Rice Shortage in Sri Lanka: Brewing Crisis as Raw Rice Diverted to Beer Production
The Small and Medium Scale Rice Mill Owners’ Association (SMSRM) has highlighted the growing rice shortage in Sri Lanka, attributing it to the increased diversion of raw rice for beer production.
The situation has been exacerbated by the entry of business magnate Harry Jayawardena’s Distilleries Company of Sri Lanka (DCSL) into the beer market, following its acquisition of Heineken Lanka Ltd.
DCSL, which now controls 99.4% of Heineken Lanka’s shares, purchased the company for €12 million (Rs. 4.2 billion).
This acquisition marks the start of DCSL’s expansion into the beer industry, where it plans to continue brewing popular international brands like Heineken, Tiger, and Anchor, along with its own Bison beer brand.
However, the move to increase beer production has had a significant impact on the availability of rice, particularly the ‘Nadu’ variety used in brewing.
According to SMSRM Chairman U.K. Semasinghe, as more raw rice is redirected for beer production, there is less available for regular consumption, which has contributed to rising rice prices in the market.
Farmers’ organizations have voiced similar concerns, urging the government to step in and stabilize rice prices. In response to the increasing shortage,
President Anura Kumara Dissanayake convened a meeting with large-scale rice distributors to discuss maintaining controlled retail prices to alleviate the strain on consumers.
DCSL’s entry into the beer market has also raised concerns about the future of Sri Lanka’s brewing industry.
According to Fitch Ratings, DCSL’s extensive market access, financial strength, and industry expertise position it to significantly expand Heineken’s operations in the country.
However, Fitch notes that such expansion will require substantial capital investment and could take two to three years to complete. In the short term, this expansion may impact the market share of Lion Brewery, the current leader in the Sri Lankan beer market.
Meanwhile, many shopkeepers have reported difficulty obtaining rice at the government-controlled price, further intensifying the market shortage. The rising cost of rice, especially the ‘Nadu’ variety, has put additional pressure on consumers who are already struggling with the economic fallout.
As the situation unfolds, both the government and industry players are under increasing pressure to find a balance between supporting new business ventures and ensuring adequate food supply for the population.
