Features
Life and Times of Sumi Moonesinghe, business leader extraordinaire
This is the Afterword of Sumi Moonesinghe’s just-published biography written by Shehara de Silva herself an accomplished business executive
Fire & Ice
It was possibly a little after midnight, at the Supper Club. Circa 1991. It was the year Rajiv Gandhi was killed, the Hubble telescope was launched, and I met Sumi.
Sumi was there with Susil and mutual friends Badra and Kokila Wimalasekera. One of them introduced me to Sumi. By the end of the evening, between the dancing and the drinks, she hired me as her Marketing Director for Jones Overseas. That typifies Sumi. When needed, she can be like quicksilver, decisive and fast to assess a situation. She never walks away from closing a deal, whatever the context.
Anchor — a global case study
Her capacity to make strong and gut decisions are rarely capricious. Her mind has a clarity of purpose. She knows what she wants and she goes for it.
It was a fascinating juncture in her leadership and relationship with the New Zealand Milk Board. Anchor in Sri Lanka was already running in pole position – 70% market share with an 18 % price premium, the only country in the group at that time where Anchor had ousted the world’s biggest food company. Nestle. Nestle, on the other hand, was throwing everything and the kitchen sink at her to oust Anchor. Nestle had entered Sri Lanka in 1906 and was a 100-year-old heritage brand.
Nestle added 26 vitamins into its local Nespray, hired high-powered lobbyists, developed salacious campaigns about contaminated milk, and ran mega ad budgets on a ridiculous value proposition that “Local cows have better grass fodder than New Zealand!” It was, in fact, a classic panic reaction of how not to fight a market leader.
Sumi was unfazed. She had a knack of finding the right people for the right job – this was her ‘A team’. She trusted them, empowered them and resourced them.
Mehra Abeygunawardene’s meticulously executed sales strategy became the playbook for the Middle East and Asia. JoJo Kanjirath had made Anchor the country’s biggest milk brand and Sumi had a brilliant stroke of intuition in backing Rosy Senanayake (who became Mrs. World). She positioned her as the face and mother figure, retaining her across time which showed her ability to stay the course, despite her legendary impatience. She knew if something was working well, not to change it. It’s a fine line, but business acumen is founded on timing and Sumi knew when to move and when to hold on and milk an opportunity. Pun intended!
Unconsciously, they had stumbled upon the fact that the masses believed that Rosy’s fairness came from drinking Anchor, and though at no point did the messaging ever state this, the subliminal correlation stuck. Coupled with a constant messaging of quality premium value and that ‘mother knows best,’ Anchor was the poster brand for brand building.
Sumi then took one of those courageous calls so rare amongst business leaders. To do the morally right thing and not fret the business impact, she partnered UNICEF on a public awareness series conceptualised by Shaan Corea, commissioning the country’s first public service awareness campaign on the importance of breastfeeding and neonatal tips for mums. It was another stroke (unintended perhaps but spot on) of marketing brilliance.
It was a double whammy. Rupavahini gave her free prime time exposure that far exceeded her production costs, achieving huge brand saliency. The consumer trusted the brand because it told them the right thing – breastfeed as long as you can. And they remembered with gratitude the multitude of tips they got in their early postnatal days and migrated in the six months or first year when mother’s milk was no longer available.
It was around this time that I entered the business. Anchor was already a well-established market leader and she took another risk, by deciding to grow the market in a generic ‘Drink more milk’ campaign. Marketing textbooks would advise against generic market development campaigns by premium segment players with a dominant market share (Anchor’s 70% as price leader was itself a market anomaly).
Theory said this strategy would grow competitor share at the bottom end. Never one to fear the path less travelled, she threw the rule book out and backed a campaign that grew the market for the lower masses. The highly-creative cartoon-style milk campaign ended up sweeping the SLIM Campaign of the Year Award and the Effies.
