• Prices unlikely to go below Rs. 200 per kilo due to high production costs: Mill owners
• Prices will further reduce in first few months of 2023, lowest by April: Ranjith
• Farmers still struggling as they continue to incur losses from paddy sales: Karunaratne
• Fertiliser subsidy aimed at reducing production costs incurred by farmers: Amaraweera

 The price of rice in the local market remains high despite the assurances given by the Government that the prices will reduce to affordable levels by the festival season, The Sunday Morning learns. 

The retail prices per kilo of common rice varieties including samba, nadu, kekulu (white), kekulu (red), ponni samba (imported), nadu (imported), and kekulu (white) (imported) remained at around Rs. 225, Rs. 220, Rs. 210, Rs. 210, Rs. 220, Rs. 195, and Rs. 195 respectively as of Tuesday (20) at the Narahenpita retail market according to the daily price report issued by the Central Bank of Sri Lanka (CBSL). 

There has been no reduction in prices compared to a month ago. On 21 November, the prices of the same rice varieties were recorded at Rs. 225, Rs. 215, Rs. 210, Rs. 210, Rs. 215, Rs. 195, and Rs. 185 respectively at the Narahenpita retail market. 

When compared to market prices a year ago on 20 December 2021, where the prices of samba, nadu, kekulu (white), and kekulu (red) were recorded at Rs. 170, Rs. 140, Rs. 135, and Rs. 120 respectively, it shows that prices continue to remain high in local markets, according to CBSL statistics.

New reduced price

Some mill owners have predicted that a reduction of the price of rice was unlikely and that many varieties would remain near the Rs. 200 per kilo margin due to high production cost. 

Speaking to The Sunday Morning, All Ceylon Small- and Medium-Scale Rice Mill Owners’ Association President B.K. Ranjith said the prices had now been reduced by around Rs. 10 in the local market mainly due to the good harvest received from both the Yala and Maha seasons. 

“We have received tonnes of rice as donations and most of these donations are still lying in warehouses. The country also received a good harvest from the previous Yala and Maha seasons as farmers received fertiliser. At the same time, the country continued to allow rice imports for which the demand was low, therefore stocks are still available at warehouses. All these factors affect rice prices,” he explained.     

Ranjith stressed that prices would further reduce in the first few months of next year, reaching their lowest by April. “We expect prices to drop further by around Rs. 10-15 within the next few months, but it is unlikely that they will drop below the Rs. 100 margin,” he added. 

He further explained that the production cost of rice had now increased drastically and therefore, there was no possibility of further reducing the prices unless the Government introduced a subsidy for farmers to purchase fertiliser. 

“There are only around 200,000 farmers in the country and it is these farmers who are demanding high prices for paddy. The Government should not increase the prices as it affects the entire country. Instead, there should be a mechanism to reduce their production cost,” he stressed.   

There were sufficient paddy and rice stocks available at present and therefore, there was no requirement for a further price increase unless an external factor affected rice market operations, mill owners told The Sunday Morning.

Paddy production statistics 

According to the Department of Census and Statistics, the estimated paddy production for the 2021/’22 Maha season was 1,931,230 MT. The highest production of 260,448 MT of paddy was estimated from Anuradhapura District. The highest paddy production in the country accounted for 13% from both Anuradhapura and Kurunegala Districts. The next highest contributions to the country’s total paddy production were from the Ampara, Polonnaruwa, Hambantota, and Monaragala Districts, estimated to be 11%, 9%, 6%, and 5% respectively during the 2021/’22 Maha season. 

The sown extent for paddy cultivation during the 2021/’22 Maha season was 775,846 hectares, out of which 356,063 hectares (45.9%) was reported under major irrigation schemes, 203,168 hectares (26.2%) under minor schemes, and 216,615 hectares (27.9%) under rainfed. The largest extent of paddy cultivated was reported in Anuradhapura District (116,969 hectares), which is 15.1% of the total extent of paddy cultivated in the country. 

