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Friday December 9th, 2022

Sri Lanka to ban grain imports in neo-illiberal high

ECONOMYNEXT – After years of taxing basic foods to keep prices artificially high and fatten the profits of an inefficient but political powerful farming lobby an administration led by Sri Lanka’s United National Party is planning to ban several cereals outright.

"We have already decided to ban importing Green gram from this year," Minister P. Harrison said in Parliament on Wednesday.

He said that importing black-eyed peas, Kurakkan, Soy beans, Urad, Paddy and Chilly seed will also be banned.

The grain ban plan comes shortly, after the current administration nationalized film distribution in a neo-illiberal move, using a 1971 law.

Harrison belongs to Sri Lanka’s United National Party, which in 1978, overturned a ‘self-sufficient’ economy where all efforts were directed at import substitution, bringing malnutrition to the poor and beggars scrabbled in trash dumps looking edibles.

The 1970s ‘closed economy’ came in the wake of a 1971-73 collapse of the Bretton Woods system of soft-peg, where money printing produced severe ‘foreign exchange shortages’.

But critics say from 2015, when the party came back to government a series of neo-illiberal measures including retrospective taxes and were slapped worsening from the pre-2015 administration, discouraging foreign investment and slowing growth, while monetary instability worsened.

You may also read:

What went wrong; Sri Lanka’s illiberal economics and unsound money : Bellwether

In recent years Sri Lanka’s food prices have been kept higher than the world for years with import taxes to protect special interests of farmers, maize collectors and politically powerful import license holders.

But there had been no outright ban on grain imports.

The food taxes have come despite Sri Lanka government giving free fertilizer for farmers at the expense of tax payers.

The current administration also came to power on a free trade economic platform.

Even now there is protein malnutrition among poorer children. Sri Lanka has been keeping maize and soya bean, which has brought poultry prices down across developing countries and free trading East Asia artificially high, pushing up meat costs in addititon to taxing pulses.

"Despite the inflated price of pulses at the retail level, one gram of protein in pulses is much more affordable when compared to one gram of protein from animal-source foods," a Food and Agricultural Organization study said.

"Furthermore, the affordable price of pulses in terms of protein source is particularly relevant for the estate sector in Sri Lanka, as household expenditure on pulses is higher than any other animal-source and higher than expenditure in rural and urban areas, signifying a reliance of pulses in this sector."

According to the household income survey of Sri Lanka’s statistics office in 2016, stunting below the age of 5 was 17 percent, peaking at 34 percent in Nuwara Eliya.

The national prevalance of wasting (below normal weight for age) is 15.1 percent, peaking at 25.4 percnet in Moneragala.

In countries like Vietnam, with free trade an entire generation of kids are growing up taller than their parents after free trade (Vietnamese too short) and a stronger currency, analysts say.

Vietnam abandoned self-sufficency and socialist agriculture starting from 1984 under its doi moi economic rewakening program, and dramatic results including poverty were seen from the late 1990s following currency reforms (Vietnam remarkable agriculture progress after Doi Moi). In Vietnam, below normal weight for kids under 5 years of age fell from around 47 percnet in 1984 at the start of Doi Moi to around 13 percent by 2018.

But in Sri Lanka profits of farmers who cannot produce food at international prices and the ideology of economic nationalists had been placed before than of malnourished children, critics say.

However, Harrison said that Sri Lanka wanted to ban grain imports because farmers could produce them, echoing the words of economic nationalists.

“Sri Lanka has the potential to produce enough for the consumption of the country and stop importing from abroad,” he said.

“It is sad to say as an agriculture based country we are importing these crops for consumption. In the last year only we have imported 10,000 metric tons of green grams to the country.”

He said that local research will allow Sri Lankan farmers to boost yields of cereal crops.

“Because of the positive results of the researches done by the research institute of the Agriculture Department, we now have the potential to produce the necessary quantity to sustain the country and also to export," Harrison said.


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Sri Lanka president slams power regulator chief after conflicting with minister

ECONOMYNET – The powers to change the electricity tariff in Sri Lanka is vested with the Minister of Power and not the Public Utilities Commission (PUCSL), President Ranil Wickremesinghe told the Parliament.

The minister of Power and Energy, Kanchana Wijesekara has requested an upward price revision to be implemented in two phases both in January and July next year, saying the recent tariff hike was not enough for the state-run utility provider Ceylon Electricity Board (CEB) to continue uninterrupted power supply.

However, Jaynaka Ratnayake, the Chairman of the PUCSL had said  the recent tariff hike is enough for the CEB to cover the cost of production and it will not allow another price hike. However, he has said a twice a year price revision is necessary though it should be in April and October instead of January and July.

President Wickremesinghe said the PUCSL chief was opposing the tariff hike due to his personal reasons.

