Government intervenes to stabilise paddy prices

By Gamini Warushamana

The Government last week said that state agencies have intervened to ensure a higher price for farmers and will offer Rs. 35 per kg for samba and Rs. 32 per kg for nadu paddy, the highest price ever paid out to rice millers. This decision comes in the wake of rains causing havoc to paddy harvests. Sources said that paddy harvesting has now commenced in the Northern and the Eastern provinces and continuous rains haves disrupted harvesting, causing harvest damage.

Paddy harvesting has now commenced in the Northern and the Eastern provinces

However, farmers said that open market prices in the Northern and the Eastern provinces is around Rs. 26-28 per kg.

Chairman of the Paddy Marketing Board, K.P. Jayasinghe declined to reveal details of the government's intervention, the amount expected to be purchased or the amount of money allocated.He said details were with the Internal Trade Ministry Secretary. However, the Ministry Secretary was not available for comment.

Analysts said that government intervention should be significantly large enough to influence open market prices, if not, paddy prices will fall below cost of production as has happened every year in the past. Government agencies should be able to purchase over 15 percent of the harvest to influence market prices, they said. The Department of Census and Statistics said that the total estimated harvest this 2012/13 Maha season is over 2.7 million tonnes. The estimated harvest from Mahaweli areas alone is around 321,000 tonnes. Director General of the Department of Agriculture said that crop damage due to heavy rain is not significant.

The low quality of paddy is a major reason for price decline in the harvesting season and government agencies only purchase paddy which has a moisture content of less than 14 percent. The open market price is low due to the poor quality of paddy. Especially after mechanisation of harvesting, the moisture content of paddy is higher and it always fetches low prices, traders said.

Regional project managers of Mahaweli B, H and C said that paddy storage facilities are ready and harvesting will start by end March.

PMB officials in Mulaitivu said that since there are no storage facilities in the area, purchased paddy has to be transported to Vavuniya. The red nadu variety cultivated in the area fetches a low price in the open market because the demand for red rice is low. Crop damage in the 2012 Yala season and resulting lower supply has increased rice prices and this situation will increase open market paddy prices this year too, traders said.