Thursday, June 3, 2021

SL Government wants to have monopolistic control of all profitable commercial ventures, so the latest foray is into Oxygen!

There was an article today in the FT about Litro Gas, which is an indirectly government owned corporation that is a subsidiary of Sri Lanka Insurance, buying 25 acres of land in Kerawalapitiya to build an Oxygen plant to meet the nation’s needs, as a result of the Covid pandemic and potential use of Oxygen to save lives. Of course this sound fantastic to the ordinary ignorant, slave of a reader, who does not realize that when an Oxygen plants comes on stream, the pandemic would have gone away, and the need for Oxygen won’t be necessary, as local producers already can supply domestic needs for the foreseeable future.

Whenever a state owned undertaking gets involved in a commercial venture one’s antennae needs to be pricked, as there is something fishy, which will benefit a gravy train of political stooges and crony capitalists who put these ideas into their otherwise empty heads, as the latter have already determined how they can make super profits. The headline itself is fake news, as the existing producers have the need covered with their oxygen production capabilities already, so what gives? Where is the catch?

There was earlier talk about Litro and Laugfs going into partnership for the sale of LPG as they are the ONLY two LPG suppliers in the land, and they could pool their resources to buy in bulk and have both their needs transported in one vessel and thereby save on costs. That maybe, but the saving MUST be passed onto the consumer, as they are a monopoly. If they amalgamate, it is the State’s job to regulate monopoly pricing as part of their governance mandate. Clearly, there is NO governance in Sri Lanka. Then again it was a ruse to fool the public and screw them by way of making super profits for those who have the contract to supply as monopoly purchasers. In such a situation, when there is NO transparency, the fraud and personal embezzlement can be done overseas, as commissions are paid directly to overseas bank accounts, in awarding contracts at unfavorable prices. This is something that has been done consistently with Chinese Corporations, who don’t have any qualms in paying bribes to get what they want, in comparison with US companies who are expressly forbidden to do so. Therein lies the love affair with China as the Cronies and their political underlings have no scruples and China is the obvious choice for any hanky panky that has gone on. This is  treason against the people of Sri Lanka by the establishment. Bear in mind competitive pricing MUST be enforced in a Country where monopolistic practices, may make sense due to small requirements, but price benefits transferred to consumers and not agents of the regime, and the regime to benefit.

An absolutely asinine opposition cannot see this daylight robbery taking place right under their noses.

As if adding spice to this pie was not enough, there is also talk too that Litro will get into bed with or buy out Ceylon Oxygen, a major gas supplier in the Country, where the foreign owner may wish to pull out, not because it is not a profitable business, but because local management have made it look unprofitable due to either theft, or cost sharing which amounts to the same thing aka as bribes to obtain business! This means that the overseas owner becomes disgusted with doing business with thieves and robber barons and would rather cut their losses, and run!

We shall see how all this transpires, but there is simply no doubt that something is afoot to hoodwink the public and trick the opposition to enhance the greedy pockets of a few friends of the regime, who are bent on tightening the noose around the already brain dead public who are not privy to the daylight robbery currently taking place right under their noses. The lack of an opposition with any brain cells is the perfect storm to set up every business as a qausi monopoly to divvy up a whole country among the leadership and their funders.

The irony of all this is that if everything is transparent and the economy is allowed to follow neo liberal policies, the economy as a whole can grow by leaps and bounds, and all will benefit including the cronies, but in this case the cronies are destroying the economy for short term gain, and they too will end up with nothing to gain locally having then invested their ill-gotten wealth in overseas countries, unable to pursue the crimes, as there are no prosecutors left alive in the Island!

The intelligentsia who is aware of this, are completely impotent, as they have no clue how to checkmate this decline into decay, as they are busy just protecting their turf from further erosion. This leaves it to the youth of the Country to organize an alternative government to take over from this mob rule, who have a huge task to persuade the older slaves who can easily be fooled like they have been for 70 years, that the status quo is the better option.

Now that all the English speaking youth of any merit have fled the fold to seek greener pastures overseas, it is just left to the vernacular youth to take up the cudgel and persuade their parents that there is no future for this Country unless they are given the chance of running it, at least initially in a transparent manner and later, in a technocrat laden professional manner, once the corrupt public service is eviscerated. The public service as it is currently constituted, does not allow a party in power under this old system to do what is right, even if they want to, as they hold the administration to ransom with their superior thievery. They would be the first to be eliminated in a youth based administration.

Tuesday, August 25, 2020

Reform begins at the grass roots level if it is to be meaningful, and provide an immediate return on investment – a product still mothballed, why?

Mr Nihal Ranasinghe, (photo above ) a former Controller of Immigration and Emigration, a very competent civil servant, who everyone in the loop, agrees transformed his department into one of the most efficient  and productive, Government Departments in Sri Lanka, told me about a very simple product that he has developed in his spare time to help the Country. 

