Thursday, January 6, 2011

The latest attempt at appeasing the public at the expense of alienating the producer

Today’s salvo in the news was that the Army is to purchase vegetables directly from farmers in order to sell at concessionary prices at centers in Colombo.

The problem is the rise in the vegetable prices. The solution is not to alienate all those involved in bringing it to the consumer, by using the army instead, assuming that the cause of the problem is that wholesalers and distributors are making an obscene amount of money at the expense of the general public and hence need to be taught a lesson. This common misconception must be immediately addressed.

As a professional in the business of growing, transporting and selling to the consumer, the problem stems from the very low production levels due to the inefficiency of the grower, which the army cannot do anything about unless they go into the business of farming, a much better way to reduce the costs of food.

When the army bypasses the normal distribution channels for a short period, in order to reduce the price to the consumer, the costs borne by the army in collection and transport are not reflected in the price, thus unfairly prejudicing long established businesses, who must bear this cost. It actually creates problems for the very people who should be encouraged to improve on the distribution and reduce wastage.

The normal working of a free market economy is disrupted and once the army ceases to do this task, you are left with businesses forced to abandon trade, who then return to this activity and need to recoup the lost income, by increasing prices still further, totally negating the objective of the original exercise.

It is most important therefore to abandon this plan immediately and address instead the real reasons for the increase in food items. If this is not done you do not cure the disease but instead put a sticking plaster that is festering and unclean, which sets the stage for a massive disease created by the plaster!!!

Why is it that we are constantly finding asinine solutions to real problems, without addressing the root causes, and continue to make the same mistake time and time again?

The increase in food prices is very real, it is not the fault of the farmer or the person who brings it over. It is mafias created by politicians who fund them that have created the inherent costs as well as the corruption of officials, like in the case where I am stopped in the middle of the Minneriya jungles by traffic cops at 2am for speeding doing 69kmph where there is no traffic and costs me time, money and effort to free myself, which all goes towards the high cost of food. So no wonder when the army truck is not stopped for speeding he has an advantage!!