Business Letters

Overcoming the coconut industry crisis

With reference to the above article by Denzil Aponso in the Daily News on January 1, I would like to point out following observations as the said story was a one sided affair.

1. "Measures enforced to reduce the price of fresh nuts" - This statement is factually false as the measures taken in November was not to reduce the price of fresh nuts but to put a stop to the escalation of prices further.
Anyone with common sense would realize that if the said measures (Eg: allow importation of 30,000 MT of Copra and duty free import of coconut oil) were not taken then the retail price of coconuts would have touched Rs. 50.00 per nut or more during November/December period and would have put a complete stop to the kernel products manufacturing/exporting industries and the consumers would have been affected very badly during the festive period.

2. The writer deliberates that the shortage was not due to land fragmentation over the years, then one would ask the question if 20,000 hectares of coconut land lost due to fragmentation during the past 20 years were all barren land?

3. The Past President of the Coconut Growers' Association had admitted they had neglected the estates due to bad management practices over the years and could not reap the full benefits from the good prices prevailed.

There is no doubt that the prevailing price of coconut historically was the highest and still if the grower is not happy with the prices and if still he cannot afford to apply fertiliser to his cultivations and maintain the estates one cannot fathom the reason behind it but can only say then please handover the land to someone who can do it better.

4. The writer also had challenged the CDA data on coconut prices and laments the grower is getting only Rs. 15-17 per nut.

I wonder why then they are not participating at the CDA coconut auctions which are now held in Kuliyapitiya and Matara as well, where average price sold during November/December was over Rs. 20.00 per nut.

If not they should have supplied the coconuts to the CDA collection points as CDA paid a price of Rs. 22.00 per nut to the suppliers till December as a relief to the consumer.

5. Another point on which Mr. Aponso had a doubt was the domestic oil production in 2007. As per CDA data it is over 70,000 MT compared to 30,000 Mt in 2006.

This is the reason for the coconut price escalation in 2007 to Rs. 30-35 as the local production was not sufficient to meet the domestic oil industry requirements and as the total requirement was over 3.6 bn. coconuts and we produced less than 2.9 bn. coconuts in 2007.

6. DC industry had earned over Rs. 5 bn. worth of foreign exchange to the country during January to October 2007.

Is there any other kernel product which can bring in this much of foreign exchange to the country?

Nalin Jayasinghe, President - Coconut Products, Traders' Association 2004-2007

Increase in bread price

As a result of the increase of the price of wheat flour twice by the Prima Company in 2006 within a month by Rs. 3 and Rs. 4 per kilo respectively the price of bread and flour based items was increased. This company again increased the price last year on four occasions by Rs. 5, Rs. 4, Rs. 13 and Rs. 9 per kilo.

Wheat flour is a product under the price supervision of the Consumer Affairs Authority. However the above increase had been done on four occasions without CAA approval.

The company's arbitrary decision to increase prices constitute an act of cheating the consumer. It has since been observed that due to introduction of Section 77 to the Consumer Affairs Authority Act No. 9 of 2003 the CAA is unable to take legal action against the company for the price hikes done without its approval and it is proposed to have a new Act removing this section.

This matter should be expedited. It is most surprising that the CAA waited for a considerable time to realise the flaw in the law.

It is true that there is a wheat flour crisis in the world market due to prevailing adverse climatic conditions in wheat producing countries resulting in a price increase but the question is whether the last two increases by the company are as reasonable as compared with such increase.

Yet as this item has a direct impact on the Cost of Living, the Government should consider granting some relief to the poorer sections of the population at least till such time Section 77 of the Consumer Affairs Act is removed to put to an end to the monopoly in wheat flour imports held by the above company.

Bakeries have increased the price of ordinary bread and sell at Rs. 35 and Rs. 37 per loaf.

Excepting the reputed bakeries many other bakeries are selling underweight bread. Appropriate action should be taken against errant bakery owners for selling underweight bread.

I trust the above matters will receive due consideration of the Minister of Trade.

Marketing Development, Co-operatives and Consumer Affairs and authorities.

H.W. Goonesekera, Panadura

Exhorbitant parking fees at Liberty Plaza

I Recently went to Liberty Plaza shopping complex for shopping. I parked my car in their car park and returned after one and a half hours after completing my shopping. To my horror, the parking fee for the time period was Rs. 80.

I was told that they charge Rs. 40 per hour. This is daylight robbery and will discourage people from visiting the Plaza for shopping. Ultimately the people who suffer will be the poor shopkeepers and the snack bars, if the people boycott the mall.

I suggest to the management that they charge Rs. 40 for the first hour and charge at the rate of Rs. 20 for the subsequent hours, which is very reasonable by the visitors as well as by the shop owners.

They should not charge any parking fee at all, if they want to attract more shoppers to this place. Here is a typical case of business practice.

P.V. RANJAN, Dehiwela

Shareholders' rights and Central Bank

The Central Bank published corporate governance for licensed Commercial Banks without due and proper consultation with the Commercial Banks.

As a shareholder one wonders the intention, as the prudent act should have been for the Central Bank of Sri Lanka in the first instance to insist the Commercial Banks to call an emergency general meeting and present draft corporate governance for discussion and incorporate valuable suggestions by the shareholders for onward transmission to the Monetary Board.

Thereafter, the draft paper of such an important magnitude should have been a subject to public debate.

The directions are purported to have been issued by the Monetary Board of the Central Bank of Sri Lanka under Section 46(1) of the Banking Act No. 30 of 1988 as amended.

The said Section 46(1) specifies with utmost clarity the areas that the Monetary Board could issue directions.

Nowhere within the ambit of the said section it has empowered the Monetary Board to issue direction on the board's composition. The election of the Board of Directors is an exclusive preserve of the shareholder.

The said direction is not only a flagrant violation of the shareholders' rights and also in breach of a statute viz. Companies Act. Corporate governance for the licensed Commercial Banks do not rest on the composition if the fundamental requirements are fulfilled.

On the contrary, denial of the continuity of a board member may impair the long term vision of the bank and the very purpose that a good corporate governance must seek to achieve.

Therefore we urge CBSL to amend the direction issued on the composition of the directors of the Commercial Banks. Further, only a cursory glance would suffice to observe the failure to address more important issues to protect and guide the economic and the financial stability of the country more.

J.G.S. DE SILVA, Colombo