Combating CoL | Page 6 | Daily News

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Combating CoL

The high Cost of Living (CoL) is very much in the news these days. The CoL is a fact of life that sometimes does not adhere to Newton’s Law that what goes up must come down. There has been a steady increase in the prices of certain food items, even though the prices of some foods fluctuate depending on their growing seasons.

Sri Lanka being a primarily agricultural nation, weather plays an important role in crop production and hence, the prices of food items. There is a prolonged drought in several parts of the country that has severely affected paddy cultivation, while incessant rain and flash floods in other areas have also hampered crop production. Coconut too has taken a similar hit with experts predicting that it would take until 2019 or 2020 for local coconut production to reach normal levels. It is basic economics really – when the supply is short but the demand is greater, a price rise is generally inevitable. Rice prices have been affected in particular, with some varieties carrying a retail price of over Rs.100 per kilo.

To its credit, the Government has taken many measures to control the runaway CoL. One of the main planks in this programme is the removal of duties and taxes on many imported food items well before the presentation of Budget 2018 last month despite revenue implications. The Government has re-imposed or adjusted these rates whenever the local production could meet the demand and has also stipulated maximum retail prices for a range of items. It has also made use of the extensive CWE or Sathosa retail network of 3,000 shops to sell essential items at concessionary prices which are much lower than those offered by private supermarket chains. The Government has also placed an urgent international order for 200,000 MT of rice to ward off the present shortage and high prices.

In a latest move, eight essential food items including rice, dhal, sprats, potatoes and onions will be provided to the people under a relief package to relieve the CoL burden on a decision taken by the Cabinet Sub Committee on the Cost of Living chaired by President Maithripala Sirisena. The relief package or “Sahana Malla” will be provided right until the forthcoming Sinhala and Tamil New Year season, Prime Minister Ranil Wickremesinghe has said.

The Sathosa shops and private traders will be entrusted with the task of issuing the relief package, in addition to the major supermarket chains and marketing firms in various cities. Since these outlets serve only one third of the country’s population, the Government plans to include dedicated economic centres and private shops too in the programme. This is a step in the right direction as consumers will be able to get a good deal on several items which would cost far more if purchased separately. Depending on its success the Government should consider making it a fixed feature not limited to festive seasons.

The authorities should address several other factors that determine retail prices of food items and many other goods. Every attempt should be made to cut out the “middleman” who buys produce from farmers for a pittance and then sells it to wholesale/retail traders for a far higher price. Add the retailer’s margin to the mix and the consumer literally has to pay a hefty price.

Post-Harvest Losses (PHL) is another worrying factor. It has been estimated that more than 40 percent of most local crops are wasted during transport and warehousing/storage. Reducing PHL must be a priority for the agricultural agencies of the Government. We often see a glut of most crops during the “season”. Since we lack proper storage mechanisms including cold rooms in most areas to keep harvests for use out of season, some of the seasonal harvest is wasted. This leads to a vicious cycle where the crops get very expensive out of season. Agriculture experts should study how other countries deal with this problem. Moreover, homeowners with even a small land plot should be encouraged to grow vegetables and fruits which will reduce their CoL bill.

There is much talk about import substitution, but the truth is that we spend millions of dollars to import fruits and vegetables, some of which are grown in Sri Lanka. One can argue the case for importing fruits such as apple which cannot be grown here with any degree of success, but there is no rationale for importing fruits such as guava and papaya. For a country that has 1,340 Km of coastline, Sri Lanka imports a staggering amount of canned fish – last year alone, Rs.7.8 billion had been spent on fish imports. If our fisheries sector, including inland fisheries can be developed further, we may be able to stop fish imports in the coming years. The dependence on expensive imported powdered milk (at an annual cost of Rs.40 billion) too can be reduced by developing the local dairy industry. There are many paths to reducing CoL and the Government must be commended for exploring all these options with vigour. 


 

There are 2 Comments

Monkeys are the menace President said he,ll do something but still pending.

Cost of living big problem with public. Communication with foreign residents the same.cost goes up or packaging smaller quantities lesser some eith prices up Every where samesize shrinks numbers down weight down price up universal problemH

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