ECONOMYNEXT – Sri Lanka will gradually reduce and halt imports of rice to maintain paddy (rough rice) prices amid complaints from farmers about lower than expected prices, Plantations Industries Minister Ramesh Pathirana said.
“Due to fears that there will be a reduction in food stocks we imported some rice in the past,” Minister Pathirana said referring to a discussion at the cabinet of ministers.
“We decided to progressively reduce it and halt imports.”
“We have got a reasonable harvest in Yala for season. We expect to receive fertilizer for the Maha season. Given that backdrop we do not think there will be a food scarcity in the country.”
Sri Lanka’s farmers are estimated to have grown 512,000 hectares of rice in the minor Yala cultivation season amid good rains and high paddy prices, which is a record.
However the yield at some farms may be lower than usual due to the use of organic fertilizer and not getting chemical fertilizer in time. As a result the harvest may not be a record.
Sri Lanka’s rice prices however are around double the previous year after the central bank printed money and the rupee collapsed from 182 to the 360 to the US dollar in a float failed by too low interest rates and a surrender requirement.
Though there is no shortage foods is not unaffordable to lower income segments with inflation outpacing the value of salaries.
Sri Lanka retail prices are now around 220 rupees which is higher than global prices.
Farmers were expecting around 120 rupees a kilogram after the state Paddy Marketing Board promised to buy paddy at the price.
“The farmer are complaining about the price,” Minister Pathirana said. “They are getting about 100 rupees per kilogram for paddy.
“They are expecting a higher price than that. If we continue to import from other countries they will not get a good price.”
Sri Lanka’s farmers do not grow internationally traded grades of rice unlike farmers in Pakistan and India. They have also been given years of import protection at the expense of the nutrition of the poorer sections of society.
After the currency collapse, farming costs shot up. This season tractor hire to prepare fields went up from around 12,000 rupees an acre in the last season to 22,000 to 24,000 rupees an acre with a steep rise in diesel prices.
Sri Lanka authorities promised farmers around 120 rupee a kilogram floor price through the state-run Paddy Marketing Board.
However the state agency has not been able to buy rice at all locations and the private sector is buying around 100 rupees, farmers have said.
The government is looking at boosting funds for the PMB, Minister Pathirana said.
“The Paddy Marketing Board PMB has asked for more credit from banks to buy rice. But there is a problem of credit limits at banks,” Minister Pathirana said.
“We will discuss this at the cabinet sub-committee on cost of living and find an early solution and solve the problems of farmers.”