• PM’s comments on food security were made looking at global situation
• State purchase price not only for rice but other locally-grown grains
• Clearing of nearly 600 containers stuck at port has commenced
• Some success in Yala harvest if Indian fertiliser arrives
• Govt. is not looking at reintroducing food rationing
• Govt. targeting large crop yield from next Maha season

By Asiri Fernando Sri Lanka can avert a major food shortage which is expected in the coming months, newly-appointed Minister of Trade, Commerce and Food Security Nalin Fernando told The Sunday Morning last week. Fernando expressed confidence that with the aid of the Indian Line of Credit (LOC), World Bank funding, and a $ 100 million allocation per month by the Treasury, Sri Lanka could manage to reduce the impact of the food shortage. He revealed that the Government was focused on reviving the agricultural industry, which had been crippled by the controversial fertiliser crisis brought on by a sudden policy change of the previous Government and shortages in fuel and supplies. With a target to reach a local agro produce surplus by the Maha crop season in 2023, Sri Lanka is once again relying on India to supply most of the fertiliser required for paddy and other crops. In an interview with The Sunday Morning, Minister Fernando said the Government was planning to import some essential foods, mainly rice and wheat flour, while the market would import other food items. He expressed a reluctance to reintroduce controversial price control measures and pointed out that the Government would provide a State purchase price not only for paddy, but also for other grains grown locally in the coming months. Following are excerpts of the interview: There is a fear among the public that there will be a food shortage in the next few months, Prime Minister Ranil Wickremesinghe has also predicted this. How long will the food shortage last? The Prime Minister made those comments taking into consideration the global situation, especially with the statement from the Food and Agriculture Organisation (FAO) about the risks to countries which are dependent on importing most of their food items. The FAO had focused on a need to increase food production, expand reserves, and better manage the food reserves of such countries. Our aim is to work towards not having a shortage of essential food items. We can manage the situation. I believe so. I believe we can sustain supply of almost all the essential food items. The price may be high for some food items, but we plan to ensure that essential foods will be available in the market without shortage. Sri Lanka is facing multiple crises; our economy is in a crisis, we have a shortage of dollars, and our food production has collapsed. We must increase local food production. The Government plans to encourage the forming of communities to focus on short-term crops (six- to eight-month yield) while ensuring the dollar is kept stable, which will allow us to import food. We passed a period of time where it looked like we lost control of our fiscal policies and could no longer contain the change in the forex rate. We have discussed with the Governor of the Central Bank and have secured a dollar allocation of $ 100 million per month. We have handed over a report on the requirement of essential food items which need to be imported and we have registered the importers and got the details, so I am confident that we can import adequate amounts of essential food to ensure there won’t be a shortage. I think we can manage to ensure a sustained 95% of essential food items. However, the public also has a role to play in mitigating this risk. There need to be changes in our thinking and food patterns. They should not hoard food and must assist each other. As the Trade Minister, I hope to assist the agriculture, fisheries, livestock, and poultry sectors to increase local production to their best capacity and reduce demand on imports as much as possible. We need to take a holistic approach to food production. Is there a forecast on the food shortage? If so, what are the essential foods that will be in short supply? Our main concern is the supply of wheat flour. We do not grow any locally. Sri Lanka consumes about 55,000 MT of wheat flour each month. Wheat flour is now a critical commodity in the world market as its two key producers, Russia and Ukraine, are in a conflict. Therefore, there is a shortage of supply and an increase in demand; no one knows when the conflict will come to an end. Many countries, especially those with cold climates, have begun to stockpile wheat flour and some have banned its export, which is also affecting its availability. This creates a challenge for Sri Lanka. We have been dependent on our neighbour, India, for wheat flour supply over the last few months. However, India has also licensed the export of wheat flour. However, India has assured us that it will continue to supply Sri Lanka with wheat flour, at least a part of what is required under the Indian LOC that has been made available to Sri Lanka. We have a similar agreement on sugar with India. Our Government coordinates with importers, suppliers, and diplomatic channels to ensure the necessary documentation is given quickly for the import of sugar. Sri Lanka used to be self-sufficient in vegetables, but due to the fertiliser issue, vegetable production has come down. The Government is taking steps to revive the growing of vegetables and fruits. They are short-term crops and therefore can be grown quickly if the relevant supplies and services are provided. The rains have arrived on time. Yesterday (1), Prime Minister Modi had again promised to help Sri Lanka with our fertiliser problem. If we are given the fertiliser, we can expect some success from the Yala crop season. Rice and flour are staples in the Sri Lankan diet. What is the quantity of rice stocks in storage and how long will they last? (Sri Lanka needs an average 2.4 million MT of rice each year for consumption). How much rice is planned to be imported and what is the status? The Paddy Marketing Board has close to 40,000 MT of paddy in storage. We believe that large-scale millers, medium-scale millers, and farmers also hold a significant stock of paddy which will be sufficient for four months. In addition, we have entered into agreements with India to import rice. For a three- to four-month period, we plan to import close to 800,000 MT of rice. According to our plan, we have begun to import stocks already. Depending on the impact of the food shortage, are there plans to introduce food rationing to manage the impact? Rationing was introduced earlier due to significant subsidies that were assigned. However, this Government is of the view that the availability of essential foods should be the focus. The Trade Ministry is not keen on reintroducing any form of rationing. We don’t want the public to feel there is a shortage. The market will itself at times impose some restrictions on the goods sold depending on prices and to prevent hoarding. We need to understand that prices will be high. The Government will work towards reducing them. We will also look at relief measures for low-income