Government to introduce new laws to prevent hoarding of rice stocks
By: Staff Writer
Colombo (LNW): Sri Lanka would introduce new laws to prevent hoarding of food stocks, agriculture ministry officials said after official scare mongering on looming food shortages and continued monetary instability which has disrupted international trade.
He also stated that the government would introduce new legislation that will govern rice mill owners and silo owners to prevent future hoarding of food stocks.
Sri Lanka’s farmers and other started to hoard rice and other foods after official scaremongering that there would be food shortages from August 2022.
The mill owners have been hiking the price of paddy. Given the current drought and rainfall situation that prevail these individuals are not only attempting to raise the price of paddy, but are also trying to create the illusion of a paddy shortage.
The per capita paddy consumption in Sri Lanka is approximately 125 kg per year. However, due to last year’s economic crisis this figure decreased to 90 kg. Nevertheless, the per capita paddy consumption has increased to 112 kg as of now.
Additionally, Sri Lankans require two hundred thousand metric tons of paddy per month. Consequently, Gunaratne pointed out that 2.4 million metric tons of paddy is needed annually.
A quantity amounting to 2.4 million metric tons of paddy is required to maintain a level of substantial rice consumption in this island.
However, to achieve that approximately 3.7 million metric tons of paddy is required annually.
When shortfalls are expected, stocking up drives up prices, in the same way as futures market prices anticipates things in the future and helps smoothen supply across time by reducing current consumption.
The building up of rice silos helps stabilize prices where millers borrow money and buy stocks during harvest time.
The silos prevents prices from falling too low during harvest time and also prevents the deterioration of grain over time.
In this instance a spike in paddy prices after official scaremongering, has driven farmers to cultivate more rice than at first expected.
Domestic rice prices however are higher that the rest of the world and millers in part are strengthened in part due to import restrictions and forex shortages from money printed to pay state worker among other expenses.
For many years the Sri Lanka has placed import duties on rice and maize to give big profits to millers and maize collectors
If cultivation takes place during the Maha Season at the right time and fertilizer and other necessary requirements are provided sufficiently, a yield of 3.5-3.7 million metric tons of paddy can be obtained.
If cultivation is successful during the Yala Season paddy could produce a yield of 2 million metric tons.
However, considering the current situation in Sri Lanka, a state of chaos has unfolded due to the ban on the use of chemical fertilizer in 2021.