a very large population of small holder farmers can turn out to be an advantage. This is because small farms can adopt this type of ecological farming with great efficiency. This can reduce the tremendous growth of health hazards that are caused by insufficiency of food and by unhealthy artificial food, chemically contaminated.

Although the government policies still give much priority to private sector agricultural control, the people on their own have already done much by way of small scale ecological farming. A survey conducted by MONLAR in early 2008 showed that there were around 538 organisations in the country that was promoting and practicing some form of ecological farming.

The present government has many programmes trying to address issues of rural poverty and food insecurity. They are “Api Wawamu Rata Nagamu” ( Let’s grow and build the Nation ) programme which envisages building of 4 million home gardens intending to get each of the families to have their own home garden, Another Programme is “Gama Neguma”for improving rural livelihoods and reduce rural poverty, another is Gemi Diriya ( supported by the World Bank) and so on. However, unfortunately none of these programmes have a clear vision and strategy of ecological agriculture. This failure is largely due to the heavy influence of private companies such as CIC, Prima and other companies dealing with chemical agricultural inputs and commercial food that utilizes the government to promote the type of farming that is beneficial to them to sell their inputs , seeds and technologies. What we need to do is to propagate the more effective alternatives that are very applicable and beneficial to Sri Lanka, to the farmers and also to consumers. This would be the best way of our preparing to face the future challenges of the country and also of the world.

It is time to set a new agenda of food production that allows and encourages the hungry and the poor people to take over the task of feeding themselves and also developing effective approaches that can feed the rest of the world. This approach can save the hungry from dying of hunger, the poor from extreme forms of poverty and also all others from ill health caused by unhealthy food and unhealthy environment and saving the world from environmental calamities.

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Posted in food security , hunger , Millennium Development Goals , Sri Lanka

Paddy production, rice and wheat flour imports; boasting and reality | වී නිෂ්පාදනය, සහල් හා පිටි ආනයන; පම්පෝරි හා ඇත්ත

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Posted in paddy production , rice imports , Sri Lanka , wheat flour imports

Sri Lanka importing chicken from Brazil

(July 01, 2010) The controlled price of a kilo of chicken is Rs. 350 but it is often sold at higher prices scot-free. Chicken price has escalated despite price control as the traders have raised prices of the products with value addition.

Giving up the self-imposed price control on chicken, Sri Lanka government has decided to import 3000 metric tons of chicken to balance the shortage in the market and to regulate the escalating prices.

Sri Lanka presently produces only 9000 metric tons of chicken per annum while the annual consumption is 12,000 metric tons.

The Minister of Cooperatives and Internal Trade Johnston Fernando says that the government will maintain the monopoly of importing chicken to protect the local producer and to regulate the market.

The imports are to be made from Brazil. Cooperative Wholesale Establishment (CWE) is to market the imported chicken via its network of outlets.

Sri Lanka's poultry industry is highly dependent of imported inputs that cause inevitable escalation of production cost.

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Posted in Brazil , chicken , poultry , price control , Sri Lanka

122,400 acres of abandoned paddy fields in the war affected zone of the Northern Sri Lanka

(June 07, 2010) A survey by the Agrarian Service Department of Sri Lanka conducted after the end of the war reveals that there are about 122,400 acres of abandoned paddy fields in the war affected zone of the Northern Province.

Meanwhile, the government says that under the Re-grow the North programme, the government will take steps to cultivate 60,000 acres of paddy fields in the next Maha season.

However, the farmers resettled in these areas are severely in short of basic amenities far farming. Some have even in need of simple equipments like spades.

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Posted in Northern Province , paddy , rice farming , Sri Lanka

Sri Lankan authorities pay focus on sustainable energy

(May 24, 2010) Sri Lanka Sustainable Energy Authority has initiated a programme to set up Sri Lanka’s first ever major scale solar power plant. A 50-acre land in Baruthakanda that has been declared as a Solar Power Zone in Hambantota has been selected to establish two solar power plants.