It is a database product, which will have the whole country’s population as well as their relevant details on file, in order for all policy makers to utilize in making decisions at government level. It is so simple that I am surprised no one in high authority has taken in up. I suspect, personal rivalry is such that in SL we are reluctant to give credit where it is due and try to get credit for something that others do, and so as a country fail to take advantage of the truly altruistic and competent people who are willing to give of their time and knowledge to benefit the people of the Country. It is the responsibility of leaders to seek such GEMS out in society, listen to their proposals and give them the time of day and resources to implement them. These are proven people in their fields and not untested self-promoters who litter the hallways of power today.

After all each Grama Niladari Division has a GN, Samurdhi Officer and in most locations also has a Govi Niyamaka, or Agriculture Officer whose job it is to increase the production, yield and productivity of agricultural output in his area of responsibility. There are nearly 14,000 GN divisions in SL that cover all the people of the Country.

The GN has a list of the households, but does not have a complete list of everyone in it, even though each year a manual form is sent just to complete for the purposes of an Electrol Register. This is a total waste of time and resources which should be computerized automatically, instead of having to effectively do a manual and time consuming census each year.

To cut to the chase, Mr Ranasinghe’s data base would dovetail nicely with each Divisional Secretariat that handles the GN division, and I believe there are 333 of these divisions in the Country.

This will make the whole business of managing the official administration a piece of cake! It will save a lot of angst and help the people of the Country. The argument that people’s privacy will be infringed upon if their details are available to Government officials, I will say they are already available, but in manual and often incorrect and outdated form, now it will be formalized and current. This is not up to debate it is one that must be implemented without delay.

I was told that ICTA would not like this as it treads on their toes, whereas I will say, let ICTA concentrate on connecting the Government Departments to speak in unison and allow this program to fit into their system seamlessly, completing an easy task that will assist ICTA instead of compete with them to integrate this database.

The database will have details of age, sex, children, schools attended, occupation and socio economic level that the GN will update on a Lap Top or now with smart phone technology can leapfrog into a smart phone app!

This will enable him to assist the Divisional Secretariat in performing their duties, in identifying, families and individuals in need of help, and so the resources of the bloated public service in the Divisional Secretariat can be made efficient.

If I were to use an example, the person in charge in the DS office responsible for Children’s affairs will have a list of all the disadvantaged children of low income families so he or she (usually a she)  can assist them with matters like shoes for the children to go to school with if there is a state program of assistance. With malnutrition among children being a major issue that is swept under the carpet in Sri Lanka they can also keep tabs on these children and make sure the necessary nutritional supplements that various programs offer do indeed reach these people.


This is so elementary, it is tragic that no one has pointed out to our intellectually challenged leaders that it is so easy to monitor and implement.

What we see with the meetings held at the Presidential Secretariat is that no nothings are consulting supposed know it alls who are ashamed to admit their lack of knowledge. If one takes Samurdhi Officers at GN level, I know more of them at the Ground Level than anyone attending a meeting at the Presidential Secretariat who are merely pretending to know, possibly never having even spoken to a Samurdhi officer at the ground!


The new government is off to a bad start as they are not doing anything different to what previous governments have done. I have made suggestions that can be implemented without delay, and all it takes is a powerful President such as we have to give the order and someone to ensure those orders are followed with teeth to enforce, to carry out this without delay and most tasks relating to the public and their needs can be resolved in a timely manner. This matter is so elementary, the tragedy is that it is the Blind at the top leading the Blind!

Saturday, August 1, 2020

Why don't we in SL take advantage of the new technology to improve the quality of life of our people ? App Development/ Wifi with good band with

The CEO's of Amazon, Google, Facebook and Apple were grilled by the US Congress on the fact that they have too much power and control in their own fields of influence. The next day they disclosed record quarterly profits, thanks in part to the pandemic, which added US$250B increase to their values.
We cannot fight them, but we sure can make use of their products and services to improve our quality of life. After all that in essence is what life is all about.
Sunder Pichai born and raised in Tamil Nadu, the CEO of Google and its parent Alphabet, was accused by Congress of helping the Chinese Government with Defense Secrets!
I too have along with the products of Microsoft, (mainly Windows and Word) can attest that their products and services made matters easier during this period. Apart from going to the Grocery Stores, I have not been to a shop since March 4th, and all my other purchases have been on Amazon, including the streaming service to watch movies and TV programs. In fact I purchased stuff yesterday, for delivery tomorrow!
In fact Amazon has a contract with the US postal service to deliver their packages on Sundays. So when you see US Postal Service Vehicles around delivering on Sundays, it is exclusively Amazon deliveries, such is the power of Amazon.
I only wish that the Government of Sri Lanka makes every effort to provide affordable high speed internet access through the telecommunications companies, throughout the small Island, so that all the people have access to communication. It is very cheap to do so, and the poor will benefit, more than building highways and wasting on an ineffective and incompetent public sector.
At the end of the day the key is to improve the quality of life of the public we are talking about, not some exclusive privilege of a few. Not one of the parties seeking election have mentioned this, as Island mentality thinking does not lend itself to actions in improving the quality of life of the people who live in it.
Do a deal with Huawei to distribute low cost good quality smart phones at Rs5,000 and you can be assured another 5 million smartphones will be sold in a year. With every household connected, elections can be no cost and more frequent! Instead of the Rs8B it is expected to cost, when half the people are going hungry.
Smart phones give access to Apps that improve the quality of life of rural living, from Agriculture, Education, Transport, Law Enforcement, to Healthcare. The pandemic has further illustrated the value of technology. In the UK 90% of GP appointments are done on line.
Recently the news was that a Railway Ticketing Contract was given to a Chinese Firm due to backhanders available to the Rogues In Power. Why? It only needs an app, easily developed in Sri Lanka with NO printed document and could be introduced in days, not years this will take. This from a President who was supposed to know something about IT! Shame on you. Sycophants of the ruling junta please explain without trying to find fault with others.
Come on Sri Lanka think ahead for the benefit of the people, not backwards for the benefit of the ruling class and their sycophants. Children still go hungry because of it. With an APP developed by Sri Lankans, no one needs to! Trust me. We can be leaders of the world not followers going in reverse!