Anchor’s brand building success will certainly go down in the annals of local marketing case lore, and in Fonterra’s case its global strategy, as a benchmark. I recall Unilever Brands Director Amal Cabraal asking me to send him a case study on Anchor that he could highlight at a Unilever global conference. We were a small country but we were the pole star. Sumi was treated like royalty by the main Board of Directors of New Zealand Milk Products (NZMP), all of whom were her friends by now. There was deep and abiding respect and trust.
In the meanwhile, The Maharaja Group, which owned the franchise, acquired the Pepsi franchise. Jones Overseas, under Sumi, oversaw and funded the Pepsi sales force until it got on its feet. Various other distractions were tossed in – a cough syrup and a cookie business from Australia to boot. She succesfully brokered a joint venture with New Zealand Milk, and Jones Overseas which was renamed New Zealand Milk Products Pvt. Ltd (NZMP).
Around this time, Sumi raised her game. She decided to grow the lower end of the market with the introduction of Ratthi, a risky move that stretched the trust of the New Zealanders. It is a testament to the faith they had in her that they let her get away with it.
To differentiate and consolidate the new brand and ensure there was no cannibalization from Anchor, Sumi needed a rear guard attack on Lakspray. She brought in a UK-manufactured milk powder which had 26% milk fat (less cream, less quality) to attack the number two value leader Lakspray. Lakspray was a leader in the tea and coffee segment at a different price point.
She had initially decided to push it unbranded to tea and coffee shops in plain foil packs. It failed to gain traction. This was the juncture at which I entered the business. I asked her if she had the guts to go the whole hog and really build a new market segment rather than try a covert unbranded attack. She didn’t flinch or waver, but flagged me on. Thus, Ratthi was born. Today, it has totally ousted Lakspray, dominating this segment.
In the interim, she decided to extend the Anchor brand architecture into related dairy categories. She began drawing plans to introduce yoghurt and butter lines and constructed a factory, doing it in record time. This once again, became a blueprint for NZMP and Fonterra, the umbrella corporate brand name that New Zealand Dairy Board used in other parts of Asia. She eventually facilitated a complete acquisition of NZMP by Fonterra in 1996, making it a full multinational, and the Maharaja Group exited the business.
The philanthropist and friend
I had been with her under two years when I needed to leave Sri Lanka and support my husband who was taking up a posting in Kuala Lumpur. Sumi was sad to see me go at such a critical juncture. But she was ever so supportive, offering to open many doors with her legion of contacts in the region.
This again was one of Sumi’s most defining features. Her largeness of heart and spirit. I saw her offer an entire sugar trading business, which was immensely lucrative, to one of her Anchor team salespersons. Her cup was overflowing; she had made enough. So she gave that business away, lock, stock and barrel for love and friendship – with nothing expected in return.
Most recently, I was with her one day when a call came through; Teddy, one of her old team members, had had a heart attack and needed urgent surgery. She called his daughter and said, “I’m transferring a million rupees, get the surgery done.” She saved his life.
Decades on, she crossed over from Singapore especially to meet me in Kuala Lumpur. She heard I had hit one of those rough patches. My husband was tail-ending a long battle with Alzheimer’s, my youngest was doing her A/Levels going to one of the most expensive British schools in Kuala Lumpur, my son was at university in London, and although I had a plum job as Country Head of Interbrand, the world’s premier brand consultancy.
I was faced with a moral dilemma. There was some distrust that had developed between the local equity partner, the Chinese entrepreneur and Group Chairman who had brought me into Malaysia and his Regional Director and JV partner. It was a typical multinational strategy of playing around with transfer pricing, keeping most of the business within the Singapore and Japanese regional offices. I had decided to leave rather than be disloyal to my former boss. However, my daughter’s education was being paid for by the company and pulling her out of school could jeopardise her A/Levels.
I had bounced my concerns off Sumi; as a former boss she knew that loyalty scored high in my playbook. In her characteristically generous and impulsive style, she came over from Singapore and told me, “Never fear the future. Don’t worry, this will pass. You will fly high again. I admire what you are doing for your husband and holding the family together.” She left me an envelope, making me promise not to open it until she left.
