Another Barmecide feast for masses

Saturday 6th February, 2021

The government apparently does two things efficiently—printing money and issuing gazettes. Nobody seems to take these gazette notifications seriously, especially those pertaining to commodity prices. Maximum retail prices (MRPs) of various goods have been gazetted several times, over the last several months, but traders flout them with impunity. The Ministry of Trade has once again announced that the prices of 27 commodities will be reduced to grant relief to the public. Citizen Perera is being treated to another Barmecide feast like the beggar in the Arabian Nights.

The government imposes price ceilings to protect the consumer, but traders and middlemen are free to treat them as price floors and keep retail prices above them. These unscrupulous elements treat price floors imposed by the government to protect producers as price ceilings and maintain buying prices below them. Besides, the MRPs marked on bags of rice are deceptive in that they are lower than the actual selling prices. The millers and traders collude to hoodwink the Consumer Affairs Authority (CAA) and fleece consumers.

If the CAA cares to conduct raids with the help of decoys, the errant millers and traders can be nabbed, but apparently it baulks at doing so because the millers’ Mafia has political connections and lavishes funds on powerful politicians. Every election is followed by a payback time for these fat cats. Perhaps, the CAA officials are wary of taking on the powerful millers because they faced humiliation following a series of much-publicised raids on paddy warehouses in the North Central Province, last year. The owner of Araliya Mills, Dudley Sirisena, a sibling of former President Maithripala Sirisena, confronted the CAA officials, during a raid, and declared that he would not sell rice at the controlled prices and was even ready to face arrest for that. Subsequently, the millers had a meeting with the government leaders, who agreed to effect an upward revision of the MRPs for rice. The millers had the last laugh. When money talks, politicians are all ears, so to speak.

Consumers may be able to console themselves if the high prices of essential commodities translate into benefits for producers, especially the poor farmers. But the goods that cost them an arm and a leg fetch extremely low prices for the producers; and those who exploit both the consumer and the producer alike, through market manipulations, laugh all the way to the bank. Farmers are in penury. They are fleeced by the millers and have no way of extricating themselves from the clutches of loan sharks including micro finance companies. No government has addressed this problem properly.

Similarly, duty concessions the government grants importers of essential goods are not passed on to consumers. Import duty on sugar was abolished to all intents and purposes, a few weeks ago, but there has been no discernible decrease in sugar prices. The controversial duty waiver only benefited an influential crony of the government; it has also caused staggering losses to the state coffers.

Sathosa and the network of co-operative outlets may be able to sell goods at the government-mandated maximum prices albeit at a loss, but their stocks are not sufficient to cater to the entire population. Nor can they influence the market, which is dominated by the private sector. They can only help the government save its face temporarily. The need for developing Sathosa and the co-operative societies cannot be overemphasised.

In making interventions to regulate prices, the government ought to act rationally and determinedly. It must conduct proper market studies and identify the factors that lead to unfair price increases before it moves in to introduce price controls, which must not be politically determined. Once maximum or minimum prices are decided on realistically and fairly, the government must do everything in its power to ensure compliance. Those who refuse to abide by the stipulated prices must be severely dealt with, and the government should have a contingency plan in place to face a possible backlash; traders and millers usually create scarcities by way of retaliation. Mere gazette notifications or platform rhetoric won’t do.