Tuesday, July 28, 2020

The Government Purchase Price of Paddy, sets the bar which determines open market prices and must be done in advance of any commencement of cultivation.

It was just announced that the Treasury has allocated Rs10.4B for the purchase of 200,000 MT of paddy this Yala season where harvesting had just begun in the Kurunegala District, before untimely rains disrupted the plan. This year it appears that Rs50 is the price for both Nadu and Samba, and even Keeri Samba as they account for 95% of the paddy planted at present.

The Yala season generally has less land under cultivation, as it is done in the dry season, under irrigation, rather than rainfed cultivation in the Maha season.

Unless you are a paddy cultivator, all these edicts are for the General Public’s consumption, as very little paddy is actually purchased by the Government for their stores, and I will explain why below. It is possible that NO paddy in fact is purchased by the Government despite the fanfare of this allocation. It all depends on how the paddy cultivator disposes of his harvest.

The real scenario

Sri Lanka has finally got to the stage due to lack of manual labor in agriculture, to use combine harvesters for paddy harvesting. The latest versions harvest and bag them in one go in bags of approximately 60kg.

Due to the method of mechanical harvesting, the newly harvested is not sufficiently dry for the government stores. The moisture content is checked prior to purchase and is rejected if they fall outside of those parameters. If the farmer is to sell to the Government, he has to transport his paddy to places where they can be dried. Often main roads are used in places to dry the paddy, but other areas are used as well, and it is a costly, time consuming and labor intensive process for a small farmer to undergo and transport. The reality then is for the majority of farmers who don’t have transport and storage facilities, is to sell at farm gate to the wholesale purchasers who come in their trucks at the present going rate of Rs42/kg.

Generally, these wholesalers are subcontracted by the larger millers, to buy this paddy, as they have the facilities to dry and store this paddy in a manner suitable for their milling and bagging for retail sale at the right time. Up to 5 large millers control this market and therefore set the retail price for rice, and any price control that the Govt. sets is also fixed by the same millers, as they are big contributors to the political campaigns. They have massive credit lines from Banks used to buy and store the harvest and use this buying power to control the price.

So what is the purpose of the Paddy Marketing Board and their warehouses?

This is a mechanism set up for bribery and corruption from the highest to the lowest levels. You only have to ask any farmer, how much he has to give to get the State to purchase his paddy. He is at the mercy of the man with the gadget to test the moisture level of his paddy when he brings it at his expense to the stores to sell to the State via the PMB. Much of the corruption comes in where lower quality paddy is purchased at the stores with moisture content and poor storage where bribes are taken.

Assume then that a certain amount of paddy is in fact purchased and stored, what then happens to that paddy? Again the large millers use the PMB as their private storage depot, paid for and financed by the state. Depending on their needs and stock and movement into the market, they may purchase the good paddy from the stores where their agents pick and choose what to buy from the stock. They rarely but at Rs50 and in fact give some excuse to buy for less. In theory if the Govt. is spending money to store, they should at least make a profit and sell at a higher price to the highest bidder, but this is usually not the case due to corruption at the highest levels.

What then happens to the paddy that is of poor quality and often unfit for human consumption? This is sold at rock bottom prices to the animal feed processing industry, where the Govt, incurs a loss by this storage.

It is interesting that a gazette notification was recently made to prohibit any paddy being used for animal feed, usually for the processing of chicken feed, due to the high price of maize and the resulting shortage due to the banning of imports of maize recently as one aspect of import controls.

To cut a long story short, my guess is that most farmers will prefer to sell at farm gate @Rs42/kg and those that do not have the capacity to dry and store their own paddy selling it at the open market to small millers in the locality at the prevailing price, which they hope a month or two after harvesting will be much higher than at harvest time.