In it, was a note which said: “Consider this a belated thank you for helping me on my journey towards success. With love and gratitude,” and a cheque covering an entire year of my daughter’s schooling! What was amazing was not that she offered to pay the fees, but her sensitivity to my pride and ego, framing it as a reward for work done. In fact as I tried to return it, she blithely said, “Think of it as a delayed bonus!”
(Shehara de Silva is a Non-Executive Director of Keells Food and the former Marketing Director at New Zealand Milk Products (Sri Lanka).
(To be continued next week)
Features
Buddhism and Ahimsa
by Dr. Justice Chandradasa Nanayakkara
The word Ahimsa, derived from Sanskrit, means non-harm or non-injury and is often translated into English as non-violence. The dictionary defines it as “the ethical principle of not causing harm to other living beings.”
From its very inception, Buddhism has had a deep commitment to non-violence. Ahimsa represents a profound ethical principle in Buddhist thought just as in many other religious traditions. The Dhammapada states “Hatred is never appeased by hatred in this world. By non-alone is hatred appeased. This is a law eternal”. The first precept in buddhism emphasises the importance of avoiding harm to all living beings. It advocates nonviolence and asserts that violence toward others contradicts the teachings of the Buddha. This principle involves refraining from causing injury to life and includes abandoning all forms of weapons that can inflict harm or destroy life. In a positive context, it promotes compassion and empathy for all living beings. Therefore. In an age of hatred and discord ahimsa (non-violence) should become an ideal for all beings.
Buddha’s stance on violence was unequivocal. He was not a theologian but a liberator who sought to guide individuals toward inner peace. For Buddha, nonviolence was not a social or political philosophy. The Buddha famously stated, “There is no greater happiness than peace.” In Christianity, Jesus expressed similar sentiments and declared “Blessed are the peacemakers” The ultimate goal for a Buddhist is to attain a serene state of nirvana, and the means to achieve this must be inherently peaceful. Moreover, the Dhammapada emphasises that “All tremble at violence, all fear death. Putting oneself in the place of another, one should not kill nor cause another to kill.”
Buddha’s teachings have influenced the lives of millions of people worldwide. Buddhists are expected to radiate metta (loving-kindness) and karuna (compassion) which are vital tenets of Buddhism to fellow human beings and to all the elements that constitute Mother Nature. These tenets teach that loving kindness toward one another is essential for peace and harmony in society. Further, the interconnected and interdependent nature of all phenomena in the world underscores that our well-being depends fundamentally on cultivating a peaceful environment free from violence and hatred.
While religions can contribute positively to society, they can also exert a pernicious influence. Religions have, at times, served as agents of violence, providing a cover of legitimacy to unbridled violence and aggression in virtually every heterogeneous society. Many atrocities have been perpetrated and cruel wars have been waged by followers of one religion ruthlessly persecuting those belonging to other faiths in the name of religion.
Buddhism is not exempt from this reality. Despite its peaceful teachings that explicitly condemn war and violence -regardless of whether they are defensive or aggressive- the fact remains that violence has disrupted the political and social landscapes of many Buddhist countries. These countries have grappled with various forms of violent conflicts, fostering a climate of mutual distrust and animosity. In many of these societies, stark disparities and gross injustices have driven individuals to such violence. Conflicts are an inescapable aspect of human existence, ranging from minor inconveniences to serious confrontations, affecting individuals and nations and not unique to Buddhist countries.
