Releasing of State Bank funds to purchase paddy left in limbo

Agriculture Ministry Secretary keeping his fingers crossed until next Board Meeting at BOC

Farmers say private rice-millers buy paddy at lower prices and sell rice at higher prices

by Sanath Nanayakkare

M.B. Rohana Pushpakumara, Secretary to the Ministry of Agriculture told the media on Saturday that the Cabinet had approved a bank facility of Rs. 2000 million from State Banks to purchase Yala Season’s paddy harvest from the farmers, which decision had been subsequently informed to the Banks by the Ministry of Finance, but nevertheless these funds have still not been released to the Paddy Marketing Board (PMB).

“The Cabinet of ministers had given the approval to get a credit facility of Rs. 2,000 million from the Bank of Ceylon and the People’s Bank to purchase the paddy harvest of the Yala season. Accordingly, the Finance Ministry had informed the Banks to release these funds to the PMB. In this backdrop, we started purchasing paddy from farmers immediately, assuming that we would get those funds. But we have still not received Cabinet-approved funds from the Banks, “he said.

“After the directives, we bought paddy to the value of Rs. 850 which was actually bought on credit. Over the past few weeks, we settled 90% of these credit purchases with funds of the PMB. However, we continue to negotiate with the Bank of Ceylon (BOC) to obtain the credit facility soon. What we hear by today is that the BOC is going to hold a Board Meeting by 2nd October, and a decision would be made at it to release the funds. If that happens, we can resume purchasing of paddy which has come to a halt due to lack of funds,” he said.

Meanwhile, farmers told the media that although harvesting of Yala Season’s paddy has started, the government warehouses are not purchasing their yield, and therefore, farmers can’t sell their yield at a competitive price.

“Government’s paddy purchasing centres must be opened as quickly as possible to prevent private rice millers from buying paddy from us at low prices,” they said.

” If we can sell a kilo of paddy at Rs. 150, that will be sufficient for us to cover our expenses and have a fair profit margin. But now we are compelled to sell at Rs. 96-110. That is not enough to cover even the cost of production. A big warehouse in Polonnaruwa has put up a sign as a ‘paddy purchasing centre’, but it remains closed. If the government starts purchasing paddy, then only private millers will start offering competitive prices. What happens now is they buy paddy at lower prices and sell rice at a higher price. If they buy low and sell low, that’s fine. But they are doing it the other way round.”

A farmer association told the media that this situation could lead to a hunger crisis. They, however, said that officials at the Ministry of Agriculture pledged to resolve the issue within a month’s time. They warned that if a solution is not found to the issue within the timeline, farmers and all the people that consume rice as their staple food would take to the streets to launch an Aragalaya.

However, credible news reports earlier this month said that the government was going to mortgage its paddy stocks to state-run banks to obtain required cash to make purchases from farmers in the current season. The move came after the state-run banks declared they were not in a position to extend loans to the state-run PMB to buy paddy as the debt on previous loans amounting to nearly Rs. two billion was still outstanding.