• United Rice Producers' Asso. Chair Mudith Perera notes the impact of erroneous political-policy decisions and the resultant industry oligopoly that has brought small- & medium-scale millers to their knees  

Despite the fact that rice remains a staple food item in Sri Lanka, the authorities are yet to provide effective and sustainable solutions to the issues surrounding the production, preparation, and the sale of rice. On the one hand, a number of issues faced by farmers and rice millers, especially due to the recent economic decline, remain unaddressed, thereby continuing to affect consumers. 

On the other hand, the rice industry being dominated by a handful of businessmen including large-scale rice millers, authorities and politicians, raises doubts about the revival of this industry. Explaining this alarming situation, United Rice Producers' Association Chairman Mudith Perera noted that the oligopoly that has been created in the rice milling industry has rendered many small- and medium-scale rice millers unable to survive the present economic situation. Adding that this is a result of wrong political and policy decisions, he opined that the said oligopoly has grown so massively that it would be difficult even for the Government to break it. Perera made these remarks during an interview with The Daily Morning, where he emphasised the importance of Government interventions to address these issues.

Following are excerpts from the interview: 

What is the nature of the key issues faced by small- and medium-scale rice millers?

The programmes that were devised by successive governments during the past 30 years benefitted certain parties such as large-scale rice millers, and not small- and medium-scale rice millers. That is the main concern. Be it political, policy or financial decisions, these decisions were taken to form an oligopoly in the rice market. For example, there is a gazette notification about the maximum retail price (MRP). But, to date, zero cases have been filed against large-scale rice millers. It is also a popular discussion these days that Keeri Samba rice is being sold at excessive rates; but, no cases have been filed by the Consumer Affairs Authority (CAA) against large-scale parties involved in these acts. Laws and policies were always enforced in a manner that benefits and provides opportunities for large-scale players. For around three-four years, large-scale rice millers had only around 35% of the market share. However today, it has increased to about 60%. The control of Sri Lanka’s rice market has been acquired by large-scale rice millers in an irreversible manner, and the Government seems unable to rectify it. That is because policies were created based on a handful of people’s opinions. Large-scale rice millers can change rice prices as they want. 

How has this situation affected small- and medium-scale rice millers?

As a result of the said wrong decisions, small- and medium-scale rice millers have been weakened, which has automatically strengthened large-scale rice millers. Today, caused also by the economic situation, the rice market has shrunk. This started with former President Gotabaya Rakapaksa’s organic fertiliser policy, which reduced Sri Lanka’s rice consumption and the small- and medium-scale rice millers’ market share. Sri Lanka’s approximate daily rice requirement is around 6 million kilograms (kg), out of which around 3.5 million kg is provided by a handful of large-scale rice millers. While this situation has weakened small- and medium-scale rice millers, some in the small- and medium-scale rice milling business have misused the chances that were offered by governments. Sri Lanka’s rice market has already succumbed to an oligopoly. 

Governments have, from time to time, introduced various assistance programmes such as zero or low-interest loans. What is the nature of the impact that these programmes have had on the rice industry?

Various governments, including the former United National Front for Good Governance and Rajapaksa-led governments, have tried to assist rice millers. But, during the past 15-20 years, small- and medium-scale rice millers’ issues were used as the ‘beggar’s wound’ by various parties in the industry who benefitted from it. governments also sell these issues. The government has not been able to recover around Rs. 1.5 billion given to rice millers under the Rajapaksa Government with the aim of building the small- and medium-scale rice milling industry.

In the recent past, farmers faced a number of issues including those related to the water supply, fertiliser and lands. How have these issues affected small- and medium-scale rice millers’ operations and the rice market in general?

Farmers can provide high-quality harvest only if they have an adequate income which improves the quality of their lives.However, in today’s context, even if farmers get the minimum amount for paddy, it is not sufficient to cover their expenses. Their income is declining, and in turn, their quality of life and the quality of the produce also declines. In a context where they can barely cover only the basic expenses, the quality of their produce does not receive attention. Therefore, the quality of the paddy that the rice millers receive from farmers is also going down.

The economic downturn had direct impacts on almost all sectors. How has it affected small- and medium-scale rice millers?

The main issue faced by small- and medium-scale rice millers due to the economic situation is increased electricity costs, which increased by around three times. It is difficult to manage the businesses in such circumstances. In addition, fuel prices also increased the cost of small- and medium-scale rice millers’ operations.

You mentioned that governments have not provided adequate solutions to small- and medium-scale rice millers’ issues while certain steps that were taken have not been effective. Can you tell us what the small- and medium-scale rice milling sector expects from the Government and the authorities?

The Government has to observe and understand the situation more carefully and decide whether it would continue to let an oligopoly control the country’s rice market, or support the sector as a whole and prevent the unjustifiable dominance that I mentioned. It should not underestimate this issue. Keep this as a competitive market. A handful of large-scale rice millers have massive power, which the Government should take into account.

Do small- and medium-scale rice millers expect any other form of interventions from any party other than the Government?

It is the Government that should get involved and take action. A third party cannot intervene in this case, as this is a matter of national security. In the future, countries would be controlled through food, not necessarily arms, and food will play a massive role in any country. The Finance Ministry and the Central Bank should pay more attention to the direction in which our food security situation is heading.