Call to protect paddy farmers - Analysts

by Gamini Warushamana

Continuous market failure in the paddy sector will create a serious impact on the growth of agriculture and policy decisions have to be taken immediately to address these issues, analysts warned.

Paddy farmers faced difficulties again in selling their Yala harvest as prices have dropped sharply due to oversupply.

Sources in Ampara, Mahaweli zones and other paddy farming areas said that the state agency, the Paddy Marketing Board (PMB), had stopped purchasing paddy.

Mahaweli officials in Wilikanda, Mahaweli Zone B, said that only private traders purchase paddy and that too at Rs 25-30. The estimated harvest this Yala season is 1.5 million tonnes and 2.7 million tonnes was harvested during the last Maha season.

Chairman of the PMB, K.B. Jayasinghe said that the PMB was now purchasing paddy only in the Hambantota area and operations in other areas have been stopped due to a shortage of funds.

“This Yala season we have purchased around 29,000 tonnes of paddy, the highest ever purchased in a Yala season. The low quality of paddy in the Ampara area is the reason for it fetching the lowest price in the open market,” he said.

Massive production in traditional farming areas, new lands in the Northern and the Eastern provinces and farmlands under new or renovated irrigation systems have created a huge oversupply, contributing to marketing issues. The PMB has a limited capacity to store paddy and there is a stock of 128,000 tonnes of the previous year's harvest in PMB stores, he said.

Director of the Business Development Department of the Mahaweli Authority said that the Authority does not purchase paddy and all warehouses of the Authority have been given to the PMB.

In the Polonnaruwa district paddy purchasing is done under the District Secretary's supervision.

The Government intervenes in the market every year with a stipulated high price to influence market price.

However, with financial and storage capacity limitations, the PMB can purchase only a fraction of the harvest and its impact is insignificant. Therefore, it is time to consider alternative solutions to the issue, analysts said.

According to the Director General of Census and Statistics, this issue is connected to socio-economic changes. While rice production is increasing, rice consumption is gradually declining. Today per capita rice consumption is 112 kg per year.

Bumper harvests during the past few years helped to keep rice prices stable and ease the cost of living. Despite a huge campaign to promote rice consumption, the demand for bread and wheat flour-based food is high. The reason is that the lifestyles of the people have changed and consumption patterns are also different.

Another development is that the demand for red rice has declined sharply. Jayasinghe said that reason for this trend is not known. According to household income and expenditure survey data, the consumption ratio in Sri Lanka is also declining and according to the latest data, the food ratio is 38 percent and non-food ratio is 62 percent. Normally this happens with increasing income but here it is not due to increasing income.

Over 50 percent of the working people earn less than Rs. 25,000 per month and there is no significant increase in their income.

However, as a result of sharp price increases in non-food items, people have reduced consumption and the consumption ratio has declined. Sharp increases in the prices of electricity, gas, transport, telecommunication, education and health services have contributed to this trend.Reallocating land for other high value crops, reducing paddy production and cultivation of high quality rice varieties for the export market are options that could be considered.

The Government can intervene in addressing some issues such as purchasing red rice for school childrens' meals, hospitals, security forces and prisons.

The export of excess rice production is a popular solution proposed by politicians.

However, according to a research report published by the Institute of Policy Studies (IPS) bulk rice export too is not feasible immediately. It is also not socially profitable under present conditions and the option is to export to small niche markets.

These markets comprise the Sri Lankan diaspora where there is a limited demand for 'Samba' and red rice and another limited market for special varieties such as red pericarp long-grained rice.

Jayasinghe said that a huge campaign should be carried out to increase rice consumption and the Ministries of Health and Education should be involved in it. Rice consumption is low in the estate sector and a program is needed to supply rice at low prices to the estate sector.