The capacities of the proposed plants are 600kw and 500kw. Renewable Energy Director of Sri Lanka Sustainable Energy Authority Athula Jayatunga said to media that Japan would grant US $ 9 million for the 600kw plant, while Korea will fund the 500kw plant with US $ 4.5 million.

Sri Lanka Sustainable Energy Authority is to develop infrastructure for both facilities.

A power supply of 1, 237,500 kw will be added to the National Grid after the generation of these two plants begin. They are also expected to save Rs22.5 million of the annual expenses on fuel for the Ceylon Electricity Board.

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Posted in Baruthakanda , Sri Lanka , Sustainable Energy

40,000 METRIC TONS OF PADDY PURCHSED THIS SEASON

April 23, 2010: The government says it has purchased 40,000 metric tons of paddy from farmers so far this season.

The Ministry of Agriculture Development and Agrarian Services added that the process would continue uninterrupted.

“Offices of the paddy marketing board are open in all parts of the country for this purpose,” said S. Amarasekara, Secretary to the Ministry of Agriculture Development and Agrarian Research.

Rs. 3,000 million have been allocated for purchasing paddy this season.

The Secretary to the Ministry noted that if those funds proved insufficient additional funds could also be obtained.

Farmers who bring their paddy to the storage facilities are paid Rs. 31.50 for a kilogramme of Samba while Nadu is purchased at Rs. 29.50 a kilogramme.

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Posted in paddy purchasing , rice harvest , Sri Lanka

Pineapple cultivators of Sri Lanka express concern

By Gamini Senadeera (Daily Mirror)

(February 26, 2010) Pineapple cultivators in the Gampaha District expressed concern about the heavy losses incurred by them due to the increasing production costs and for want of a profitable market for their produce.

They pointed out that the increasing prices of fertilizer and agro chemicals seriously affected them. A pineapple cultivator of Rathupaswala, Wimal Wickramarachchi stressed the need to provide a fertiliser subsidy to the pineapple cultivators as in the case of paddy cultivators. “I took to pineapple cultivation a few years ago in a small scale.

Today I have 50 acres of pineapple cultivation at Giriulla, 40 acres at Katupotha and 15 acres at Ganemulla. However, I am facing hardship for want of a market for our produce. The sharp decline of prices causes us heavy losses during the harvesting season. The government or the private sector must introduce pineapple based industries to provide a market for the produce.

The small scale cultivators should receive a fertiliser subsidy from the government. It is sad that we have been left to the mercy of the middleman.”

Meanwhile, the traders pointed out that it was with great difficulty that they earned a marginal profit from pineapple cultivation.

“We do not have storage facilities to preserve pineapple for a long time. Unless we dispose of our stock in a couple of days, we would be compelled to discard a large parentage of it as rotten fruits. Our customers are mostly ordinary consumers,” one of the traders said.

The pineapple cultivators requested the government to look into their predicament and provide them adequate facilities.

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Posted in Gampaha , pineapple cultivation , Sri Lanka

A fair trade and exhibition in Sri Lanka

(December 09, 2009) Savisthri  (Women for development alternatives) Movement, a national Sri Lankan women's organization for development alternatives has  organized a fair trade and exhibition to be held on 11^th December from 9 am to 8 pm for promoting alternative community creations and productions. 

Aims and  Goals of the fair trade is as follows:

·         developing fair trade

·         buildup confidence on fair trade

·         initiate dialogue for fair trade

·         encourage the people alternative products

·         spreading ideology among the people

Following items are displayed and sold in this exhibition. 

·         handloom sarees

·         bedspreads

·         handbags

·         shoes

·         clothes and ornaments

·         indigenous foods

·         indigenous medicines

·         alternative energy(bio-gas)

·         clay pots

·         handy crafts

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Posted in development alternatives , fair trade , Sri Lanka

600 bottles of water unfit for human seized from tourist hotel

(December 05, 2009) Six hundred bottles of water, unfit for human consumption, were seized from a coastal tourist hotel at Beruwala in Sri Lanka by Public Heath Inspectors.