There have been many instances where despite Buddhists being committed to radiating metta (loving-kindness) and karuna (compassion) toward all beings participating in violence in places like Sri Lanka, Thailand, Myanmar, and several other countries. These clashes often arise when people fail to tolerate each other’s moral, religious, or political differences. All religions have their accepted dogmas and beliefs that followers must accept without question, which leads to inflexibility and intolerance in the face of other beliefs. When individuals display blind religious zealotry and adopt absolutist and dogmatic attitudes toward their religion can also provoke powerful irrational impulses that destabilise society. When individuals feel overwhelmed by their irrational emotions, normal behaviour breaks down. Similarly, the interpretation of vague dogmas and scriptures has led to varying interpretations resulting in conflictual situations. Moreover, there is the tendency of religious nationalists to view their religion as intimately tied to their nation or homeland, so a threat to one is perceived as a threat to the other. Religious fundamentalists who are primarily driven by dissatisfaction with modernity too have produced extremist sentiments in many countries. It is indeed unfortunate that violence has become so entrenched in our societies, overshadowing the profound wisdom of non-violence that Buddhism seeks to promote.
What happens in these countries in no way represents Buddha’s teachings It is the perversion of his core teachings. No matter what the Buddha taught, there have always been and will be people who will misinterpret the teachings, and resort to violence and killing. It is the fault of the people and not the teachings. While every religious tradition has experienced instances of violence, this phenomenon highlights more about human nature than it does about religion itself. This is particularly so when the world is composed of diverse people with varying tendencies; some are naturally peaceful while others are prone to violence. These popular portrayals of religions often reinforce the view of religion as conflictual and violent.
The Buddha’s teachings are generally pacifist and peaceful, but some contend violence may be justified in certain circumstances. They believe that a certain amount of violence may be acceptable if the end goal is noble. However, the overarching message of Theravada Buddhism remains clear. Non-violence which is intrinsic to Buddhist philosophy, applies to all spheres of life and rejects physical violence even to achieve social or political change. Buddhism is inherently a peaceful tradition and sets its moral bar very high and nowhere in its teachings does one find any evidence in support of violence whether in word , thought or deed. Therefore, all teachings and practices are geared towards the principle of ahimsa (non-harming) for the benefit of oneself and others. Buddha once declared: Even bandits were to carve you up savagely, limb by limb with a two-handled saw, he among you who let his heart get angered even an at that would not be doing my bidding”.
Buddhists who are committed to peace believe that they cannot take up arms under any circumstances, even knowing that they would be killed as a result. True Buddhists are not expected to kill even a small insect let alone kill a human being. If a Buddhist insults another let alone kill or use violence toward others he does not follow buddhas teachings. The irony lies in the fact that history has demonstrated that the use of violence, no matter how justifiable it may seem, often leads to a cycle of further violence.
Another fundamental aspect of Buddhism that is allied to this idea is the doctrine of consequences or Kamma. Buddha said volition is karma Cetanaham, bhikkhave kamman vadimi . Cetayitiva kammam karoti kayena, vacaya, manasa (Intention, oh monks, I call karma, intending one does karma by way of body, speech, and mind. Buddhism just like many religions teaches that human beings are responsible for their actions and must face the repercussions—whether in this life, the next life, or the afterlife. Dhammapada states “An evil deed committed does not immediately bear fruit, just as milk curdles not at once; like smouldering fire covered with ashes, evil deeds follow the fool”.
When we delve deeply into the root causes of conflict and tension, they lie in the unhappiness and suffering born of greed, hatred, and delusion as identified in the Buddha’s teachings. We can only truly foster a harmonious world by embracing the principles of non-violence as enunciated in many religious traditions overcoming hatred and discord.
For Buddhist countries, maintaining armed forces poses the dilemma of protecting their citizens’ rights and lives without violating the principle of non-violence. Similarly, some Buddhists may find it difficult to conceive of serving in the military whilst adhering to the ethos, values and standards of Buddhism. Although Buddha himself was a member of the warrior caste and had cordial relations with kings and delivered several discourses to kings he never advised them to abandon their responsibility of ruling with its attendant consequences and punishment for crimes, nor to abandon warfare and protection of their state when necessary.