I have followed this price movement with interest, as I used to buy paddy at rock bottom as soon as harvest was done, dried and stores and then milled rice as and when I need and transport to Colombo to feed my household. This way, I am able to cost my paddy (excluding transport costs, as I usually bring it down if someone is returning to Colombo. My cost turns out to be around Rs65/kg while the prevailing market price is around Rs100. One can then understand how profitable this business is to the large millers, who use all the parts, husk, rice bran, to reduce their rice costs more than I can and clear around Rs30/kg net profit after costs.

The moral of this story

The real profit is being able to buy at the prevailing farm-gate, today’s price being Rs42/kg, dry it and store. When the wholesale market price rises, usually keeping between 40-50% gross margin, you sell it to a small miller on the open market. Say if my holding and drying costs, as well as loss of weight in drying all come to half that margin, I make at least 20% return on cash investment, usually within 2 months, for an annualized return of 120% on investment.

So it is so ironic that I see wealth in the village where the farmer is dirt poor, and the local school master who has studied the subject, and able to store say 30 Tons at a time, being able to make more money than in teaching and the result is the house he lives in and the car he drives from this nice little side income!

Don’t forget the market price rises over Rs50/kg a few months after harvest and the Govt. stores don’t have sufficient quality to paddy stored to make a profit, and as it is a state enterprise, bureaucracy and corruption are the order of the day, while in the private sector, it is YOUR OWN MONEY at stake and the private operator is sufficiently savvy to know when to cash out.

This is the reality of the rural economy, where those that put the most effort have the least reward and those with capital and staying power reap the rewards. That is capitalism at work and the only means to improve the farmer’s return is to raise the guaranteed price sufficiently high, that the discounted farm gate is high enough for the farmer to get some return.

The other point not appreciated is that the large scale farmer, who has his own equipment because he has the larger acreage to cultivate, has economies of scale, and lower per unit costs of production, and can benefit. The small farmer is merely eking out an existence on his tiny plot that by itself is not economical anyway, but encouraged by a political system designed to enslave a section of people in order to live of the promises to farmers for electoral sustenance.

In paddy farming the average unit of land a farmer farms today is only 1 acre. So those farming 30 acres are able to reduce their cost of production by at least 50% of the small farmer, who if his labor is valued at all is losing big time in farming this land, where he would definitely better of doing something quite different in life to sustain and feed his family. There is lack of unity among Sinhala villages in pooling their lands as I have seen many Muslim families in the Eastern Province give all the land to a group to farm the whole area using the skills, equipment and better use of irrigation, where the profit is shared, as a rent in proportion to the land that is used for cultivation, where the owners DO NOT get involved in any cultivation and can pursue other economic activity instead.

This is a story of how a rural teacher, bank manager, who has access to say Rs1M credit line or cash in his mattress, can buy at farm-gate and sell when the market price climbs in two months, where all he has to do is dry and store at a warehouse next to his home! He can do this twice a year and make more than his salary for 12 months as an extra and not even declare this profit, as he is under the radar.

No wonder if a school teacher can supplement his income this way, as shown, you can imagine the Rs Billions made by the large millers before amortization of their Billion rupee investments in plant and storage, even in this recession, where the rest of the Country are suffering. Make no bones about it, the farmer again draws the short straw!

All this money is made on a staple that is the largest contributor of NCD in the Island. (non-communicable disease) and we are taxing alcohol and cigarettes as sin taxes, instead of sugar and rice not far behind!

Ruwan Hulugalle does capitalism not work? why doesn't 'the profit motive' increase competition for achieving these fabulous returns, thereby increasing competition for purchase of inputs and sale of outputs (increasing prices for inputs and decreasing prices of outputs) ? what's not working in the system?

Risk and access to cash. Farmers live hand to mouth. There is no perfect knowledge.

 they don’t like messing around farm gates as the big miller mafia are thugs

I don’t have to remind you of the harassment I faced during civil war checkpoints in bringing my rice to Colombo to sell to my customers as the mafia had told the security forces to stop any transport of rice

They can’t as the big millers have the muscle to reduce the price if people try to enter. That is why I said only those under the radar in localities survive in the game

No one wants to fight the big boys as they bankroll the politicians and are the politicians, so no different to the mafia cartel. You don’t mess with them.
It’s simply not worth it, they are playing other bigger games with alcohol. Interesting to see how the rice to ethanol investment will play out now that imports are banned. I am sure they may think that is the next best thing for a Rs10B investment

In investment there is something called first player advantage crowding out new comers. It’s similar. Just like Tesla is so far ahead in the game all others are playing catch-up

Read the article and understand it is seasonal and annualized return made in two tranches. Occasionally a loss is made if you read the market wrong or imports are allowed. Remember in rice world market prices are half and the poor SL consumer is screwed eating poison at double the price when they can import less poisonous starch for half. This is what you get in a country ruled by donkeys voted in by sycophantic jackasses

The uncertainty of policy is another factor that deters entrants. Who knows what the government will do after the elections? They may realize the least of the bad options available may in fact be to float the exchange rate and allow equilibrium at Rs300 a dollar. That maybes what IMF demands as a condition for emergency life line. I can’t predict which way the crony capitalists and their benefactors will turn.
 as you can see I like writing stories to annoy the jackasses following the donkeys blindly not realizing that there is something called the real world they have left behind, living instead in a make believe caccoon

The above open communication shows the disconnect between theory and practice, which is the single most annoying thing on FB when I have to deal with morons, who are not educated in understanding how everything works in practice.

