The recent rapid price fluctuations and sudden shortages of the staple food in Sri Lanka, rice, has become a topic of discussion both in the political arena and the general society. Although it is not the first time that the country faced price and availability-related issues concerning rice, this time, there is a more widespread discourse about food security and business practices that have an impact on the cost and availability of rice.

Large-scale rice millers are at the centre of this controversial discussion. On the one hand, they are blamed for hoarding paddy and releasing rice to the market in limited, controlled quantities. On the other hand, the Government and the other relevant authorities are blamed for their alleged lethargy in taking strict and systematic action to reduce large-scale rice millers’ influence on the prices and availability of rice. 

Large-scale rice millers in Sri Lanka have a significant influence on the country's rice market, particularly through the practice of hoarding paddy in large quantities. These millers control a substantial portion of the rice supply chain, from purchasing paddy directly from farmers to processing and distributing rice. By stockpiling large volumes of paddy, they can create artificial shortages in the market, driving up rice prices and increasing profit margins, regarding which local farmers’ groups levelled allegations in the past few months. This practice exacerbates price fluctuations, making rice less affordable for consumers, especially during periods of economic instability.

Hoarding also destabilises the market, discouraging fair competition and undermining smaller-scale millers and farmers who cannot compete with the financial leverage of larger operators. Moreover, it is a well-known fact that many large-scale millers have strong political ties and influence on the rice market, which raises concerns about market conditions concerning rice.

In such a context, with consumers bearing the brunt of artificially inflated prices and shortages, the democratisation of the rice market and the management of paddy by breaking the existing oligopoly is crucial. The Government has paid attention to taking measures, and the most recent measure is the decision to purchase around 300,000 metric tonnes of paddy to maintain its own paddy stocks in order to prevent adverse price fluctuations by reducing the large-scale rice millers’ influence on the rice market. However, this move has attracted criticism, with farmers’ groups alleging that the Government’s decision entails practical issues such as the Government not having adequate storage facilities and possible irregularities when converting paddy into rice, and that the Government’s decision, even if implemented, not being adequate to provide consumers with considerable benefit as far as rice prices are concerned.

While continuing and strengthening the existing efforts, in response to this situation, several strategic steps can be taken to promote a more balanced and transparent market structure. First, rice millers and their associated storage facilities should be officially registered with the relevant authorities, ensuring that their operations are fully documented and monitored. This registration should include details of their milling capacities and storage capabilities, enabling the Government to keep track of their role in the rice supply chain. Next, it is essential for all rice millers, both large and small, to submit regular reports on their purchasing activities, storage volumes, and rice production. These reports would provide much-needed transparency and allow the authorities to detect any unfair practices, such as hoarding. Regular reporting also helps ensure that any supply chain disruptions or irregularities are promptly identified and addressed.

Another critical step would be the imposition of limits on the amount of paddy that can be purchased and/or stored by individual millers. By capping the volume of paddy that can be accumulated, the Government can prevent monopolistic practices and ensure that smaller, local millers are not sidelined. This would also help regulate market prices by maintaining a more equitable distribution of the available supply. In parallel, the Government should allocate more resources to support small- and medium-scale rice millers, enabling them to improve their processing capacities and competitiveness. These resources could include low-interest loans, grants, and technical support. However, these regulations should apply equally to both large and small-scale rice millers to ensure a level playing field.

This issue must also be looked at in a more holistic manner with an eye on the macro picture. Improving Sri Lanka’s paddy-related research is crucial to developing high-yield, affordable seed paddy varieties that can increase local production and reduce dependency on imports. Towards this end, the Government should enhance support for the Rice Research and Development Institute and the Paddy Marketing Board to accelerate research into drought and disease resistant, and higher-yielding paddy strains which are also nutritious and healthy in terms of having a low glycemic index. In addition, investing in advanced, cost-effective technologies will improve milling efficiency and make rice more affordable for consumers. By promoting innovation in both paddy cultivation and rice processing, the Government can strengthen the local rice industry and protect consumers.

Implementing these steps would not only reduce the concentration of power in the hands of a few large-scale rice millers but also enhance the overall efficiency and fairness of the Sri Lankan rice market, benefiting both producers and consumers alike. In a context where the economic crisis has had a considerable negative impact on agriculture, the food market, and nutrition, this is high time for more effective and sustainable steps.