ECONOMYNEXT – Sri Lanka’s Consumer Affairs Authority, the main price control agency in the island has set new ceiling prices for rice as the country’s main Maha harvest is coming in, amid curfews imposed to stop the spread of Coronavirus.
The agency has set ceiling prices of 125 rupees per kilogram for Keeri Samba, 90 rupees for red or standard samba (steamed), 90 rupees for red white/samba and 90 rupees for red/white boiled nadu.
White and red raw rice had been priced at 85 rupees a kilogram.
According to central bank data Samba was around 97 rupees, raw rice was around 91.80 and Nadu 95 rupees at the Marandagamulla wholesale market.
The price controls will cause working capital losses for rice wholesalers and retailers elsewhere that have bought rice at the prices and are trying to feed the people and hit their cashflows.
But large millers who had bought paddy (rough rice) from farmers at around 50 rupees or lower will not be affected.
The price controls come as banks are giving credit relief and the central bank is printing money, undermining the stability of the rupee to give working capital loans at 4 percent to businesses.
Rice traders had warned that rice may be in short supply and prices spike in April because mills close for the New Year season after their work was already disrupted due to curfews.
Sri Lanka on Friday declared rice milling an essential service.
The price control agency set floor prices of 100 rupees for tinned fish and another unrealistic price for lentils making them disappear from shop shelves, though first year economic students are taught that price controls will drive goods underground and create an unofficial market.
The agency is now arresting ‘black marketers’.
Sri Lanka’s rice prices were much higher than global rice of better palate and fragrance but with a steep collapse of the rupee from 2015 to 2020 from around 130 to 195 rupees, rice prices are now nearer international prices. (Colombo/Apr10/2020)