The bottles were produced in Court and referred to the Governmenta Analyst for a report.

The raid was conducted by the Chairman of Beruwala local government authority Prasanna Sanjeewa, the Public Health Officer, Chandrasiri Pinidiya and a team of Public Health Officers.

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Posted in bottled water , public health , Sri Lanka , tourist industry

Sri Lanka to grow oil palm in 5000 hectares

(November 13, 2009) The cabinet of Sri Lanka has approved a proposal to import seeds of oil palm for the cultivation in estate lands managed by the plantation companies.

Under the programme, it is expected to cultivate palm oil in 5000 hectares..

Oil palm cultivation by the estates is criticized by some of the residents in the adjacent villages due to the trees' high consumption of water that cause the water resources to dry out.

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Posted in Agriculture , palm oil , plantation , Sri Lanka

Sri Lanka schemes ‘legal reform’ to negate identity and grab land

[TamilNet, Wednesday, 11 November 2009, 02:34 GMT]
News reports from Colombo indicate Sri Lanka government is planning to revise the Theasa Vazhamai law of Tamils, which is a constituent legal code, ever since the formulation of the island’s current legal system by the Dutch. The urgency of the Sri Lanka state at this juncture is not social reformation but grabbing the lands of Tamils without legal hurdles, besides removing last vestiges of Tamil sovereignty in the state apparatus, Tamil legal circles said.

The very word ‘Theasa Vazhamai’ means the conventions of the nation or country.

This is a civil legal code applicable to the people of the Jaffna Peninsula and was codified by the Dutch in early 18th century, by compiling the traditional laws of the times of Tamil sovereignty before the advent of colonialism.

The legal code was a result of a consensus between the Dutch administration and the chieftains of Jaffna. Earlier, at the fall of the kingdom of Jaffna, the chieftains had a convention on such matters with the Portuguese. The details of this convention, mentioned by historians, are said to be available in the archives of Goa, but are yet to be translated.

The nomenclature Theasa Vazhamai implies that the Tamils had a Theasam (country) in the island and the incorporation of it as an identifiable legal code in the Roman-Dutch legal basis of the island by the Dutch indicates that separate sovereignty of Tamils in the island was acknowledged in matters of civil law. The territories of the kingdom of Jaffna were a separate unit called Jaffna Patnam under the colonial administrations of the Portuguese and the Dutch.

A Tamil coastal community of the eastern and western parts of the island also had a similar code compiled by the Dutch, but it became obsolete and removed in British times. When the British conquered Kandy in 1815, as a consequence of a convention between the British and the chieftains, the Kandyan Sinhalese received a similar legal code, which is still recognised as Kandyan Law.

The most conspicuous part of Theasa Vazhamai is its property and inheritance laws, which strike a balance between patriarchy and matriarchy, in differentiating Muthusam, property that comes in father’s line from Seethanam, property that comes in mother’s line.

Unlike the Tamil Nadu custom of Vara-thadcha’nai, which in etymology and in practice means donation to the bridegroom, the Seethanam of Jaffna means woman’s property and in practice also go in female line. Husbands live in wives houses and sons will not get the property when there are daughters.

British colonialism lenient to patriarchy, as seen with the case of the abolition of Marumakka’l Thaayam (a matrilineal practice among the Naayar community) in the princely state of Trivancore, brought in changes twice in Theasa Vazhamai too, according to which the husband has to countersign when a woman transacts her property.

The British version of Theasa Vazhamai, before changes, is available in the form of palm leaf manuscripts in London. Prof. S. Pathmanathan has reproduced some of them a couple of years ago in his book in Tamil on Theasa Vazhamai.

