Sri Lanka to import rice to buffer price spikes

Sri Lanka to import rice to buffer price spikes


Oct 30, 2009 (LBO) – Sri Lanka's government, which is ideologically committed to domestic rice production, will import 50,000 metric tons of rice as a buffer against an 'artificial shortfall', a senior minister said.
"We feel there might be an artificial shortfall in rice supply, so the government is going to import 50,000 metric tons of rice as a buffer stock," information minister Anura Yapa told reporters.
"This will be kept as a buffer stock if there is an increase in price. We are not just importing rice it will be released to the market if there is a spike in prices."
Sri Lanka has kept rice prices high, just below 'food crisis' prices last year to promote domestic production and also restricted the carbohydrate diet, especially of the poor, by taxing imported potatoes and wheat flour.
Sri Lankan rice is below international export quality and cannot be readily sold abroad, though it is relatively expensive.
But other countries in the region are bigger and agriculture is mechanized allowing them to get better yields, Yapa said.
"In Sri Lanka we are also introducing farming technologies. The yields have to go up," Yapa said.
But analysts say because prices are kept high and fertilizer is subsidized through heavy government interventions, farmers have no incentive to increase yields, making the rice farmer a burden on the non rice producing poor.
Restrictive land policies have also prevented consolidation.
Rice is water intensive and needs full inundation during part of its growth cycle.
Earlier this week, Sri Lanka's Geological Survey and Mines Bureau warned that paddy cultivation in the northwest Puttalam district was lowering the water table in the area and there was a threat of sea water contamination of ground water resources.