Central Bank of Sri Lanka’s (C.B.S.L.’s) facilitation of a forward contract scheme (f.c.s.) for red onions for the Jaffna farmer has run into problems due to a steep decline in prices.
Farm gate prices which went up to Rs. 70 a kilo last year has since come down to Rs. 30-35, not enough for the farmer to make a profit, C.B.S.L. Assistant Governor W.M. Karunaratne, told The Sunday Leader on Thursday.
“Rs. 40 however is a fair price,” he said. Karunaratne said that the reason for the glut which has since depressed prices was because everybody started growing red onions after last year’s “record” prices.
Retail prices last year went up to Rs. 100-150 a kg. because of the scarcity of red onions in the market then, said Karunaratne.
Red onions are grown by smallholders, having an acreage of not more than ½ an acre, at times not more than 20 perches in Jaffna; said Karunaratne. These homesteads have their own inbuilt warehouses in their homes where they could store the onions till prices once more pick-up, without allowing the produce to get spoilt, he said.
The Jaffna farmer has got wise after this glut, and is now planning to grow other crops, other than red onions at the next cultivation to avoid a repetition of the same, said Karunaratne.
Red onion harvest is currently on in Jaffna.
Their produce reaches the Dambulla market where those are wholesaled at Rs. 50-60 a kg. A fcs is currently being worked out with a supermarket chain where prices are being negotiated. They will require about 500 metric tons a month, he said.
During the war the country got its red onions from Kalpitiya, Moneragala and from the East. Prior to the war, Jaffna was the island’s number one red onion producer followed by Trncomalee.
Atchuvely is one of the central areas in Jaffna where red onions are grown. “We are getting the farmers organized so that they could enhance their bargaining powers with the buyers,” said Karunaratne.
He said that he plans to extend this scheme to net in the banana farmers in Neerveli, another suburb of Jaffna, as well as the grape farmers in the peninsula.
Meanwhile a Japanese soft loan totalling Rs. 2.57 billion is available for funding women led micro enterprises in the North and East as well as in the adjacent districts of those areas, such as Puttalam and Anuradhapura.
Those funds which are channelled through C.B.S.L. are lent through participatory financial institutions such as commercial banks under a 100% refinance scheme at a 4.5% interest. The end user in turn is charged a 12% interest on his loan which would not exceed Rs. 50,000.
It’s a development banking activity, Karunaratne told this reporter
He said that in the Jaffna Peninsula alone some 3,070 groups have been uplifted under the scheme. Each group comprises some five to eight families. No collateral is asked.
In total, about half the aid quantum has already been disbursed with the aid line which began in 2008, closing on 2012. The tenure of the loan is three years.