Monday, July 27, 2020

I am not a patriot or a nationalist. I was raised to believe it is our heritage to help those less fortunate, in any way we can – IF WE CAN!

Photo taken in 2010 at the height of my farming activities. A quick drive to Parsikudah about 90 minutes from my Hingurakgoda property, for some R&R. We took our two dogs Bahu and Megha also.

We must do what we enjoy, and if that permits you to help those less fortunate that is fine, but don’t think of that as a sacrifice, or that you had to forego your desire to fulfill others needs outside your family.

I am so grateful to my parents for the values they raised us in, which have rubbed off on me and my siblings. It has nothing to do with patriotism or love for our Country or any belief we may have adopted. It is all to do with duty, if it is possible, to do whatever you can to better the quality of life of those less fortunate.

We were never wealthy by any measure of wealth as my parents did not inherit land or a house, and whatever they have is by their own hard work. It is due to their behavior towards others and plain humaneness that we received whatever graces, to live our lives, which by no means was easy, and few know the sacrifice.

I will reserve the rest of the essay to what I feel and possibly why. From my earliest recollection, I was never forced to eat, I was merely told, the food is ready at mealtimes, it is on the table, please eat what you want, and don’t leave even a grain of rice behind. That has stood me in good stead all my life. I therefore ONLY serve what I can eat and nothing more. So I do not like other people who serve full plates for people and who leave food uneaten, saying that the animals will eat what is left over. We were told that, it was fine to eat only what you can, as there are many other hungry mouths who could eat the food you don’t eat, so it is only up to you to eat what you want. This created, neither greed, nor insecurity! I was sent to boarding school from age 8, which made me independent.

In the 1960s, we were less mature than youth of the same age today, due to various reasons, that I will not address here. So we were more pliant in accepting that our parents knew best. It was under these parameters, that once the JVP uprising hit Sri Lanka in 1971, that my parents wanted and were able to send me to school overseas, first to Australia, to stay with a friend who agreed to look after me and then to the UK to Boarding School.

I count myself lucky to get accepted into a direct grant school in Cambridge for my O levels and A levels, and even luckier to enter Bristol University to study economics, and pay British Student Fees, which was a few hundred pounds a year, though I did not get a student grant as my parents were not UK tax payers.

I was fortunate to be employed, upon graduation, at an international accounting firm, Deloitte Haskins & Sells, in London in 1978. I was then financially independent of my parents, qualifying as a Chartered Accountant in 1981.
Having lived for 18 years in the UK and 15 years in the US, I decided to return to Sri Lanka in 2004, only because I wanted to. I was the Country Manager for Dilmah Tea in London at the time I resigned my employment and returned to Sri Lanka.

It was something I wanted to do as I had not lived in SL . Don’t ask me why. I did not do it for any patriotic reasons! I had not acquired any wealth in the interim, and all I had when I arrived in Sri Lanka in November 2004 was around 10,000 pounds to call my own. I had no bank accounts or assets that I had left behind.

I had put down Rs300K on a Tata Pickup Truck for which I had to pay Rs18K a month for the next 4 years to pay it off, and I bought a property for Rs100,000, an acre of land in Ratmale that I decided to gradually build a small house, and I bought a plot of land, 5 acres of Swarnabhoomi land for Rs650,000 in Hingurakgoda, Raja Ela to farm. My father had some land in Godagama, Meegoda, which was a chicken farm, but which had Coconut and King Coconuts at the time, and I lived for the next 8 years farming both properties.

Of course, I had returned with a desire to live the rural life in Sri Lanka, something that was more a romantic notion than a practical one, primarily as I had no other family obligations, and I thought the village life was an idyllic one. Within a short time, I realized how different the village life was in fact!

It would have been nice to have met a life partner in the rural area then, but it was not to be, as those I liked did not want me and those who were proposed to me, I did not have any feelings for. I had an intention of living a rural life, married with children, but it was not to be.

As I had no option, but to earn a living, I set about that task earnestly, and using a few workers began growing and selling my produce to my customers in Colombo out of the back of the pick-up. It was hard work transporting produce between Hingurakgoda and Godagama and then to Colombo in the thick of the Civil War in Sri Lanka. We had to go through check points at every level and obtain security permits to transport food items in those days and it was a living.

I have blogged experiences during that time in and It was hard work, where without prior farming experience, I was able to live off my earnings till January 2011, when I had a disabling accident, while bringing my produce to Colombo, at Minneriya and the whole operation stopped that very second, as I was driving the vehicle with the produce to market, and I was the hands on person without whom the operation would not function. It took 9 years more for me to be able to walk unaided again and that is a different story for another day!
Who said life was easy, as I had to live with the disappointment of my father, and not my mother, who felt I should have been gainfully employed in a prestigious company in the West, earning big bucks, considering the sacrifice made for my education, and I cannot blame him for that expectation, as that was normal in those days to expect a more than adequate return on investment!

