The escalating tension in Sri Lanka’s rice market is creating ripples that threaten to turn into a full-blown crisis. While farmers are demanding Rs. 150 per kilo of paddy, small and medium-scale mill owners argue that they cannot sustain operations or provide rice at the current control price unless the government revises it to Rs. 270–275 per kilo.
A kilo of rice currently sells for around Rs. 145 in many areas, with mill owners stating that a fair retail price should be Rs. 280 if they are to pay farmers Rs. 150 for paddy. However, farmers in economically stable regions are holding onto their stocks, refusing to release them until their price demands are met.
This deadlock has disrupted the operations of over 300 small and medium-scale mills, which collectively supply 50% of the country’s rice demand. These mills lack the capital to store large volumes of paddy and rely on daily purchases to produce rice. With restricted access to paddy, their output is dwindling, leading to concerns of a worsening rice shortage by the second week of January.
Adding to the complexity, large-scale mill owners and intermediaries control a significant portion of the previous harvest’s paddy stocks. This stockpiling exacerbates the scarcity and gives well-financed farmers the leverage to withhold their produce until prices rise further.
The government had previously set the control price for rice at Rs. 120–130 per kilo of paddy on December 9. However, this pricing now appears unviable as the market dynamics have shifted dramatically. Despite efforts to import rice to mitigate the crisis, recent shipments have failed to meet expectations.
Sri Lanka requires 6.65 million kilos of rice daily to meet its population’s needs. With a significant portion of this supply disrupted, the market faces a potential domino effect of rising prices and dwindling availability. Mill owners warn that unless immediate steps are taken to increase the control price, the shortage will spiral into a severe crisis, straining both consumers and small-scale producers.
The government faces mounting pressure to balance the demands of farmers, mill owners, and consumers while ensuring fair practices and sustainable pricing. Without swift intervention, Sri Lanka’s staple food could become a source of widespread hardship.
