RICE CRISIS ON THE RISE!

Prashanthi Cooray describes the ripple effects of Sri Lanka’s rice shortage

As the staple food of most Sri Lankans, rice is at the heart of the country’s food security; yet, it is highly susceptible to price hikes, import restrictions and fiscal challenges.

Sri Lanka’s rice production is heavily dependent on two seasons: Maha and Yala. The Maha season, cultivated during the northeast monsoon from October to March, contributes 65-70 percent of the island’s total annual paddy output with the harvest taking place from February to March.

Meanwhile, the Yala season, grown during the southwest monsoon from April to August, accounts for 30-35 percent of output with its harvest occurring between July and August.

This creates a supply gap in December and January as stocks from the Yala season dwindle by late November. The situation is exacerbated when the Yala harvest underperforms or there are delays in Maha cultivation, leading to a demand supply imbalance in rice production.

Climate factors such as irregular rainfall, droughts and floods also disrupt yield while the 2021 fertiliser ban resulted in severe disruption to agricultural productivity – and its lingering effects are still being felt.

Compounding the issue are inadequate storage facilities, buffer stock policies and market speculation, all contributing to price hikes.

A food flow mapping exercise carried out by the City Region Food Systems (CRFS) programme found that distance also affects consumer prices. Rice from the Southern Province, where smaller mills lack polishing facilities, has to be transported to larger mills in the North Central Province. This leads to higher costs.

Additionally, it is widely known that the market is manipulated by a few large millers who hold substantial stocks of rice and restrict its release, creating artificial scarcities and causing price surges that directly burden consumers.

Previously, rice imports helped mitigate shortages, maintain supply and prevent sharp price increases but high import duties – up to Rs. 65 a kilogramme – have caused local prices to soar above global averages.

In December, Sri Lanka Customs reported tax revenues of 4.3 billion rupees from the import of 67,000 metric tonnes of rice. The surge in imports followed the temporary removal of restrictions to alleviate shortages and stabilise prices, and contributed substantial revenue to the state coffers.

However, relying on imports comes with its own set of challenges – including pressure on foreign reserves, distribution in­efficiencies and potential corruption.

This approach also puts small and medium scale millers at a disadvantage, as they struggle to compete in a market dominated by imported rice and fails to tackle deeper issues – such as the monopolistic behaviour of large millers and low domestic production.

The fiscal burden of the rice shortage is felt far beyond the dinner table, impacting everything from the cost of living to the stability of the nation’s food systems. Increased rice prices lead to higher costs for consumers. This can cause inflationary pressures, and affects wages, industrial productivity and economic growth.

Looking ahead, Sri Lanka must adopt long-term fiscal measures to address the rice shortage and its economic implications. Investing in sustainable agricultural practices should be a priority as it will reduce dependency on imports and increase the resilience of the agricultural sector, which employs a large share of the population.

Strengthening public-private partnerships to improve market efficiency, transparency and competition will be crucial to reduce the monopolistic practices of large rice millers. A more equitable approach to rice production and distribution will bene­fit both producers and consumers.

While short-term measures such as rice imports and price controls may offer temporary relief, they do not resolve the structural issues in the market. By employing policies that address both supply and demand side factors, Sri Lanka can ensure food security, reduce its reliance on imports and pave the way for future economic stability.