Sri Lanka is once again grappling with a rice shortage, an issue that hit the country from time to time   in the past. Rice is the staple of Sri Lanka, and any issue involving its production and supply has a bearing on the entire populace. The successive Governments invested in the development of irrigation sector, and it eventually resulted in the country becoming self-sufficient in rice requirement.

For centuries, rice has been the heartbeat of Sri Lankan agriculture, with over one million hectares of paddy fields cultivated annually, accounting for 37 percent of the country’s land use.

However, the problem now lies with distribution with a coterie of leading millers who enjoy an oligopoly in the market supply. They have been able to enjoy this oligopoly for years, if not decades since the successive Governments did not have any mechanism for market intervention in case of dubious attempt to manipulate supply for undue profits.

In the past, the Governments did not pay sufficient attention to overcome the challenge of efficiently storing its abundant food grain harvests.  The Paddy Marketing Board which once did the job now remains defunct virtually.

Paddy storage

The private sector mill owners seized the market opportunity and established the state-of-the-art grain silos for paddy storage.  The market share is with the private sector which determines prices. These mill owners, with an oligopoly, is in vehement opposition to any intervention.

Sri Lanka’s recurring rice shortage during December and January has become a predictable yet pressing issue. This challenge is rooted in the country’s reliance on its two main paddy cultivation seasons, Maha and Yala, alongside structural inefficiencies in production, distribution, and storage systems. Understanding the statistical trends and underlying causes provides clarity on the situation and highlights actionable solutions.

In Sri Lanka, rice is produced in two seasons named Yala and Maha.  During the Maha season between October and March, 65-70 percent of rice is produced and the rest during the Yala period between April and August.

Normally, a shortage of supply is experienced during the months of October, November, December and January every year. The government of the day is always hamstrung in the control of prices because it does not have any state-of-the-art grain silos to maintain buffer stocks. Small, medium scale mill owners do not have capacity to compete with leading millers who wield their power.

The new Government led by President Anura Kumara Dissanayake has now redoubled its efforts to address the issue once and for all. It is an issue with political ramification and therefore the Government is under compulsion to address it. In the short run, it is in the process of importing rice to address shortage.  In the long run, it has tapped into the expertise and resources of the private sector, ensuring the efficient and cost- effective development of these critical storage facilities.

This   not only leverages the latest technologies and best practices but also fosters a sense of shared responsibility in safeguarding Sri Lanka’s food security.

If the country makes strides in this direction, the benefits will be felt across the agricultural value chain, from farmers to consumers. This strategic investment in storage infrastructure not only secures the country’s food supply but also positions it as a   leader in sustainable and efficient food management.

Market economy

In a free market economy, the state intervention is not the lasting solution. The current problem is not a phenomenon created by the new Government. In fact, the NPP Government inherited it from the misdeeds of the past Governments. Yet, the onus is on the new government to address it.  The importation of rice is also not feasible every time because it can impact negatively on the farming communities. Rice farming is ingrained in Sri Lankan culture.

President Anura Kumara Dissanayake has directed rice traders to sell Nadu rice to consumers at a wholesale price of Rs. 225 per kilo and a retail price of Rs. 230 per kilo, wholesale price of a kilo of white rice: Rs. 215, Retail price: Rs. 220, retail price of a kilo of imported Nadu rice: Rs. 220, wholesale price of a kilo of Samba rice: Rs. 235, Retail price: Rs. 240 and wholesale price of a kilo of Keeri Samba: Rs. 255, Retail price: Rs. 260.

He also instructed the officials of Consumer Affairs Authority (CAA) to closely monitor the situation over the next ten days and strictly enforce the law against rice mill owners who fail in compliance with his order.

Short-term solution

He has taken this step as a short-term solution. Prices have to be controlled and constrained by the market forces only. Supply and demand will determine prices in main. What the Government can do is to intervene as and when it is necessary. For that purpose, the government needs to maintain a buffer stock of rice. It is in fact an example followed by the countries such as India.

Another practical solution is to increase productivity in rice farming. Currently, around 80 bushels of paddy is harvested one acre cultivated. If high yielding paddy varieties are developed and cultivated, harvest can be increased. Excess supply can be used for alcohol and animal feed production.

In Sri Lanka, paddy fields have long been cultivated under the continuous flooding system, consuming around 2,500 liters of water to produce just 1 kilogram of rice, placing immense pressure on water resources, especially during periods of drought. Data from the project shows that through AWD, water usage is reduced by up to 27%. And increased cropping intensity from 1.2 to 2.1 which means farmers can now cultivate their land more frequently, leading to more harvests, more income and food security, according to the UNDP.

Improvement of both market forces and production remains the lasting solution.  Mill owners should also be protected in the whole process since they have contributed immensely in the quality development of rice and value addition.

Published Date: December 11, 2024