Every Buddhist enlisted in the military is legally bound to protect and defend his country and countrymen. It is also natural for every living being to defend himself and attack another for self-protection, but the karmic effect of aggression depends on his mental attitude. For example, if a man dies accidentally in the course of a struggle at the hands of another who had no intention of harming him, according to Buddhism he will be absolved from the karmic reaction. On the other hand, if a man kills another without any provocation whatsoever then he will not be free from the karmic response; he has to face the consequences.
Therefore, there is no fundamental contradiction between adhering to ahimsa and being enlisted in the military service. What is important is how he sets about his task and what intentions he entertains while performing his duties.
In the Kalama sutta of the Anguttara Nikaya, the Buddha has told Kalama, how the three unwholesome roots of greed, hatred and delusion lead one to commit unwholesome actions like killing and causing violence and also to encourage others to do the same, result in long-term harm and suffering.
The renowned Srilankan Buddhist monk and scholar Venerable K. Sri Dhammanannda says, “Buddhists should not be aggressors even in protecting their religion or anything else. They must try their best to avoid any kind of violent act. Sometimes they may be forced to go to war by others who do not respect the concept of brotherhood of humans as taught by the Buddha. They may be called upon to defend their country from external aggression, and as long as they have not renounced worldly life, they are duty-bound to join in the struggle for peace and freedom. Under these circumstances, they cannot be blamed for becoming soldiers or being involved in defence.
One of the challenges the world faces today is transforming the prevalence of violence in all its forms into a culture of peace, not merely the absence of war but also fostering an environment of compassion and karuna (loving-kindness).
Features
A murder that shook British India and toppled a king
It looked like an ordinary murder.
One hundred years ago on this day – 12 January 1925 – a group of men attacked a couple on a car ride in a upmarket suburb in Bombay (now Mumbai) in colonial India, shooting the man dead and slashing the woman’s face.
But the story that unfolded brought global spotlight on the case, while its complexity put the country’s then British rulers in a spot of bother, and eventually forced an Indian king to abdicate.
Newspapers and magazines described the murder as “perhaps the most sensational crime committed in British India”, and it became “the talk of the city” during the investigation and subsequent trial.
The victim, Abdul Kadir Bawla, 25, was an influential textile businessman and the city’s youngest municipal official. His female companion, Mumtaz Begum, 22, was a courtesan on the run from the harem of a princely state and had been staying with Bawla for the last few months.
On the evening of the murder, Bawla and Mumtaz Begum were in the car with three others, driving in Malabar Hill, an affluent area along the shore of the Arabian Sea. Cars were a rarity in India at the time, and only the rich owned them.
Suddenly, another car overtook them. Before they could react, it collided with theirs, forcing them to stop, according to intelligence and newspaper reports.
The attackers showered expletives on Bawla and shouted “get the lady out”, Mumtaz Begum later told the Bombay High Court.
They then shot Bawla, who died a few hours later.
A group of British soldiers, who had inadvertently taken a wrong turn on their way back from a golf game, heard the gunshots and rushed to the scene.
They managed to catch one of the culprits, but one officer suffered gunshot wounds when an attacker opened fire at them.
Before fleeing, the remaining attackers made two attempts to snatch the injured Mumtaz Begum from the British officers, who were trying to rush her to the hospital.
The newspapers suggested that attackers’ aim was likely abducting Mumtaz Begum, as Bawla – whom she had met while performing in Mumbai a few months earlier and had been living with since – had earlier received several threats for sheltering her.
The Illustrated Weekly of India promised readers exclusive photographs of Mumtaz Begum, while the police planned to issue a daily bulletin to the press, Marathi newspaper Navakal reported.
Even Bollywood found the case compelling enough to adapt it into a silent murder thriller within months.
“The case went beyond the usual murder mystery as it involved a rich and young tycoon, a slighted king, and a beautiful woman,” says Dhaval Kulkarni, author of The Bawla Murder Case: Love, Lust and Crime in Colonial India.