Restricted rice imports

A week ago, the Government restricted rice imports, placing them under licensing from 9 December, according to a gazette notice issued by President Ranil Wickremesinghe as Minister of Finance. 

On 8 December, President Wickremesinghe told Parliament that Sri Lanka was expecting a good harvest in the current main cultivation season and that farmers had to be ‘protected’. 

According to the gazette notification, raw rice, milled rice, and parboiled rice will require licences to be imported from 9 December, but goods shipped before 9 December will be allowed to be imported until 23 December. 

However, according to the Finance Ministry, rice shipments that are already in transit and stocks for which Letters of Credit (LCs) have been opened and advance payments have been made before 9 December 2022 will be allowed to be cleared under special permission.

Farmers demand high price

Meanwhile, the farmer unions have expressed dissatisfaction with the recent paddy purchasing prices decided by the Government. They have urged the Government to further increase the prices or provide them a subsidy to purchase fertiliser and fuel. 

Speaking to The Sunday Morning, All Ceylon Farmers’ Federation (ACFF) President Namal Karunaratne said that farmers were still struggling as they continued to incur losses from the sale of paddy, as production costs had skyrocketed compared to previous years. 

“Farmers now have to spend around Rs. 40,000 for harvesting. What can we purchase from the shop if we sell a kilo of paddy? We can’t even purchase an exercise book for a child. Farmers continue to incur huge losses and have massive debts. No one is addressing their grievances,” he stressed.

Commenting on the rice prices, Karunaratne said that prices could be reduced further as around Rs. 18 was now added to the price formula that decided prices of a kilo of rice. “Earlier, the prices were decided by multiplying the price per kilo by 1.6 and adding Rs. 8 to the wholesale price and adding an extra Rs. 4 to the retail price. However, now they add Rs. 18. This is only an estimated price. Even under this price formula, the prices are exorbitantly high in the retail market,” Karunaratne stressed. 

Rice prices were still controlled by large-scale mill owners, he explained.

“These mill owners own only around 24% of the entire country’s production. The remainder belongs to the Government and the farmers. However, the Government lacks a mechanism to control this mafia governed by large-scale mill owners. They are now earning massive profits as the rice that they issue to the market are from the stocks of paddy they purchased a year ago when the prices were very low. This is very unfair, but the Government doesn’t take any action against these mill owners,” he charged.

Consumer complaints 

While mill owners claim that prices are dropping, consumers in Colombo lament that they are yet to see any price drops. 

“Prices are still the same. We need at least Rs. 1,000 to buy five kilos of rice at the lowest rate in the market today. How can the Government claim that it ensures an affordable rate for rice, which is the staple food of the country? Have they increased salaries in line with the increasing cost of living? No. However, the prices of all goods and services have increased by over 200%. This is absurd,” Iranganie Perera, a private sector executive residing in Koswatta, told The Sunday Morning. 

Malaka de Silva, a consumer from Kottawa, also expressed anger towards the Government, stressing that the majority was unable to afford the prices in the market. “I don’t know how people who earn a daily wage can afford basic necessities. For now, it appears that only the poor and lower-middle classes are affected by the recent price hikes. The prices are really high; I checked prices of rice in most places and it remains the same,” he stressed.  

Subsidies for farmers

Responding to the pleas of farmers, Agriculture Minister Mahinda Amaraweera said that the Government was currently providing an indirect subsidy worth around Rs. 50,000-60,000, given that a bag of urea fertiliser was sold to farmers at Rs. 10,000 when the actual price was around Rs. 19,000 in the local market. 

“We provide Rs. 20,000 for those who are willing to obtain organic fertiliser. In addition, under the Asian Development Bank (ADB), farmers will receive Rs. 10,000 per hectare as a subsidy. We received Rs. 8 billion from ADB. We distribute TSP fertiliser free of charge, which costs around Rs. 20,000 per bag in the local market,” Amaraweera said. 

“We have also received 6.98 million litres of fuel from China and this will be distributed among farmers,” he added.