Rs. 1 bn embezzled in paddy purchase and rice milling

Buddhika Samaraweera

During a programme to purchase paddy from farmers and produce rice to be sold through Lanka Sathosa from 2019 to 2021, nearly Rs. 1 billion was misappropriated, while there is presently a risk of the misappropriation of another Rs. 500 million, The Morning learnt.

The programme, which involves District Secretaries (DSs) and small and medium-scale rice millers in the 2019-2020 Maha, 2020 Yala, 2020-2021 Maha, and 2021 Yala cultivation seasons, was implemented by the Ministry of Finance, Economy, and Policy Development (currently the Ministry of Finance, Economic Stabilisation, and National Policies).

Against the backdrop of the Government importing rice since the end of last year (2021), stocks of paddy were purchased under this programme, using which about 5,800 metric tonnes (MT) of rice can be produced and is still stored in the warehouses of rice millers. It is possible to sell a kilogram of such rice at a price of about Rs. 100 through the Sathosa. However, The Morning learnt that such rice is being sold to the private sector at a price of about Rs. 200 per kg, through which the rice millers in question are making a huge profit.

The Presidential Secretariat had issued the circular number PS/EPC/06/2020 related to the purchase of paddy from farmers through District Secretaries and small- and medium-scale rice millers during the 2019-2020 Maha season. The Circular No. DFD/Yala/2020/01 related to the purchase of paddy during the 2020 Yala season had been issued by then-Secretary to the Finance Ministry and Treasury S.R. Attygalle on 31 July 2020. In addition, circulars related to the purchase of paddy under this programme during the 2020-2021 Maha and 2021 Yala seasons had been issued by the then-Secretary to the Finance Ministry and Treasury.

A reply from the Finance, Economic Stabilisation, and National Policies Ministry to a right to information request made by The Morning seeking information related to this programme revealed that paddy has been purchased from the districts of Ampara, Anuradhapura, Badulla, Hambantota, Kurunegala, Matale, Monaragala, Polonnaruwa, Puttalam, Ratnapura, Trincomalee, and Vavuniya during the said four seasons. Under the said programme, a total of 40,511 MT of paddy has been purchased – 23,998 MT purchased in the 2019-2020 Maha season, including 1,256 MT from Ampara, 2,461 MT from Anuradhapura, 17 MT from Badulla, 23 MT from Hambantota, 2,875 MT from Kurunegala, 10 MT from Matale, 493 MT from Monaragala, 11,239 MT from Polonnaruwa, 3,351 MT from Puttalam, 290 MT from Ratnapura, 1,773 MT from Trincomalee, and 210 MT from Vavuniya; 5,344 MT in the 2020 Yala season, including 157 MT from Kurunegala, 2,989 MT from Polonnaruwa, 2,168 MT from Puttalam, and 30 MT from Ratnapura; 6,001 MT in the 2020-2021 Maha season, including 819 MT from Anuradhapura, 26 MT from Kurunegala, 3,164 MT from Polonnaruwa, and 1,992 MT from Puttalam; and 5,168 MT in the 2021 Yala season, including 26 MT from Anuradhapura, 3,466 MT from Polonnaruwa, 1,549 MT from Puttalam, and 127 MT from Ratnapura.

Under this programme, during the 2019-2020 Maha and 2020 Yala seasons, Keeri Samba, Samba, and Nadu paddy have been purchased at Rs. 50 each per kilogram, while Keeri Samba and Samba paddy have been purchased at Rs. 52 per kilogram, and Nadu at Rs. 50 per kilogram during the 2020-2021 Maha season.

During the 2021 Yala season, Keeri Samba and Samba paddy had not been purchased, and Nadu was purchased at a price of Rs. 55 per kilogram. Several types of rice produced from the paddy purchased under this programme such as Keeri Samba, Samba Parboiled, Samba Raw, Nadu Parboiled, Red Raw, and White Raw have been sold at prices ranging from Rs. 92 to Rs. 115 per kilogram.