“The power is vested with the Minister and me. I am the one who made the PUCSL act and I know what is in it,” Wickremesinghe told the parliament on Thursday. quoting a letter from the Attorney General which mentioned provisions in the island nation’s Electricity Act.

Accordingly the Act, the PUCSL would be statutorily obliged to give effect to such policy. It is observed that neither the Act nor the PUCSL Act contains any provisions that empowers the PUCSL to change or act invariant of such policy guidelines.

“The Chairman of the PUCSL is misguiding the general public. I have to meet him and see,” Wickremesinghe said.

WIckremesinghe said the Chairman does not want the tariff hike because he owns one of the highest electricity consuming companies.

“He is the Chairman of the Trillium corporation. It is the firm that takes up the most energy”, he said.

The Trillium group is managed by Janaka Ratnayake and he also holds positions as the chairman and CEO of Trillium Property Management & Services Ltd., City Housing and Real Estate PLC, Trillium Residencies Ltd., Computer Care (Pvt) Ltd., and Rent a Comp Services (Pvt) Ltd., and JR Management Consultants (Pvt) Ltd.

“It means when the electricity bill increases, his expenses increase as well”

He said the CEB still has a loss of 300 billion rupees since 2013 and it needs to be covered.

The CEB issue can be solved only in three ways, either printing more money, increasing value added tax or increasing the tariffm, he said. (Colombo/Dec08/2022)

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Sri Lanka President bemoans over inconsistent LNG deals

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe bemoaned over successive governments’ liquefied natural gas (LNG) deal that has brought in all the world powers into the discussion.

Wickremesinghe’s center-right United National Party (UNP) had discussions with India and Japan between 2002-2004 for an LNG project.

“Following dialogues with India and Japan, the UNP government could come to agreements to get two LNG power plants. After we were defeated the successor government, without cancelling those agreements granted it to New Fortress company in USA,” Wickremesinghe told the parliament.

“Thereafter, as they did not like New Fortress, they gave it back to Pakistan and China. So within the same premises, there were China, Pakistan, India, USA, Japan and only Russia was not there.”

“It was wonderful that a world war did not ignited there as there were five main powers in the world.”

“Now there is no LNG or anything here and now they ask me to solve this issue.”

Wickremesighe’s outburst comes as his government is forced to raise tariffs on power prices after successive governments failed to implement cheap and renewable power generation projects.

He said a total loss for the state-run Ceylon Electricity Board since 2013 was 300 billion rupees and a possible drought next year could increase the 2023 electricity cost to 420 billion rupees.

“If it rained, we need Rs. 352 billion while Rs. 295 is required if rained so much to have floods. How are we going to find this money? We would have to print money, but Rupee would depreciate. We would have to increase VAT but it would increase the price of all commodities or to charge it direct.” (Colombo/Dec08/2022)

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Air quality drop forces Sri Lanka to close schools; public warned

ECONOMYNEXT – A rapid drop in air quality in Sri Lanka has forced the Colombo government to close all schools across the country after a deep depression over Southeast Bay of Bengal, officials said.

The Education Ministry, issuing a special notice on Thursday said, it has decided to close all government schools for Friday, after discussing with the officials in Meteorology Department and Disaster Management Center.

An official said the drop was due to the deep depression over Southeast Bay of Bengal carrying the air from India.

Due to the depression over South east Bay of Bengal (370 km east of Trincomalee) has concentrated into a cyclonic storm “Mandous” by Wednesday night.

“Cyclone in the Bay of Bengal that is the prime reason for the increase in the pollution load as we receive more wind from India,” H.D.S.Premasiri, Senior Scientist, Coordinator-Air Quality, noise and vibrations at National Building Research Organization (NBRO) told EconomyNext on Thursday.

Officials said there is a likelihood of the cyclone moving west-northwestwards and further intensify into a severe cyclonic storm tonight and cross North Tamil-Nadu, Puducherry and South Andhra Pradesh coast around midnight of 09 th December and the maximum wind speeds will be 70-90 km per hour and can increase up to 90 in sea areas.

“Hopefully, today we can expect normalization in the environment and the effects of the fog will disappear”.

According to the NBRO’s real time Air Quality Index Indicator, the quality of air in northwestern coastal district of Puttalam has dropped drastically and indicated a particular matter (PM) 132, while Kegalle (85) and Mannar (84) were the districts which had next worst air quality.

According to NBRO, Battaramulla, Polonnaruwa, Dambulla, Kegalle, Mannar and Puttalam indicate a poor quality of air due to higher PM.

“The fog will lead to lung and breathing issues,” Premasiri said.

“So the public is warned to wear a mask when they travel outside. The pollution highly prevails in city areas and has a less impact on the other parts of the areas.” (Colombo/ Dec08/2022)

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