According to legal circles, what the Sri Lankan state eyeing now in the guise of social reform is erasing an important element in the property laws, called Earvai that prevents selling a land to others, when neighbours are prepared to pay the same money.

The law was a reason for strong ‘village identities’ among Tamils but at the same time also contributed to caste segregation of settlements.

Migration to foreign countries, displacement and the drastic conditions faced by Tamils are in many ways changing the social picture today in which diaspora remittance determines land transactions among castes, but yet as a social consensus, land is retained within Tamils and has not gone to non-Tamils.

The idea of the Sri Lankan state is to break the identity of Tamils with their land in their heartland on one hand, and on the other, to pave way for the purchase of Tamil lands by the new economic forces dominated by Sinhalese, said an academic in Jaffna, adding that once practical applicability is invalidated, Theasa Vazhamai, the symbol of a separate identity and the last vestige of legal sovereignty of Tamils in the island will become obsolete.

Some LTTE circles also, when there was a de facto state, thought of revising Theasa Vazhamai, but for social reasons. This is different from what the Sri Lanka government aims now without exclusive consent of the people concerned. This is a matter for Tamils to decide under their own sovereignty, the academic said.

The Sri Lankan state could have easily achieved multi-ethnic land ownership in any part of the island had it conceded the rights of Tamil nation in the island and had eliminated fear of genocide. But the state now tries to achieve it as a part of a systematic structural genocide after militarily crushing the balance of Tamils and some greedy powers are assisting to this process, the academic further said.

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Posted in land grabbing , Sri Lanka , Thesawalamai

Coconut industry hit by imported palm oil

(November 03, 2009) Sri Lanka's major opposition United National Party (UNP) yesterday charged that the coconut industry in the country was in serious trouble with 60 percent of coconut mills in the North Western province alone having been closed down.

Opposition Leader of the North Western Province Shamal Senarath told a news conference yesterday that the coconut industry is in dire state because the excessive importation of palm oil to the country. He alleged that the import duty on palm oil had been reduced to 5 percent from 28 percent in order to satisfy a few businessmen who import palm oil and have state patronage.

The government had not taken meaningful measures to revive the coconut industry despite Minister of Nation Building Salinda Dissanayake who is in charge of the subject threatening to submit his resignation if no effective steps are taken to revive the dying industry, he said.

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Posted in coconut industry , palm oil , Sri Lanka

No licences for encrachers of state land in Sri Lanka

(October 30, 2009) Sri Lanka Ministry of Land and Land Development has decided to suspend the issue of licenses for the persons who have illegally settled in state land after 1995.

The Minister of Land and Land Development Jeevan Kumarathunga says that the step was taken to discourage encroachment of state land by people.

Encroaching has several dimensions and the low income group people settle in state land due to poverty while the politically backed affluent persons encroach valuable state land for business purposes. Clearing state forests for cultivation also takes place in mass scale and this has also generated issues such as man-elephant conflicts.

However, the worst kind of encroachment takes place with the support of the government politicians and the affluent encroaches obtain the licenses easily and own the land for generations if not for forever.

The Minister of Land and Land Development points out that the state is now in short of prime land for development in Colombo and suburbs due to this illegal encroachments. 

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Posted in encroach , land , land grabbing , Sri Lanka

Sri Lanka to import rice

(October 30, 2009) Sri Lanka government has allocated funds to import 50,000 metric tons of rice.

The imported stocks are to be used as buffer stocks ahead of the elections. Sri Lanka has anticipated rice price hikes and shortages in near future. President Mahinda Rajapakse said recently in a discussion with the pro-government trade union leaders that there is a conspiracy against the government by the traders to create an artificial rice shortage. Rice is the major staple food of the Sri Lankans.

Sri Lanka is facing a drought situation with the delay if the monsoon rains and thousands of acres of rice fields have been abandoned due to water shortage in the main rice farming areas.

