Flour companies in attempt to increase paddy prices

Wednesday, 14 March 2012 00:05 - - {{hitsCtrl.values.hits}}

Flour producing companies are attempting to increase the price of paddy so wheat flour products will become more popular, charge Government sources.

They point out that the strategy adopted by these companies is to mislead farmers and raise the price of paddy to keep the consumption level of paddy at a lower level. When the price of rice goes up, people tend to eat more flour and the profit margin of flour producing companies goes up.

“The Government provides a huge fertiliser subsidy and farmers can buy a 50kg fertiliser bag for Rs. 350. As a result, the production of cost of paddy has dropped considerably. The Treasury has released Rs. 2,000 million to all Government agents to purchase paddy in their districts. For the same purpose Rs. 1,000 million has been granted to the Paddy Marketing Board, a Government entity. In addition to this State banks, such as People’s Bank and Bank of Ceylon, have also got involved in paddy purchasing business,” sources said in a statement.

The harvesting season of Polonnaruwa District, which contributes to a considerable share of the paddy production of the country, has just commenced. Accordingly, there is no surplus production yet in the market which could disturb the ongoing process of paddy purchase by the Government.

The sources insist that this is yet another cunning business strategy of a few companies to raise the price of paddy in order to keep rice consumption at a low level to ensure that their profit margins are high. The market analysts are of the view that there is no real necessity to raise paddy prices.