communities. What other essential food items does the Government plan to import to reduce the impact of the food shortage? Seasonal crops which are in need, like onions, potato, dhal, and mung beans will continue to be imported by the market. Based on local production, the Government will adjust the import taxes to either encourage or discourage as required. We are facilitating the market [importers] to source the dollars they need and to release the cargo they have brought down from the Port. Does the Trade Ministry plan to adopt price controls for essential food items during the anticipated food shortage to prevent price gouging? The current price control on rice is likely to continue. Paddy farmers have highlighted an increase in production cost due to the rise in fuel prices and the cost of materials. We will evaluate their request in the coming days. This Ministry will calculate the production price hike and respond to the request. We are hesitant to return to price controls for other food items as it usually triggers stocks to be hoarded, which aggravates any shortage and drives a black market. I think it is better to wait until the market stabilises. Attempts to introduce price controls at this stage may backfire. We need to improve supply, which will then affect demand and drive down price. Reviving local agriculture is key to ensuring the food shortage does not last long. What is your Ministry doing to help farmers get back to farming? The Government is working towards supplying adequate quantities of fertiliser for paddy farmers and other crop growers. We also plan to introduce a scheme to provide or import farming equipment and supplies for farmers at a reasonable price. We have given paddy farmers a reasonable purchase price for paddy and we will maintain it. The Paddy Marketing Board will buy the excess produce. We as the Trade Ministry plan to buy onions, potatoes, mung beans, and some other types of grain at a certified purchase price. There will be a forward buying agreement with them. We have decided that any quantity of such produce can be bought by us, even if it’s a few kilos from each farmer. Thereby, we give the farmer the best price and they don’t have to lose out to intermediaries or middlemen. We will purchase directly from the farmers. Does the Government have a plan to ensure that there is a steady supply of food until the economic crisis stabilises in Sri Lanka? Yes, we do. The Government plans to push local food production to the maximum capacity possible; this will help with livelihoods and help the economy. We will also be able to save dollars which would otherwise be used to import food. We have a plan that has got Cabinet approval and we are in the process of implementing the plan now. Our focus is on securing the fertiliser needed and the agricultural plans have been approved. The Government will target achieving a large crop yield from the next Maha cultivation season, which will be in September next year. With a bumper crop, Sri Lanka will be able to rebuild its grain and rice reserves. We can get a buffer stock out of it and we are laying the groundwork for it. Then, we can reach our normal levels of food production. This will help us with recovery. We plan to take what we can get from the Yala season and import the shortfall as a stopgap measure. What measures are being planned to address the food security risk if many farmers avoid taking to the fields during the Yala season? Are there contingency plans? The Agriculture Minister has developed a contingency plan, to expedite the growing of other crops (in place of paddy) – short-term ones. I think they have managed to get nearly 50% to move towards this plan. Cultivation is underway. We will supply them with fertiliser. Has the Government sought an emergency food supply programme with the United Nations (UN), FAO, United Nations Children’s Fund (UNICEF) or other international agencies and on a bilateral basis for the anticipated food security issue? Not at the moment. There may be discussions with international agencies later. The World Bank and some UN organisations pledged funds to assist Sri Lanka, especially low-income communities, during these troubled times. Does the Government plan to utilise those funds to address the food crisis? These funds, $ 160 million, will be utilised via the Divisional Secretaries and with the coordination of Grama Niladharis, to provide food relief to low-income communities. We will use that channel to provide relief as they are up-to-date on the levels of poverty and those affected, which communities need it the most, etc.  Some farmers have alleged that the Government has abandoned the Yala crop season due to the delays in obtaining fertiliser. Is this true? No, not at all. The Government is steadfast on getting the most out of the Yala season; we will support the farmers who are cultivating to get the best crop yield possible. We want to see paddy produced from the Yala season. For those who start cultivating late, they can follow the Agriculture Ministry’s contingency plan and grow short-term crops. Essential food importers have been complaining about the inability to open Letters of Credit (LCs) to import goods and to pay for them. Has the Trade Ministry established a mechanism to address this issue? Our Ministry, working closely with the Central Bank, the Treasury, and Sri Lanka Customs, moved quickly to release close to 300 containers holding essential food items which were imported after the banks stopped imports under open accounts. We checked the consignment dates and facilitated the release of the new consignment, which had been already ordered when the use of open accounts was closed. Further, with support from the Governor of the Central Bank and coordination from others, including the Customs, we have begun to facilitate the clearing of nearly 600 imported containers with essential food items that have been languishing in port due to shortage of dollars and other issues. These containers were stuck in port for close to seven months. I must commend the Governor of the Central Bank, the Treasury, and the Customs for the assistance given and for coordinating with us on this matter. How much of the $ 1 billion LOC given by India has been used to import essential food items up to date? The $ 1 billion was for three categories – pharmaceuticals, essential food, and raw materials. We have begun to import goods from suppliers this month. The registration process was a bit lengthy but has now been concluded and we’ve begun importing. The original allocation was $ 180 million for essential foods. However, an additional $ 100 million has also been allocated for the import of essential foods. I think through the Indian LOC, we can receive goods till mid-August. The Treasury has also allocated $ 100 million for imports. As the Minister of Trade, Commerce, and Food Security, what are your plans to improve trade and commerce? I think we need to review the role and performance of the Commerce Department. We maintain officers from the Commerce Department in key foreign countries; we need to evaluate their impact and performance to see how they have helped our exporters.