The attackers’ footprints, as speculated in the media, led investigators to the influential princely state of Indore, which was a British ally. Mumtaz Begum, a Muslim, had lived in the harem of its Hindu king, Maharaja Tukoji Rao Holkar III.
Mumtaz Begum was famed for her beauty. “In her own class, it was said, Mumtaz was without a peer,” KL Gauba wrote in his 1945 book, Famous Trials for Love and Murder.
But the Maharaja’s (king’s) attempts to control her – preventing her from seeing her family alone and keeping her under constant surveillance – soured their relationship, says Kulkarni.
“I was kept under surveillance. I was allowed to see visitors and my relations but somebody always accompanied me,” Mumtaz Begum testified in the court.
In Indore, she gave birth to a baby girl, who died soon after.
“After my child was born, I was unwilling to stay at Indore. I was unwilling because the nurses killed the female child that was born,” Mumtaz Begum told the court.
Within months, she escaped to the northern Indian city of Amritsar, her mother’s place of birth, but troubles followed.
She was watched there too. Mumtaz Begum’s stepfather told the court that the Maharaja wept and begged her to return. But she refused and moved to Bombay, where the surveillance continued.
The trial confirmed what media had speculated following the murder: representatives of the Maharaja had indeed threatened Bawla with dire consequences if he continued to shelter Mumtaz Begum, but he had ignored the warnings.
Following a lead given by Shafi Ahmed, the only attacker captured at the scene, the Bombay police arrested seven men from Indore.
The investigation revealed links to the Maharaja that were hard to ignore. Most of the arrested men were employed by the Indore princely state, had applied for leave around the same time and were in Bombay at the time of the crime.
The murder put the British government in a tough spot. Though it happened in Bombay, the investigation clearly showed the plot was planned in Indore, which had strong ties to the British.
Terming it “the most awkward affair” for the British government, The New Statesman wrote that if it were a minor state, “there would be no particular cause for anxiety”.
“But Indore has been a powerful feudatory of the Raj,” it said.
The British government initially tried to keep mum about the murder’s Indore connection in public. But in private, it discussed the issue with much alarm, communication between the governments of Bombay and British India shows.
Bombay police commissioner Patrick Kelly told the British government that all evidence “points at present to a conspiracy hatched in Indore or by instigation from Indore to abduct Mumtaj [sic] through hired desperadoes”.
The government faced pressure from different sides. Bawla’s community of wealthy Memons, a Muslim community with roots in modern-day Gujarat, raised the issue with the government. His fellow municipal officials mourned his death, saying, “there surely must be something more behind the scene”.
Indian lawmakers demanded answers in the upper house of British India’s legislature and the case was even discussed in the British House of Commons.
Rohidas Narayan Dusar, a former police officer, writes in his book on the murder that the investigators were under pressure to go slow, but that then police commissioner Kelly threatened to resign.
The case drew top lawyers for both the defence and the prosecution when it reached the Bombay High Court.
One of them was Muhammad Ali Jinnah, who would later become the founding father of Pakistan after India’s partition in 1947. Jinnah defended Anandrao Gangaram Phanse, one of the accused and a top general with the Indore army. Jinnah managed to save his client from the death penalty.
The court sentenced three men to death and three to life imprisonment, but it stopped short of holding the Maharaja accountable.
Justice LC Crump, who led the trial, noted, however, that “there were persons behind them [assailants] whom we cannot precisely indicate”.
“But where an attempt is made to kidnap a woman, who was for 10 years the mistress of the Maharaja of Indore, it is not in the least unreasonable to look to Indore as the quarter from which this attack may have emanated,” the judge remarked.
The case’s prominence meant the British government had to act quickly against the Maharaja. They gave him a choice: face a commission of inquiry or abdicate, according to documents presented to parliament in India.
The Maharaja chose to quit. “I abdicate my throne in favour of my son on the understanding that no further inquiry into my alleged connection with the Malabar Hill Tragedy will be made,” he wrote to the British government.