Revisiting Patriotism and Nationalism

Like I said, I did it for me, and not for anyone else. It was selfish and not for any altruistic reason. I have enjoyed the ride, its ups and downs, and looking back on my life, I feel fortunate at being one of the few people to have been able to live a full life of many parts, where most people have a very simple, almost trouble free life in one field of expertise. Mine was completely out of the ordinary, eventful, unpredictable and compartmentalized. It’s like 9 lives rolled into one!

I have not met any Sri Lankan who are truly patriotic and that word is used very loosely. Many say they had an opportunity to go and live overseas and chose instead to live in SL. I say that has NOTHING to do with patriotism and it is do with the balance that was weighed up at the time to suit their own personal circumstances.

I find many of the most patriotic Sri Lankans live overseas because they were pushed out because of circumstances out of their control. Either life was made difficult for them where they had to leave, or they chose the best alternative for them and for their intellect to leave. It is Sri Lanka’s fault for not understanding the contribution they could have made to Sri Lanka instead of merely decrying their exit.

If I am merely to use one example, the best academics that Sri Lanka has produced live overseas, because the system of academia in Sri Lanka is not based on ability and merit, but on seniority and incompetence, which has led to a scary deterioration in the quality of tertiary education in Sri Lanka for which the faculty as well as the Government policy makers must share the blame.

Sri Lanka has still been unable to harness the latent talent lying overseas, due to the “Island mentality” of its people, who see progress with skepticism instead of the whole point being to improve the quality of life of the people who live on the Island, to make life easier, simpler and more accessible to the masses. So we have gone backwards, whereas in the rest of the world, the quality of life of people has improved, I would even go as far to argue that in Sri Lanka it has got much worse. The racial divisions, the civil war, and the continuing harassment of minorities, women, child abuse, hunger and malnutrition are all part of this result. The pandemic has pointedly shown the fallacy of this policy, but to no avail.

Wednesday, July 22, 2020

You don’t kill the goose that lays the golden egg!

Two key rational objectives upon which decisions must be made.

The Government is desperate for income from Taxes to meet their obligations

The Country is desperate for foreign exchange to import the products that will assist the economy to grow and prosper as well as providing inputs for the export industry.

So how do you go about it?

Look at imports and tax them to encourage local production if that is the long term objective. Banning just means that local production cannot immediately supply the lost imports as it takes a minimum of two years to gear up production to fill the void, and entrepreneurs need reassurance that they are given incentives to produce locally, but that there will be NO policy reversal in midstream that will devalue their capital expended in import substitution.

Using Milk Production as an example

Of course there are hair brained schemes that play lip service to Govt. objectives, but which are approved not out of public interest, but due to private profiteering. A good example is the import of 5,000 cattle from Australia, ostensibly to breed for increased milk production, but the reality, was due to bribes or commissions to be made upon imports of unsuitable animals for the Sri Lankan climate as needed feed was unavailable, as well as nutrition and medication, resulting in their mass mortality.

Sri Lanka also imports US$500M of substandard milk powder, mainly from New Zealand that has arguable nutritional value. There is no argument about the nutritional value of fresh cow’s milk for growing and healthy children up to age 16. For the longer term growth of local milk production, sustainable animal husbandry using productive cows must be the answer. There is enough science and a massive milk producer as a neighbor India, from whom we can learn the best practice and follow that to achieve these goals. However it is not done. Each milk farmer is on his own with minimum assistance from the state.

If you take pepper, exports for example, we know what happened. Permission was granted to rogue traders, to import substandard pepper from Vietnam which was used to mix with local pepper, that changed Sri Lanka highly prized pepper into a worthless commodity as the quality drop was more than apparent. Now the industry is in crisis trying to regain its lost prestige!
Ethanol Production

The alcohol industry is a very big business in Sri Lanka. The government gets substantial revenue from excise taxes. However for some personal grudges, the import of Ethanol a basic ingredient for the manufacture of alcohol was banned.

This meant that local production from the State owned Sugar Manufacturers of molasses was not enough to fill the void. So Arrack Production suffered, and Government Revenue fell drastically. The winners were the alcohol manufacturers who raised their prices as demand exceeded supply, as well as the moonshine manufacturers who found it exceedingly profitable to bribe the law enforcement to run their trade, with ZERO revenue coming to the Government.

We can separately discuss the moral issues of Alcohol and Tobacco consumption, but at this state it is the Government Revenue to meet basic obligations that are at stake and all steps taken so far has been to reduce this revenue stream.