In response to a query by The Morning, regarding the amount of rice that can be produced using the total amount of paddy purchased under this programme, the Ministry stated that about 25,700 MT of rice can be produced out of which about 20,000 MT have already been converted into rice. In addition, it stated that sufficient paddy to manufacture 5,800 MT of rice is currently stored in the warehouses belonging to the relevant rice mill owners under the supervision of the relevant District Secretaries.

This programme is being implemented with the Finance Ministry granting the relevant financial provisions to the District Secretaries. After the small- and medium-scale rice mill owners obtained paddy from the farmers, the District Secretariats credited the relevant sums of money to the respective farmers’ bank accounts. The rice mill owners then convert the paddy into rice, sell it to the Sathosa, and settle the relevant payment to the District Secretaries, after which the latter credits the money to the Treasury.

Meanwhile, United Rice Producers’ Association President Kusumitha Mudith Perera, speaking to The Morning, stated that nearly Rs. 1 billion has been embezzled in the above programme, and that there is a possibility of another amount of around Rs. 500 million being embezzled. He claimed that instead of converting paddy purchased under this programme into rice and selling it to Sathosa, the rice millers in question are selling it to the private sector at high prices, thereby making huge profits. Through this, he said, not only will the Government lose that money, but consumers will also lose the opportunity to purchase rice at a fair price.

“These mill owners have so far produced nearly 20,000 MT of rice from paddy purchased under this programme. The purpose of this programme is to provide rice to customers at fair prices through the Sathosa. However, we can prove with evidence that out of the 20,000 MT of rice produced so far, only 10,000 MT have been sold to Sathosa by these mill owners. They have sold the remaining 10,000 MT to the private sector,” he claimed.

Perera further said that although rice produced from paddy purchased under this programme should be sold at prices between Rs. 92 and Rs. 115, the respective mill owners have sold rice to the private sector at a price of nearly Rs. 200 per kg. He said that the fact that these mill owners have sold rice at higher prices is proven as there was no rice to be purchased at prices between Rs. 92 and Rs. 115 in the past few months. However, he also said that the rice mill owners have settled the payments to the District Secretaries as per the prices of rice announced by the Government.

“What has happened here is that these mill owners sell a kilogram of rice that can be sold for Rs. 100 to the private sector for Rs. 200. However, they only settle the amount of Rs. 100 per kilogram to the District Secretaries. Accordingly, the huge profit they earn does not go to the Treasury. Also, the price of rice is going up in the market, so consumers cannot purchase rice at a fair price. If we imagine that they sold 10,000 MT of rice in this way with a profit of Rs. 100 per kilogram, the profit they have earned is close to Rs. 1 billion. They will be selling the rice currently in the warehouses in the same way. Through that, they will earn about another Rs. 500 million,” he added.

Speaking further, Perera said that the relevant institutions should explain to the people as to why the Government is spending large sums of money for the continuous importation of rice, while leaving stocks of paddy, enough to produce about 5,800 MT of rice, that were purchased two years ago, languishing in warehouses. He said that the paddy purchased under this programme that is currently left in the warehouses should be turned into rice and that the rice should be sold through Sathosa at the prices set by the Government at that time. Apart from that, he said that action should be taken against the respective mill owners regarding the fraud committed so far.

When Polonnaruwa District Secretary, W. Dharmasiri was contacted by The Morning to inquire about this, he claimed that 95% of the rice produced from the paddy bought under the programme was sold to the Sathosa. However, he said that the amount of rice that has been sold is lower than the amount of paddy that has been purchased. Therefore, he said that the relevant rice mill owners have been instructed to settle the payments with regard to the remaining amount of rice to the District Secretaries, adding that legal action will be initiated against them if they do not comply with the relevant instructions.

The Agriculture Ministry recently stated that due to the further importation of rice, certain rice mill owners may buy paddy from farmers at cheaper prices. In order to prevent the farmers from not getting a fair price for the paddy, the Ministry had planned to suspend the importation of rice until December. A Cabinet proposal in this regard had been submitted by Agriculture Minister Mahinda Amaraweera in August. However, the relevant institutions have not yet taken the necessary steps to implement the said proposal. The Morning

Leave a Reply

Your email address will not be published.

%d bloggers like this: