On Wednesday vegetable shops in the capital were mostly empty as protest by traders continued in the capital Colombo.

At one shop where there was a large pile of beans in a Colombo suburb the shopkeeper said a regular supplier had 'smuggled' in a load of beans and begged him to buy the entire quantity as the supplier feared the police if he tried to distribute to all the shops.

One old timer said the events reminded him of the 1970s when they used to smuggle rice inside vegetable sacks, because the state prohibited the transport of rice under a highly interventionist socialist administration.

"We used to bring rice into the Pettah vegetable market," he said nostalgically. "A sack is first filled with a layer of vegetables, then a bag of rice is placed in the middle.

"Then it is covered with more vegetables. So when the truck is stopped and even if the sacks are poked checked, only vegetables are found."

Sri Lanka's internal trade minister Johnston Fernando insists that the 'law' will be implemented amid protest from at least one lawmaker from Sri Lanka's ruling coalition representing a farming district.

Burnt Crates

Farmers burnt crates and protestors were tear-gassed by police Tuesday in Dambulla, a key fresh produce trade hub in the island's central region. There were also protests in Colombo the capital, Bandarawela in the hill country and Ranna in the South, media reports said.

The crate law comes shortly after citizens and foreigners' property rights were violated by an expropriation law which critics said was deeply flawed.

Sri Lanka is going back to expropriation when countries like China and Vietnam are bringing sweeping new laws to restore property rights taken from citizens under misguided Marxist principles.

Minister Johnston however has suggested that crates be 'rented' to farmers after being bought from plastic vendors with tax payer money.

It is not yet known what crate contract will cost the tax payer or whether the crates will be bought from one or multiple suppliers and how the 'rents' will be collected and the costs of the collection mechanism itself.

Multi-Faceted

Lawmaker Harsha de Silva, an economist, representing the island's main opposition who has been closely involved with the Dambulla market to improve information asymmetries for several years says problem is complex.

"I have been studying the agriculture supply chain since about 2003, particularly looking at the smallholders," de Silva said. "The problems are multi-faceted."

On one side there was an information asymmetry about what produce is needed at what time and giving better information for farmers to time their harvests.

Another was that there was a 'quality penalty' suffered by farmers due to the lack of standards, and a lack of incentive to produce higher quality goods.

De Silva says in theory the use of crates is a good idea as it will reduce post harvest losses and there is broad agreement among wholesalers about need to move away from sacks, but small farmers in particular face practical problems, which need to be solved.

"While wholesalers can possibly afford crates the bigger problem is at the 'first mile'," de Silva says.

"That is why the farmers and small collectors are rioting."

Collapsible Crate

Small farmers put produce in gunny bags and transport them through various means including bicycles, sometimes buses and then onto trucks. Small farmers and collectors then tie the bags up and take them back.

"They have suggested a collapsible crate," de Silva said.

Collapsible crates would also allow trucks returning from cities to return with a payload, reducing the total transport cost. Before reefer trucks became commonplace lorries transporting fish used to carry empty wooden crates on their roofs on the return journey.

In a free country, policies and laws have to be devised following consultation with citizens.

Especially in economic matters which are not life and death issues and involving business, solutions should be developed and also implemented by the industry with expert guidance from state agencies where needed.

De Silva says there are some vegetables that do not need plastic crates, for example like pumpkins.

If the crate law is strictly implemented he says farmers may move to grow products that do not require crates and that will disrupt supply causing excess production and price collapses which will backfire ultimately on farmers.

If that happens consumers may also have to face high prices for other products.

People in the supply chain say more the produce taken in one truck in gunny bags need more than one truck when vegetables are placed in crates.

"I heard the traders saying they cannot load the lorries since plastic crates consume more space since they are used to overloading the lorries," Sri Lanka's Daily Mirror newspaper quoted minister Johnson as saying, perhaps indicating that he had got to know of the problem recently.

If the existing fleet cannot transport the same amount of vegetables, the fleet has to be expanded, which cannot be done overnight. The main markets will also need to accommodate more trucks.

Meanwhile some vegetables like snake gourd, which are long are do not fit in the crates, the industry complains.

Ad hoc lawmaking

The 'law' was introduced some time ago and the trade was given time to comply, but the reaction from the people and authorities suggests there was not enough consultation or consideration given to the actual market forces at work, analysts say.

There is no information to suggest that a committee of trader organizations or farmer organizers and state or expert representation were tasked with improving the supply chain and agreement sought from the industry on an action plan with timelines.

Analysts say a task force which should implement such a change should be formed with industry representation themselves so that they can have 'ownership' of the change as is usual in a democratic nation.

Advice could also be sought from large retail chains which are using crates for transport and their experience shared with trade associations.

Minister Johnston had apparently agreed to some relaxation to goods transported by farmers in three wheeled vehicles.

Recently the authorities also tried to create a third state-managed pension fund out of deductions from private workers salaries, a move which was abandoned after one protesting worker was killed.

This was despite the existence of a standing national labour advisory council which was kept completely in the dark until the last minute.

The tourist industry was also rocked with high visa fees announced without consultation, but which have now been amended following protests.

It is not known why the state behaves in this fashion towards citizens.

"Sri Lanka's citizens need to be treated more humanely by authorities," de Silva said.

Lands minister Janaka Bandara Tennakoon has also protested against the arrest of lorry drivers by police saying they should not be treated like criminals.