Govt to intervene directly in the vegetable market to control prices

Department of Agriculture Photo.

ECONOMYNEXT – The government is planning to intervene in the produce market by purchasing directly from farmers and fixing profit margins in yet another attempt to bring down rising prices, Agriculture Minister Mahindananda Aluthgamage said.

Addressing traders in Colombo today December 14, the Minister said that he is “acting on the instructions of President Gotabaya Rajapaksa who has said that the unfair increase in vegetable prices must be controlled.”

As a pilot project, the Department of Agriculture will purchase fruits and vegetables from farmers and make it directly available to traders at the Economic Centres at Meegoda, Narahenpita and Welisara, he said.

Traders had been asked to keep a retail margin of LKR20 per kilogram of produce and a wholesale margin of LKR10 per kilo.

Plastic containers to transport produce will be provided so that damage to the vegetables will be minimized he had said.

Aluthgamage had had a meeting earlier today with the Traders Associations at these centres and they had agreed to the scheme, a statement released by the Ministry said.

The Minister told the traders that the District Secretaries of Nuwara Eliya, Anuradhapura and Badulla would make the purchases in conjunction with Farmers Associations in these areas.

The traders had informed the Minister that some businesspeople who had won the tenders to run stalls in the Economic Centres were renting the premises to third parties and as a result, a further cost has been added to the produce. The Minister promised to put a stop to the practice by January.

There were also complaints that some traders who had obtained permits to sell other goods were using the Covid pandemic situation to sell vegetables in these stalls.

The Minister had said that the big profits being made by middle-men involved in the vegetable trade must end and both consumers and traders should get a fair price.





Aluthgamage said that price controls will be imposed on produce, rice, eggs and fish and traders should display these prices at their stalls.

This is not the first time that governments have tried to intervene in markets with varying results. Most attempts have been unsuccessful for a number of reasons.

During festive periods with money supply increasing, prices tend to rise and the December/January period is also when the Yala harvest comes to market, which has lower yields than the Maha season analysts say.

Another factor is that the middle-men need to keep a margin to cushion themselves from price fluctuations which can take place within a 24-hour cycle. (Colombo, December 14, 2020)

Reported by Arjuna Ranawana

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  1. Farmers should be allowed to form their own cooperatives and bring their produce direct to consumers. Space should be allocated in each town for that purpose. Government buying produce is not a practical solution. It will be a waste of public money.

  2. A project destined to fail. Mainly because the farmer is dependent on the 3rd party for financial assistance to engage in farming. thereby majority farmers are compelled to sell their harvest to this source. until there is a guaranteed mechanism to provide 100% support to the farmer the proposal direct interference by any government will fail.

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