Sri Lanka millers given subsidized credit to buy paddy at Rs50 a kilo

Paddy farmers are protected in Sri Lanka and provided free inputs including water and fertilizer. Source: FAO Photo.

ECONOMYNEXT- The Sri Lankan government will provide subsidised loans to millers to buy paddy from farmers at 50 rupees a kilogramme, cabinet spokesman Minister Bandula Gunewardene said.

Millers have been directed to buy paddy with low moisture levels at 50 rupees a kilogramme and grain with higher moisture at 45 rupees a kilogramme, Gunewardene said..

Earlier, ‘nadu’ rice had a minimum farmgate price of 38 rupees while ‘samba’ rice was bought at 42 rupees and ‘keeri samba’ at 51 rupees.

Harvests from Sri Lanka’s main agriculture season Maha will hit the market next month.

Gunawardane said the cabinet has approved funding to be distributed among small, medium and large scale millers at a subsidised interest rate of 8 percent to buy paddy from farmers at the minimum price.

Gunawardane claimed the estimated 3.0 million tonne paddy harvest in the current Maha cultivation season was worth a billion US dollars.

However Sri Lanka’s rice cannot be exported due to its smell and taste which is different to standard grades and prices collapse when there are bumper harvests.

Sri Lanka’s rice prices are supported by import taxes on substitutes like potatoes and wheat.

However the current administration cut the tax on wheat as rice prices went up in the last few weeks.

Rice farmers also have restrictions on their foods.





Research at the semi-government independent think tank Institute of Policy Studies (IPS) has shown that Sri Lankan consumers could enjoy rice prices 30 percent below the protected levels if imports are allowed without tax.

IPS research points to the need for the government to maximize land usage by focusing on the most productive lands for paddy and releasing the remainder for more productive agriculture crops or industries.

Recently, a nationwide survey conducted by the Advocata Institute, an independent think tank, showed that 57 percent of Sri Lankans are not willing to pay high prices for their food to protect local producers. (Colombo/Jan23/2020)

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