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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 109

Buyers and sellers violate FSC system in Rajanganaya area

Sunil C. Perera - Reporting from Colombo

Colombo, 23 January, ( A recent survey on forward Sales Contract system for Rice marketing revels over 30 percent of buyers and 45 percent of sellers violated the contract.

A team of scientists from the University of Ruhuna , Ministry of Agriculture and the Mahaweli Development have completed their survey mission on Forward Sales Contract system and said drastic price fluctuations occur in the rice market between the harvesting season and the off season and creates a serious problem of marketing farmers’ paddy production at a stable and reasonable price.

As a measure to solve these problems, the Central Bank of Sri Lanka has introduced a Forward Sales Contract System [FSC] in 1999, named Govi Sahanaya.

This contract system is an agreement made between a buyer and a farmer to sell agricultural commodities on a certain future date at a predetermined price. In addition to the farmer and the buyer, a facilitator [usually a bank] also participates with this system.

During this study at the Rajanganaya irrigation project, consists a number of farmers who have a wider knowledge on FSC said of their second highest preference, out of three main opportunities of rice marketing.

The researchers said most of the farmers such as 80 percent have a positive attitude towards the FSC system .There was an increasing trend of farmer numbers engaging in FSC system from 2004/05 Maha to 2005 Yala season.

Farmers prefer this system due to good quality seed paddy, straight fertilizer and support services rendered by a private Bank in addition to the availability of reasonable price for the farmer production.

The researches namely P.G.M.N.Peramuna,A.P.R.Jayasingha and M.Wijeratne highlighted the most critical reason for not consenting with this system is weaknesses of a private Bank’s facilitating activities. The major problems in implementing this system are violating the contract by the buyers by 33 % as well as the farmers by 45% .But still 70 percent of farmers are willing to engage in this system again.

With regard to the bank’s procedure, farmers expect the bank to make the procedure easier and grant the credit in correct time, while for the improvement of the FSC system , 83% farmers expect to have government involvement to some extent.

Farmers expect to improve awareness and build confidence on FSC system by having freedom to engage individually, the researches said.

- Asian Tribune -

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