From October to February, Sri Lanka's rice farming districts receive sufficient rains from the northeast monsoon for the cultivation in the main season. Excess water is stocked in reservoirs for limited cultivation in the other season in which low rainfall is recorded. 

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Posted in rice farming , Sri Lanka

Sri Lanka to increase fines for the misuse of pesticides

(October 26, 2009) Sri Lanka Pesticides Registrar's office says that the cabinet has approved the increase of the fine for the misuse of pesticides to Rs. 500,000 from present Rs. 10,000.

The amendments to the relevant Acts are to be moved in the parliament soon.

The office also says that around 70% of the pesticides users in Sri Lanka do not use the recommendations relevant to use of the agro-chemicals. Use of pesticides was popularized by the authorities during the 1970s green revolution and now it is widespread among the farmers of cash crops.

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Posted in pesticides , Sri Lanka

New laws on pesticide use

(October 07, 2009) New regulations on the use of pesticide will be gazetted this year to ensure the safe use of pesticides, said senior research officer of the Peradeniya Registrar of Pesticides, Sumith Jayakody.

Addressing a media awareness program organised by the Health Education Bureau together with CropLife and Toxicology Society, he said new regulations will be applied to pest control services, labelling information, training of pesticides applicators and penalty structure.

After effects * Pesticide poisoning deaths: 1,242 * Admitted to hospital: 16,876 * Seventy percent use more than stipulated dosage of pesticides * Eight percent had intense toxicity following spraying

“The fine for the misuse of pesticides will be increased to Rs. 500,000 from Rs. 10,000. One thousand two hundred and forty two deaths were recorded due to pesticide poisoning in 2006 while 16,876 people were admitted to hospital. In the same year, 2,787 people had committed suicide by taking pesticides,” Jayakody said.

He pointed out that the majority of pesticide users (70 percent) used more than the stipulated dosage and majority (82 percent) had symptoms of intense toxicity following spraying.

He emphasised that the users must take adequate protective measures while using them and this cannot be done simply by enacting laws.

Jayakody also noted that when using pesticides not only personal safety but also the impact on environment and beneficial insects should be of concern.

The users are also encouraged to use novel approaches in pesticide products such as “insecticide treated bed nets” for mosquitoes, in which chemicals are embedded in polymer capsules, and “Splash packs” for crops, which minimise the exposure by keeping the sprayers away, he said.
Rejecting the claim that any pesticide can be transported into the country easily, he said: “We are following Stockholm, Basel, Rotterdam and Montreal International Conventions related to the production, export and import of hazardous chemicals and therefore bringing in banned chemicals to the country is highly restricted.

Also as an island, by nature itself, trans-boundary movements are limited and it is a comparative advantage for us,” he said.

-Daily News

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Posted in Agriculture , pesticides , Sri Lanka

Indian agriculture team visiting Sri Lanka

(September 18, 2009 - Lanka Polity) A six-member Indian agriculture expert team led by S.P. Tiwari, Deputy Director General of Indian Council for Agriculture Research (ICAR), is on a four-day visit to the country. Its mission is to help the renewal of agriculture in Northern Sri Lanka as part of the Rs. 500 crore package announced by India for relief, reconstruction and rehabilitation of the three-lakh war displaced.

The mission is a follow-up to the visit of eminent agricultural scientist M.S. Swaminathan in the second week of June. During his visit Prof. Swaminathan called on President Mahinda Rajapaksa and met a wide range of people to study the role India could play in accelerating the progress in livelihood rehabilitation of the farm and fisher families in the conflict zone.

On Thursday, the team called on Basil Rajapaksa, Chairman of the Presidential Task Force on Northern Development and discussed the broad contours of its agenda. It also met with officials from the Ministry of Agriculture, Fisheries and Plantation.

In the short-term, besides giving basic inputs for the use of seeds and fertilisers to the Internally Displaced People (IDPs) who are in the process of being re-settled, the team also proposes to support the institutional development of agriculture in Sri Lanka.