After abdicating, the Maharaja stirred more controversy by insisting on marrying an American woman against the will of his family and community. Eventually, she converted to Hinduism and they wed, according to a British home department report.
Meanwhile, Mumtaz Begum received offers from Hollywood and later moved to the US to try her luck there. She faded into obscurity after that.
[BBC]
Features
Sri Lanka’s Perennial Rice Crisis: Scarcity Despite Self-Sufficiency
by Rajan Philips
The ideological Left and Right in Sri Lanka have staked out their positions on the country’s perennial rice crisis. In the view of the ideological Left, the country’s food crisis including the recent rice crisis is even traceable to the allegedly flawed IMF program. And the preferred solution is getting back to the future and achieving self-sufficiency in food based on a public distribution system that has been neglected and/or abandoned after 1977. What is conveniently forgotten is the scourge of shortages and the ridiculous restrictions on inter-district movement of rice before 1977 that set the political stage ready for the ideological and even habitual, but not at all pragmatically calibrated, launching of economic liberalization.
For the Right which is nowhere near what it was in 1977, the current and the recurrent September to December rice crisis is the cumulative result of the failed policies of price controls, import controls that were reintroduced after 2005, and the old self sufficiency mindset itself. Open up the market for locally produced rice to compete with imported rice and establish steady supplies and a price equilibrium. If prices occasionally rise to become unaffordable, people can eat bread until the hidden hand imposes a new price equilibrium. That is the gospel according to the Right.
Self-sufficiency in Rice
The fact of the matter is that based on annual production and consumption estimates, Sri Lanka has achieved self-sufficiency in rice, and this has been so for about three decades. That it happened under the open economy is not denied. In fact, pursuing self-sufficiency in rice has been a traditional UNP goal and not the SLFP’s. CP de Silva after an illustrious Civil Service career working under Prime Minister DS Senanayake, introduced self-sufficiency to the SLFP vocabulary after becoming a powerful Minister in the 1956 SWRD Bandaranaike government. He was quickly rebuked in parliament by his elder cousin, the LSSP’s Colvin R de Silva, that “one can achieve self-sufficiency only in one’s grave.”
Positive free trade has historically been the cry of the Left from the 19th century. Yet specific to rice and Sri Lanka, the balanced position articulated by Dr. Gamani Corea is a timeless advice, that “agricultural policies should not be guided entirely by considerations of comparative advantage,” … and that it would be “fool-hardy not to achieve a minimum self-reliance in basic food stuffs.” And none more so than in the areas paddy cultivation and rice production that have been so integral to Sri Lanka’s civilizational existence.
At the same time, self-sufficiency in rice is not assured year after year due to adverse climate conditions. Alternating droughts and floods can upset all the self-sufficiency planning, as it happened in 2016. Now we know economic blunders such as the man-made fertilizer crisis can drastically impact our self-sufficiency as we saw in 2022. One would hope that the Rajapaksa history will never repeat itself, but weather disruptions can occur any year and every year. So, there has to be a well laid out Plan B for dealing with shortfalls in rice due to weather conditions.
But the recurrent September-December rice crisis is not due to weather but the manipulation of the supply-demand imbalance between the near constant monthly demand for rice and its biannual supply from the harvests of the Maha and Yala cultivating seasons. The well established seasonal pattern is that the main Maha season accounts for about 60% of local production and its harvest arrives in the mostly in the month of March every year. The harvest of the smaller Yala season brings the balance 40% usually during the month of August.
Monthly ‘Rice-Flow’
The paddy and rice statistics for the year 2023 indicate a total production of just over 3.0M metric tons of rice (out of 4.5M metric tons of paddy) and a total consumption of just under 2.5M metric tons, indicating a net surplus of about half a million metric tons. The monthly ‘rice-flow’ is conditioned by the steady monthly demand of approximately 205,000 metric tons of rice and its biannual points of supply of 1.8M metric tons of the Maha season rice in March-April, and 1.2M metric tons of the Yala season rice in August-September.
