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Friday, 30 December 2016 00:35 - - {{hitsCtrl.values.hits}}
By Charumini de Silva
Mixed signals given by different Government authorities have left Essential Food Commodities Importers and Traders Association confused over a system set in place to import 100,000 MTs of rice by mid January.
“The Government has not given any clear-cut format on how the selection process is going to be and how the buffer stock will be made available for the public without any artificial price hike or shortage,” an Essential Food Commodities Importers and Traders Association spokesman told the Daily FT.
The Cabinet approved the import of 300,000 MTs, or one and half month’s rice consumption, as a buffer to control price increases and storages that may arise in the domestic market. Following the decision, registration of rice importers has been scheduled from 2 to 4 January.
However, different members of the Government have announced different systems to be set in place, leading to confusion among rice importers.
Finance Minister Ravi Karuanayake on an earlier occasion said that the Government does not want to be involved in rice imports and that it would be done by the private sector.
“We have no intention to call tenders for this because that’s where the corruption takes place,” the Minister added.
In the meantime, State Minister of Finance Lakshman Yapa Abeywardena on Wednesday said the Government had decided to allow the private sector to import only 100,000 MTs of rice under the direct supervision of the Trade Ministry and the Cabinet Subcommittee on the Cost of Living, to be made available by 17 January.
According to Minister Abeywardana, bids called from suppliers will be first evaluated by the Trade Ministry Committee of experts who would then forward their recommendations to the Cabinet Sub Committee on Cost of Living, who in turn would make the final decision on which bidders would be allowed to import.
“The selection would be done according to guidelines given by the Treasury,” he claimed.
However, importers suggested that reducing the import duty on rice for a limited duration would have been a more practical approach to avert any shortfall until the Maha season crops come into the markets, noting that keeping buffer stocks in bonded warehouses would incur an additional cost for them.
“If there is a shortage of supply of rice to the market, why do we need to keep it in bonded warehouses with an extra cost when it can be imported with reduced tax and make freely available to the general public at a nominal price?” they questioned.
The Association also highlighted that the authorities have not indicated how these buffer stocks would be released to the market for it to be available for the public.
Defending the decision to directly control the import process, Abeywardana claimed that Government involvement was necessary to ensure that local producers are protected, while also imposing proper price controls.
“If we don’t do this, then importers will bring in more stocks to reduce the price for local produce,” he claimed.
According to him, only 245,000 acres out the total 800,000 acres of arable land were cultivated during Maha season due to drought and adverse weather patterns, which are the key reason for the shortage and price hikes observed in the market.