On September 19, the team will travel to Vavuniya town in the north to get information on the existing infrastructure.

At the end of his visit, Prof. Swaminathan was of the view that India could provide necessary seeds, biofertilizers and biopesticides, farm equipment and post-harvest infrastructure. For strengthening location-specific research, he said an existing centre in Vavuniya could be strengthened.

For fishermen, he suggested development of an existing centre in Mannar as a "Fish For All" Training Centre on the model of the one set up in Poompuhar, Tamil Nadu by the M. S. Swaminathan Research Foundation.

"Over 80 per cent of the population of the Northern Province of Sri Lanka, comprising the districts of Jaffna, Killinochchi, Mullaithivu, Mannar and Vavuniya, depend on farm enterprises from their work and income security. Prior to the conflict, the Province had a cultivable area of about 300,000 ha., of which over 100,000 ha. was under rice.

"The remaining area was planted with onion, chillies, mung bean, sesame, groundnut, yam, fruits, vegetables and coconut. At the moment, it is not known how much area can be farmed, since there has been much damage to agriculture due to mines, protective structures and security measures," Prof. Swaminathan had said.
(The Hindu)

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Posted in Agriculture , M.S. Swaminathan , Northern Province , Sri Lanka

Each Sri Lankan in debt to the tune of Rs. 196,914

(August 21, 2009) Each Sri Lankan was in debt to the tune of Rs. 196,914 this year, Deputy Finance Minister Ranjith Siyambalapitiya told Parliament yesterday.

The total debt of Sri Lanka stood at the Rs. 4,020,780 million, Minister Siyambalapitiya said.

The Minister was answering a question raised by UNP Parliamentarian Ravi Karunanayake.

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Posted in debt , Sri Lanka

Draconian and deceitful trade practices continue; ‘Mudalali mafia’ gradually strangling fruit and vegetable industry

By Steve A. Morrell (The Island, 2009-08-16)

President, Lanka Fruit and Vegetable Producers, Processors & Exporters Association, (LFVPP&EA) Ismeth G. Mohamed addressing the 28th annual general meeting of the Association said last week that producers at grassroot level are held to draconian and deceitful trade practices through dubious subterfuge to snare small time producers and deprive them of fair trade for their produce.

He pointedly said there are sub trade wholesellers who snared small time producers, whom he referred to as the ‘Mudalali Mafia’, who indirectly had iron control on the small holder community through money lending and consequential purchase of produce at extremely low prices.

The necessary evil who is the middleman exploits small-timers who have no redress or access to equitable trade and are invariably cheated. They have, arguably, formed sinister cartel applications to inveigle such growers, who through ignorance or effective savvy are lured to accept vagaries of these middlemen, he said.

End user consumers meanwhile pay dearly for produce available on retail shelves although in situ purchases present a completely different trade image. Complaints have been made to the President. However, lower rung politicians say there is no incidence of these surreptitious transactions affecting the small holder base. This, Mohamed implied, was a tongue-in-cheek assessment in reality, which in real terms was that there was cheating and thuggery continuing unchecked.

He suggested that banks be more expansive extending credit to stimulate the industry rather than enforce outmoded collateral procedures which discourage rather than encourage small holders. Bank’s responsiveness is lacking, he complained. Rural credit schemes are, in this context, absent, which give rise to the ‘mafia’.

If it is that solutions should be considered it is now opportune that agricultural governance be more a workable option and not be shunned to the back burner.

More to the point, he said, there should be an active link between farmer and consumer.

With eradication of terrorism and its complementary postscript applications, Mohamed said it is now time an economic stimulus package be formulated and implemented quickly.

He made the point that relaxation and entry to the airport should be a priority consideration for immediate implementation. This among others, there is a long list of ‘Dos’ which, he said, should form an holistic relief package sorely needed now, than later.

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Posted in Agriculture , fruit and vegetable exporters , Sri Lanka