By Mandana Ismail Abeywickrema
Any sort of relief to the masses seem a
distant illusion as the shocking price
increases of consumer goods continue to soar
with the focus once again being diverted to
The shocking extent of the increase in
rice prices was witnessed last week when a
kilo of rice saw an increase of Rs. 10
within a span of seven days in most areas.
The increase was due to a rice shortage
in the local market owing to the destruction
of paddy due to the heavy rains experienced
in the paddy cultivating areas.
According to officials from the
Agriculture Department, torrential rains
during the Maha harvest was likely to
lower the quantity and quality of rice and
keep prices high in the domestic market.
The Agriculture Department further said
that in some districts, around 50% of the
crop has been harvested while the remaining
50% was yet to be harvested.
Field officers have also reported to the
department that around seven percent of the
harvest in major paddy producing areas has
been destroyed by the rains.
The reduction of the harvest has dashed
any hope of seeing a decline in rice prices
in the local market. Prices were expected to
come down with the onset of the Maha
However, Agriculture Department officials
predicted that the crop failure due to bad
weather might not have a significant impact
Although farmers were in a position to
earn between Rs. 32 to 35 per kilo, a
quality drop in the yield already harvested
was inevitable since farmers have been
unable to find proper storage facilities for
Agriculture Minister Maithripala Sirisena
has said the increase in rice consumption, a
large amount of paddy being sold as animal
feed and the 4% drop in production recorded
(in the east) during the last harvest have
been identified as the reasons for the
shortage of rice experienced in the market.
Sirisena recently said that with the
imported rice making its way in to the
market and the rice from local farmers
entering the market, prices would be
stabilised within the next few weeks.
Addressing the rice issue
He also said that the government is to
pay local farmers Rs. 20 for a kilo of
nadu and Rs. 22 for a kilo of samba
during the next harvest.
Sirisena also said that the government
has drawn up a plan to address the ‘rice
issue’ on a long-term basis.
He said that there has been a 50% decline
in wheat flour consumption in the country,
which has in turn increased rice
consumption. Therefore, the government he
assured would take every possible step to
ensure the smooth supply of rice to the
market in future.
According to the Census and Statistics
Department, paddy production in the country
has recorded a decline of 4.1% due to
several reasons — hostilities in the east
and bad weather in some other parts of the
island in the third quarter of 2007.
The estimated total paddy production for
the 2007-2008 Maha season was
initially estimated at 2,068,000 mt.
Rice prices, which escalated to over Rs.
100 per kilo in January, started to decline
with the government permitting the
importation of a limited quota of rice.
Rice importers alleged that the state
control of rice imports prevented cheaper
foreign rice from stabilising prices in the
Last November the government exempted the
Rs. 20 import duty on rice for a state firm
and permitted the importation of 75,000
metric tonnes of rice from India.
In January, President Mahinda Rajapakse
summoned the rice importers for a meeting to
resolve the issue. The importers informed
the President that the rice shortage was
created due to a decision by the government
to limit rice imports to the country in
order to pave the way for local farmers to
sell their produce at a higher price.
The importers blamed the government for
the shortage and in order to find an
immediate solution to the problem, the
President requested the relevant ministries
to make the necessary arrangements to import
The rice was expected to be sold through
the Co-operative system, but later large
stocks were allegedly found to be sold
through private wholesalers.
Allegations were made that 20,000 tonnes
of the rice imported through the state ended
up with private wholesalers.
However, the government’s decision to
import a limited amount of rice did not
reduce the rice prices as expected. The
recent rains destroying much of the paddy
land dashing any hope of receiving the
initially anticipated yield this season and
the growing dissension among the public over
the high rice prices have forced the
government to take some urgent measures to
arrest the situation.
The government in a bid to resolve the
impending rice shortage and a price hike in
the market, last week decided to allow the
private sector to import rice to the
Import duty removed
Further, the import duty of Rs. 20
slapped on rice, initially with the
intention of discouraging traders from
importing rice, was also removed to
encourage rice imports.
