First paan, now rice going beyond the common man

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 rice prices.

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 harvest.

However, Agriculture Department officials predicted that the crop failure due to bad weather might not have a significant impact on farmers.

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 their crops.

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.

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 market.

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 rice.

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 country.

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," Gunawardena said.

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.

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 region.

Several Asian countries have decided to stop exporting rice in order to maintain a buffer stock to be used by domestic consumers.

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 daily staple.