Govt. to release more rice stocks to manage prices

• Cabinet nod to import 20,000 tons of rice from Myanmar via G2G deal
• STC to import rice at $ 460 per ton to offer country’s staple food at affordable price
• Since June, Cabinet has approved to import rice on 4 occasions
• Cabinet Co-Spokesman says Govt. has ensured availability of essential food items amidst forex crisis

To counter possible shortages with sufficient buffer stocks and to create a competitive pricing mechanism for the country’s staple food, the Cabinet of Ministers has decided to import another 20,000 tons of rice from Myanmar under a Government-to-Government (G2G) agreement. 

The State Trading Corporation (STC) has been given the approval to import at $ 460 per ton of rice from Myanmar to stabilise the local market prices and to offer the country’s staple food at an affordable price for the general public. 

“The imported rice would be distributed through the mediation of Lanka Sathosa and the co-operative movement across the country to be sold at Rs. 98 per kg,” Cabinet Co-Spokesman Dr. Ramesh Pathirana said at the post-Cabinet media briefing yesterday.

Since June, the Government has decided to import rice on four occasions, whilst removing the Maximum Retail Price (MRP) on the country’s staple food, giving room for the large-scale rice mill owners and traders to jack up prices at their convenience.

On 24 September, the Cabinet decided to import 100,000 tons of rice from India and Thailand under a G2G agreement, whilst in August, the Government decided to import 6,000 tons of rice through the Sri Lanka-Pakistan Free Trade Agreement (FTA) as a short-term measure to address the shortage of rice in the market. In June, the Cabinet also decided to import another 100,000 tons of samba under the G2G deal as a counter measure to control price hikes by rice producers and traders.

Early November, the Finance Minister Basil Rajapaksa reduced the special commodity levy of Rs. 65 per kg of imported rice to 25 cents. The move is for six months from 2 November and will ensure sufficient stocks ahead of the festive season.

Affirming there is no acute shortage of rice in the country, Dr. Pathirana explained that the decision to import was to create a balance in pricing mechanism as the market witnessed a gradual increase over the past three months.

“Once we start importing and distributing, the rice prices of other varieties too have come down to around Rs. 110 per kg at present,” he said.

Typically prices of essential items including rice see an uptick in prices close to the festival period, but Dr. Pathirana acknowledged this had worsened due to the pandemic impact. 

“Despite the foreign currency shortage, we have decided to import the essential food items to ensure there’s no scarcity of food in the country,” he pointed out.

The annual rice consumption is around 2.2 million tons and the paddy harvest for the 2020/2021 Maha season and the 2021 Yala season is around 4.8 million. The collective production of rice is about 3.2 million tons. However, rice prices have been soaring for many months in the local market.

Aimed at addressing stock shortages and price hikes, the Cabinet of Ministers in August decided to build five rice mills in Kurunegala, Anuradhapura, Batticaloa, Hambantota and Ampara under a Public-Private Partnership (PPP) and distribute the essential commodity via Lanka Sathosa and Co-operative Societies from the next Maha season.

The Government last week called for Expressions of Interest (EOIs) from investors keen on constructing and operating new paddy mills.