Consumer Affairs Minister Bandula
Gunawardena said that with the government’s
decision to import rice, the shortage in the
market would be resolved and prices too
would stabilise as a result.
"Anyone can now import rice and sell at a
reasonable price as the Rs. 20 duty imposed
on rice has been removed. Rice will no
longer be imported through the government,"
He also said that now traders would be
forced to put out the rice stocks they have
been holding on to before the market
receives rice in large quantities.
No quick fix
However, Sri Lanka’s rice issue would not
see an end any time soon due to the rice
shortage faced by other countries in the
Several Asian countries have decided to
stop exporting rice in order to maintain a
buffer stock to be used by domestic
The Philippines, which imported close to
33,000 mt of rice per day is now faced with
a rice shortage due to the decision of
countries like Vietnam and Cambodia to limit
rice exports. India too has announced it
would limit rice exports in order to create
a buffer stock.
According to Gunawardena, Sri Lanka plans
to hold discussions with India, Pakistan and
Myanmar to arrive at an arrangement to
create a buffer stock for Sri Lanka.
"I hope to travel to India, Pakistan and
Myanmar to discuss this issue on a
government to government level and request
their help to create a buffer stock in
rice," the Minister said.
While the government shops around for
rice and till the imported rice reaches the
market, the consumers would have no option
but to fork out exorbitant prices for their
"Bread will go to Rs. 100 a loaf"
Consumer Affairs Minister Bandula
Gunawardena says that wheat flour prices
would continue to increase and the
government had no control over it.
Gunawardena also said that as
predicted by him on a previous occasion,
no one would be able to prevent a loaf
of bread from rising to Rs. 100.
He stated that a loaf of bread might
soon increase to Rs. 100.
Previously addressing a public
gathering he said that at the rate the
price of wheat flour was rising not even
Vaima, the son of Sakka could stop a
loaf of bread rising to Rs. 100 in Sri
Lanka in the future.
Gunawardena said the only answer to
the problem was to reduce wheat flour
consumption by resorting to consuming
He said that due to the global food
crisis wheat flour prices would continue
According to Gunawardena, it was the
people from the estate sector who
consumed a large amount of wheat flour
and in order to encourage them to
consume rice instead, the government was
providing them rice at Rs. 10 lesser
than the market price.
Gunawardena also said that the
government was trying to reduce milk
powder prices as well.
"Sathosa has currently imported milk
powder that is sold at Rs. 255 (a 400g
pack). By the Sinhala New Year, we plan
to import milk powder from Australia,
which will be sold at Rs. 245," he said.
He also said that although chicken
producers have requested a price hike,
the government has not permitted it.
"The government has permitted a
maximum price of Rs. 280 per kilo of
chicken. However, in most places,
chicken is sold at less than Rs. 280,"
Gunawardena said that the government
was now looking at methods to reduce the
price of coconuts and coconut oil.
He also said that consumers should be
educated on utilising money prudently.
Citing an example he said that if a
person has two vegetable rottis,
it would cost him Rs. 50 while a kilo of
rice, which could be consumed by six or
seven persons would cost between Rs. 60
and 70. The amount spent on each person
would then be Rs. 10 and if a pol
sambol were added to it, it would
cost each person around Rs. 15.
Drastic increase in prices
Rice prices have seen a drastic
increase within one year and in some
instances recorded an increase of over
According to the Census and
Statistics Department, rice prices have
seen a drastic increase from March 2007
Red raw rice, which was Rs. 42.74 in
March 2007, has increased to Rs. 67.62
by March 2008. This is a 58.2% increase.
White raw rice, which was Rs. 34.29
in 2007, is now Rs. 60.29 (an increase
Nadu, which was Rs.36.86, is now
Rs. 64.28 (increase of 74.4%).
Samba, which was priced at Rs. 42.46,
has increased to Rs. 77.30 (increase of