Import Substitution

When foreign earnings fall, especially due to the pandemic, import substitution takes a new life of importance. I do not deny that, but it has to be done intelligently on a basis that yield overall benefit to the Government Exchequer, prevent undue rise in the cost of living, especially of those items consumed by the General Public, mainly, alcohol, cigarettes, sugar, milk powder, and other essential food stuffs that bring the treasury a combined Rs500B in import and excise taxes, both of which are in serious decline due to the recent policies. If you add duty on vehicle imports that adds a further Rs100B to the state coffers.

What are they trying to do? VAT the only other tax is under phenomenal pressure as the rising cost of living has prevented the general public from buying Vatable goods and services due to their strained economic times.

Certain products require economies of scale to keep prices competitive. Those industries must be able to compete with export markets to compete with other producers in the rest of the world, so it is a rational comment to say that industries that also export are competitive industries, while those that only supply the domestic market given the protection from import controls, are in fact fleecing the general public with substandard, unsafe local products that will not stand scrutiny elsewhere.

To choose the businesses we have a competitive advantage in the pandemic, one must just look at our competitors (Vietnam) who have jumped at the chance of setting up production facilities outside China, to supply the USA market which has suddenly shown an aversion for Chinese made goods. Has Sri Lanka added one industry to this list?

Government Revenue decline is over Rs500B and could rise to Rs1,000B.

An incompetent administration, whose economic, fiscal and monetary policy is to reduce the GNP of the Country by 30% + in the next year, without having Covid to blame for most of it, due to the return to the dark ages of the past, where shortages, lines of people waiting to buy essentials, becoming another Venezuela!

All this appears is to only temporarily save the rupee from decline and stop the resulting inflation. I think that is the least concerning option, as there is no spending money in people’s pockets to result in inflation. All steps should be taken to contain the oncoming recession which will last for five years.

Saturday, July 18, 2020

Some ideas to improve food security in Sri Lanka - an about face on who to assist (priority)

Food Security is the recurring theme for all countries post pandemic, now suddenly discovering that the old world order no longer holds and unlikely to return, with a new normal taking over.

Nothing is more important for a nation - to make sure its residents can obtain their dietary requirements at a reasonable price. If Governments prioritize this, other sustainable industries will automatically grow around this. We must be focused in this direction. Vietnam is a prime example of growing on the backs of this.

In Sri Lanka's context the lip service paid to those in this industry has not changed at all even post pandemic recession we are in the middle of.

It is left to the Private Sector to fend for themselves. They prefer to do it under the radar, when they reach economies of scale, rather than rely on the State, as the latter interferes with the independence to operate, with the normal supply and demand rules. In some cases political interference restricts organic growth instead of assisting it.

Price controls time and again have proved counter-productive as they have either been short term and unsustainable as the recent experience of the Presidential dictats that barely could be sustained for a month before they were conveniently dropped without shame!

The example in the link below is a success story in the poultry industry which has been able to supply local demand, and have been able to take advantage of the void created by supply chain dislocations to export to Middle East Markets of Halal Certified Products.

If one looks at the history of Crysbro they started small and are now one of the most efficient producers of poultry products. This is due to the entrepreneurial skill of its founders.

The State duty is to assist the small scale farmer (not all people farming are farmers, many are forced to farm because the state has enslaved them by giving lands instead of maximizing their skills) with potential and desire with technical knowledge and inputs appropriate to his or her vision. Training is an integral part of this, in judging those with potential. There are educated graduates in Agriculture, without the tools to engage in this field, while 90% of the class are in that stream because they have just got the needed z score to enter that faculty.
We have got all our priorities wrong and we have leaders going to agricultural area exhorting farmers to export, without selecting those with the most potential (10% of farmers who have to be identified and selected) and assist them with improving their skills, productivity, providing quality inputs and assisting in value addition will provide the needed dividends. One has only to use the examples of success stories to ask them how they were able to achieve success to know how to replicate this for so many farmers in SL who have the potential, desire, and vision, but lack the inputs needed.

We must identify this pool of people from the community at large. They are also the people most suited to run the country as opposed to the present mob vying to enter parliament. They will turn around this Industry that has been suppressed with inconsistent policies for so long.

As the link shows, 2,000 farmers of maize have a direct market for their produce to Crysbro so the latter can manufacture their own chicken feed. However the answer is not banning the import of maize. Banning only increases the price of inputs making the cost of production of poultry higher, as we have recently seen. If we were able to increase supply of maize that is fine, but it is not as simple as that, as the demand has always been there, but farmers need to be assisted in increasing their output, not due to lower market price, but other factors, such as poor seeds, lack of fertilizer, and schizophrenic policies that have increased HEC (Human Elephant Conflict) in growing area, by further restricting Elephant Habitats.

The biggest myth is the lack of land to grow. We have at least 2 million hectares of land that is unproductive due to parceling out land to landless, the most enslaving policy that SL has performed since independence for political purposes. If we put back a million hectares back to forest, we can then utilize the other million hectares into productive agriculture.

Only a farmer can see this need of balancing productivity with the needs of the environment and not destroying forests that this Government is bent on doing.
In conclusion the key is to identify the potential and develop that. Remember NOT everyone who is classified as a farmer is a farmer. Please identify the 100,000 people in the country who could be classified as farmers from the 1,000,000 who are engaged as such.