The Maha season supply of 1.8M metric tons alone can meet the monthly requirements until about the month of October. With the addition of the Yala supply of 1.2M metric tons by September, a positive ‘rice-flow’ can be maintained (with a surplus of 0.5M metric tons) until the next Maha harvest. This would usually be the case every year unless there is a weather disruption. The recurrent reality, however, is that supply levels drop, and prices increase during the months of September to December, causing rice shortages and price increases and forcing governments to rush in rice imports and exercise price control to avoid a political crisis. Usually, the governments’ remedies have been making matters worse.
The monthly retail price fluctuation is across the main paddy and rice types (samba, nadu, red rice etc.) and it has shown a generally consistent pattern of increasing prices from September to December, falling prices from January to March, slight increases in April, May and June, and ending with decreases over July and August. The highest retail price per kilogram of rice is registered in December and the lowest in March, with a Rs. 10 to Rs. 15 average difference between the two.
The general diagnosis is that the rising price from September to December and the falling price from January to March is the result of supply manipulation by a few large rice millers with large storage capacities who collude among them to restrict supply before December and glut the market after January. The main objective would seem to be not profiteering in the months of September to January but driving down the prices after January so that the millers can pay the minimum price to the farmers for purchasing paddy after the new Maha season harvest in March. The farmers are constantly in a bind no matter what the season is. They have no storage capacity and are constrained to turn over their harvest not to any miller or buyer, but generally to the one to whom they are invariably indebted to for obtaining seed paddy, purchasing fertilizer and other inputs.
The alternative explanation is that the rice stocks with millers go down during the year end months even as the demand for rice slightly goes up due to the increase in the number of tourists arriving in the country. When imports were freely allowed, the explanation goes, the recurring shortfalls were compensated by imported rice varieties so that rice supplies were maintained, and sharp price increases were avoided. This pattern was apparently broken after 2005 by the restriction on imports and high import duties and the impacts on the people became harder.
But the dispute over imports does not explain why rice stocks should fall below demand levels at any time during the year unless there have been weather disruptions. The additional demand attributed to tourist populations or beer production is likely to marginal at best. While there must be flexibility in turning to imports to deal with shortfalls in local production due to adverse whether conditions, relying on imports should not be the answer to supply manipulations by large rice millers.
Todate the problem of the market power of the large rice millers has been seen as more of a political problem but not as a technical as a technical challenge. At the political level, i.e., ministerial and cabinet level, the response to the rice crisis all these years has been one of inaction and overreaction. The inaction is by the government towards the widely acknowledged problem of a handful of large rice millers controlling the marketing and pricing of locally produced rice during the inter-seasonal months between end of the yala season harvest and the beginning of the maha season harvest. The overreaction is also by the government to address rice shortage and price increase by enforcing price controls and allowing rice imports.
For the present NPP government, unlike its recent predecessors, there is no evidence of there being vested interests to be served or having economic IOUs to anyone. On the other hand, every government this century – whether governments of the Rajapaksas by the Rajapaksas for the Rajapaksas, or the Sirisena-Ranil misadventure, or the Ranil-Rajapaksa caretaker regime – have been notorious for safeguarding vested interests and doling out IOUs. Or mostly IOUs in the case of the Rajapaksas.
As well, the NPP government notwithstanding its ideological prehistory is turning out to be the most practical government that this country has seen in a long time. By being practical in governing – I mean a governing approach to achieve results through actions based on evidence and information. Specific to the rice situation, Sri Lanka has gone through both the public distribution system and the private marketing system, and neither approach has by itself always produced the desired results.
Being practical in this instance would mean leveraging what works and under-using what does not. It also means that the government must rapidly work towards establishing a comprehensive database covering the rice milling industry, as well as a marketing information system for the rice sector at all levels. Agricultural Economists and Professionals have been calling for this for some time and it is a task that requires the government’s immediate attention.
(To be continued)
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