he people have been dealt a double whammy. On one hand is their fight with Covid and on the other they have been crippled with the rising cost of living. As the Sinhala proverb goes it’s the perpetual case of the man who falls from the tree being gored by a bull. Food inflation is at 25 percent (National Consumer Price Index). Data released by the Department of Census and Statistics show that the cost to prepare a plate of rice and curry in August 2021 is 3211.35 rupees in contrast to August 2020 when it was 2649. 77 rupees and which overall is an increase of 561.58 rupees.
A comparison of the Department’s prices of other food items for the same period paints an equally somber picture. Save for a handful, vegetables, dried fish and condiments have seen a price hike with steep rises in the price of pulses. Green gram has more than doubled in price and cowpea is one and a half times the price of what it was in August 2020. As recently as Friday this week bakery giant Prima said it will be increasing the price of a kilo of wheat flour by 12 rupees. Whether this will reflect on the prices of bakery products which were increased less than two weeks ago will beknown in the coming days. The prices of everyday drugs like Atorva which is taken for cholesterol, Metformin which is used to control diabetes, Amoxycillin and some others have doubled or trebled in price. Although reasons for the rising cost of living are many, two factors dominate. The country’s dollar strapped cash reserves have put the brakes on the import of essential food items which precipitated the declaration of a state of emergency on Tuesday to streamline the delivery of these foods, and the hoarding of essentials such as rice, sugar and domestic gas by importers and traders. According to latest news reports, rice mill owners have allegedly torn up the government gazette which was issued last week to control the retail price of rice because it will be a loss for them to sell it at the prices the government wants them to. The gazette laid down a ceiling of 125 rupees for one kilo of Keeri Samba, 103 rupees for a kilo of red/white samba, 98 rupees for red/ white nadu and 95 rupees for red/ white kekulu rice.
In the eye of last week’s sugar storm were four companies that were caught by the Consumer Affairs Authority which were found hoarding 29, 900 MT of sugar. They were Pyramid Wilmar Company in Muturajawela (6200 MT), Global Trading Company in Mabole Wattala(4800 MT), Global Trading Company in Uswatakeiyawa, Wattala (4100 MT) and WilsonTrading Company (14, 000 MT) and RG Stores in Hunupitiya, Kiribathgoda (800 MT). The cumulative total of the sugar which they had hoarded was five MT short of the country’s monthly consumption need of 35, 000 MT. The State controlled Dinamina newspaper last week reported that there are sufficient stocks of sugar, imported into the country using the low import levy, to last the country for 17 months which would mean there are ample stocks without the need to hoard. The loss of revenue to the government from this pecuniary advantage to importers is about 35 billion rupees.
Last October the government increased the tax on a kilo of sugar by 50 rupees to control sugar imports and to encourage its production locally. Before long, that same month, defying the logic of the earlier tax increase it was reduced to 25 cents. The tax break benefitted sugar imports which were in the pipeline including importers such as Pyramid Wilmar Trading. Its local agent Sajad Mowzoon is known to have helped President Gotabaya Rajapakse with his election campaign. Despite a government gazette to capthe retail price of a kilo of sugar at 85 rupeestraders continued to retail a kilo of it at over 120 rupees due to which consumers lost out on any benefits from the low tax levy. Although the State owned Sathosa outlets were among the few that were selling sugar at the gazetted price they rationed the sale of sugar to one kilo per person. The limited reach which government outlets have also reduces the numbers who can benefit. According to JVP MP Vijitha Herath, Sathosa outlets serve only about 5 percent of the population while supermarkets serve about 12 percent. The majority are served by small privately owned grocery stores. Any semblance of price control was taken away after the gazette which capped the sugar price at 85 rupees was done away with and the sugar industry had free reign over it. At its peak, one kilo of white sugar was retailing at around 220 rupees and a kilo of brown sugar at about 190 rupees. Trade Minister Bandula Gunewardene and the Consumer Affairs Authority were hamstrung. Minister Gunewardene went on record saying publicly that he could not do anything to stop the prices from rising because price controls had been removed which meant that traders could retail their sugar stocks at whatever price they wanted to. In an attempt to curb the wild fluctuations in the price of sugar the government double upped on its own previous gazette and put a cap on packeted sugar at 125 rupees for a kilo of white sugar and 190 rupees for a kilo of brown sugarwhich still leaves it with a profit margin of at least 40 rupees.
The JVP, which has called the government’s bluff and is taking it to court over the sugar scam, is calling for answers. It has asked the government why it did not purchase stocks of sugar itself when tariffs were low and sell them to the people through its outlets. The movement in the price of sugar in the world market has been marginal with a kilo of sugar selling for about 39 cents (US) or around 79 rupees. This still leaves room for the government to let the people have sugar at their earlier stated price of 85 rupees or even lesser at 79 rupees in keeping with world market rates.