It is the 100,000 true farmers who appreciate sustainability not the 900,000 who just want a free ride by cutting more trees and forests to further devastate the land, and the livelihood of a whole nation. It the politician who is pandering to these bogus farmers for their survival that is killing Sri Lanka and worsening the crisis.

There is another matter that needs consideration. With the Government banning the import of maize, a key ingredient in the chicken feed for the Poultry Industry, the local price of maize goes up, however the supply does not increase to match the demand. Then the poultry producers increase the price of chicken as we have seen already, as the feed cost has risen. So if local demand from the consumer falls, as the consumer has less money to buy chicken or eggs, then an efficient producer with contacts in the Middle East has no option but to export if he has a market, where he is able to make a higher profit margin than selling locally. As long as there is an opening here that is fine, if you don't have the export leads, then you have to face the local market realities, of being squeezed, profit wise!

Monday, July 13, 2020

The plight of the farmer being asked to export his produce to get a good return!

Lately the President has been exhorting the farmer by extolling the virtues of exporting his produce, why?

The country is in dire need of foreign exchange and that must be in the back of his mind, looking towards agriculture to come to the aid of other industries that have taken a hit due to maladministration, which is now coupled with the Covid 19 epidemic worldwide.

I will use one example, pepper, to make the point, but broadly the argument holds for other crops too. If we exclude Tea, and Coconuts, which have a well entrenched system of production and value addition, that have their own problems as they are traditional export industries, it is other crops that I will refer in general in my opinion piece.

90% of the crops in all other agricultural produce is grown my small farmers in land extents not exceeding 5 acres and few if any farmer, me included are involved in mono crops, as diversification is considered both an insurance against crop failure or disease, and better for the overall soil utilization using minimal chemical fertilizer on the land.

In my case, I sell almost everything I grow on my land itself where the consumer comes to my property to purchase the limited but fresh and generally organic produce on Saturday morning as a matter of practice. It may be my fault that my revenue has never exceeded my payroll, and so have never made a profit on my land, and am willing to be branded inefficient and incompetent, if only you know what I am up against, all manner of theft from humans and loss due to animal interference!

Be that as it may, like most other farmers we all produce in quantity that is considered at best home garden levels in any other country, due both limited land area, and low productivity and little incentive to use modern technology.

There are many reasons for that, but include high cost of labor, in a country where working on the land is a matter of least preference, and other less onerous alternatives being available, one being Government Service, even as agricultural extension officers who aren’t require to do much work for their remuneration.

It is important to state at the outset, that if Public Service pay was halved, there would be more people wishing to go into agriculture at a lower wage, but that will not happen until it becomes necessary for food security.
Given the above, and that small crops have a limited harvesting season in Sri Lanka, inevitably, when it comes to selling one’s produce, over supply is given as a reason for the middle man to pay much less when purchasing the small yields of the farmers. Due to limited buyers for produce, the farmer has little choice.

In the case of pepper which is the example I am using and is no different in concept to others, the small farmer does not have the equipment (as it is not economical for him to purchase) to prepare it to a quality for export. So raw newly cut pepper is sold to a middle man who supplies the exporter who has the machinery to dry and clean the pepper in order to get the quality needed for export, something that local farmers are unable to do, as their level of output does not render that investment worthwhile. Quality is key and is hard to achieve.

I wonder if the President is even aware of this process in order to secure export markets, which require much larger volumes and consistent quality that only a middle man can guarantee, by him sourcing the raw material to meet the orders in hand. It is foolish even to ask the farmer to find export markets in this instance.

The State must intervene to give advice via these agricultural extension officers as well as assist in obtaining the planting material suitable for that particular area, as well as the guidance on best practice to maximize on quality yield in the manner of planting and fertilizer usage etc. This is what the farmer looks for at a minimum from his local extension officer and does not get. This is the area within the power of the President to intervene on behalf of the farmer, instead of shamefully extolling and exhorting! Of course a fairer price is always needed.

I am told Sri Lanka Pepper is the best in the world and I believe so. It needs to be marketed well and recently, the import of cheap pepper from Vietnam for re export by crooks maintaining it was Ceylon Pepper ruined the export market we had, which now suspects any pepper originating from Sri Lanka. One can imagine what it did to the pepper prices for farmers, some of whom were ruined by that action. If that was not Government policy to permit, tell me who’s idea it was!

Whether it is Cinnamon, Pepper, Nutmeg, Cloves or other spices, Sri Lanka can produce the best in the world, but the final finishing of the raw produce of farmers to international standards of hygiene and marketability cannot be done by the traditional farmer and taken up by a more centralized organization in the private sector, where the farmer receives a fair price for his product, rather than being fobbed of with the standard retort of too much supply now that has depressed the price!

I trust the President instead of putting his foot in his mouth, sincerely tries to understand the hardest vocation in Sri Lanka, namely farming and truly helps it.