• CBSL reports increase of nadu prices from Rs. 220 in 2023 to Rs. 235 at present
• No decision yet to import nadu rice to address shortage: Nayeemudeen
• Shortage deliberately created by large mill owners: Karunaratne 

As the nadu rice shortage continues to intensify across the country, the Government has announced it will not be importing rice to stabilise the market, leaving millions of households grappling with rising costs and dwindling availability of the staple grain.

Despite growing concerns over food security and price hikes that are squeezing family budgets, the Trade Ministry has ruled out any plans for importing rice to ease the current scarcity.

Last Thursday (7), the Trade Ministry submitted a detailed report on the nation’s rice situation to President Anura Kumara Dissanayake, outlining the available stocks, production levels, and updated data from the last season.

Ministry Secretary M.M. Nayeemudeen confirmed that the President was expected to review the findings and issue guidance on any further actions. However, the Secretary reiterated that no steps towards importing rice were on the table yet, despite calls from some quarters for urgent intervention to curb the shortage.

‘Private millers have unchecked control’

According to market trends, nadu rice prices have surged past the Government-set Maximum Retail Price (MRP) of Rs. 220 per kilo, with current retail prices averaging around Rs. 235 per kilo in many parts of the country. 

As families face these inflated costs, farmers and consumer rights activists are sounding alarm about what they describe as a calculated manipulation of the market by powerful rice mill owners. They allege that major players in the rice industry are restricting supply to boost profits, creating an ‘artificial scarcity’ that could worsen if left unaddressed.

“The shortage we are seeing is not natural,” said All Ceylon Farmers’ Federation (ACFF) National Convener Namal Karunaratne. “It’s a crisis deliberately engineered by large-scale mill owners who have unchecked control over the rice supply chain. 

“The Government’s withdrawal from purchasing paddy for the Paddy Marketing Board (PMB) means it has no strategic reserves to counterbalance private millers. This leaves consumers vulnerable to market manipulation, as these millers are now in complete control of supply – and with it, the prices,” he explained.

This growing dependence on large-scale private millers for rice supply marks a significant shift from previous years, where Government involvement through the PMB acted as a buffer against sudden price hikes or supply shortages. As observed, by scaling back its role, the Government has effectively handed over significant control to private entities.

‘Only vendors get punished’

Against such a backdrop, the power that these millers hold over the rice supply raises questions about the gaps within Sri Lanka’s Consumer Affairs Authority (CAA) regulations. Current laws primarily penalise vendors who exceed the MRP, while allowing large-scale mill owners who control the supply to largely escape scrutiny.

Karunaratne argued that the current penalties do not target the root of the issue, enabling powerful mill owners to manipulate the market and hold both small-scale vendors and consumers hostage.

According to Section 60 of the CAA Act of 2003, any vendor selling rice above the control price can face penalties ranging from fines of Rs. 100,000 to Rs. 500,000 or imprisonment for up to six months. Corporate entities found guilty of repeated price violations can be fined up to Rs. 10 million. 

However, these penalties apply only to vendors, leaving millers – the main players in price control – untouched. Critics contend that this approach leaves the vendors, often compelled to buy rice at inflated prices from mill owners, unfairly bearing the brunt of the law.

At a recent meeting with President Dissanayake, officials from the CAA, and several prominent rice millers, an agreement was made to release nadu rice at Rs. 218 per kilo.

However, according to the Hector Kobbekaduwa Agrarian Research and Training Institute (HARTI), nadu rice is still being sold at an average of Rs. 235 per kilo, indicating that the agreement has yet to yield tangible relief for consumers.

Since January, the CAA has reported nearly 600 cases of vendors violating the control price for rice, but vendors argue that they are left with little choice but to sell at higher prices due to inflated purchase costs from millers. Farmers stress that the enforcement of MRPs primarily against vendors has limited effect, as it fails to address the pricing practices of the larger suppliers.

Karunaratne said: “At present, only the vendor is getting punished when rice is sold beyond the MRP. There is no law to apply to mill owners. Vendors purchase rice at higher rates from mill owners. That has not been considered.”

Govt. intervention needed

Adding to these concerns, the Central Bank of Sri Lanka (CBSL) reports that the price of nadu rice has risen from Rs. 220 per kilo in 2023 to Rs. 235 per kilo at present, despite Government efforts to keep prices steady.

Additionally, the HARTI in October noted that the price of nadu grade I had risen by Rs. 4 per kilo, with other rice varieties showing similar increases. These hikes are partly attributed to insufficient stock and higher demand, but the report also highlights the influence of market control on pricing.

Farmers are pushing for amendments to the CAA Act, which would allow penalties to extend to larger players in the supply chain, including bulk stockholders who can withhold supply to manipulate prices. 

“The current consumer protection laws are inadequate to deal with the influence of large mill owners,” Karunaratne said. “We need stronger measures that target those who control the market, not just the small vendors.”

In the absence of Government-controlled reserves, Karunaratne advocated a programme whereby the Government purchased a portion of paddy from farmers directly. He argued that this would allow the State to maintain its own paddy reserves, enabling it to release stock to the market to stabilise prices during shortages. 

According to him, without these reserves, major millers are left in a position of considerable influence, with the ability to set prices in their favour.

As revealed by HARTI statistics, compared to the same period last year, wholesale prices for all local rice varieties have increased by 8-20%. 

Meanwhile, President Dissanayake, speaking at an election rally in Monaragala, announced that the Government would take legal action against rice millers who failed to adhere to controlled prices. He stated that the Government currently lacked the means to control rice prices because the previous administration had not purchased paddy stocks. With no reserve stocks available, the Government can only enforce price controls through legal action.

To prevent future shortages, the Government plans to begin purchasing paddy during the upcoming Maha season. The PMB and the Food Commissioner’s Department have been directed to refurbish storage facilities to prepare for this. Once purchased, the paddy will be milled by small-scale rice millers and distributed to consumers through cooperative stores, according to the President.

When contacted by The Sunday Morning, Agriculture Ministry Secretary M.P.N.M. Wickramasinghe stated that approximately 78% of the paddy cultivated in the country was nadu and that there was no actual shortage of nadu rice. He charged that any shortage had been created by mill owners. 

“A comprehensive study is currently being conducted by the HARTI, which will examine the varieties of rice that have been cultivated,” he added.

Attempts made by The Sunday Morning to contact CAA Chairman Hemantha Weerakoon were futile.