The Rajapaksa Government has been forced to back out from imposing a Maximum Retail Price (MRP) on the country’s staple food, as large-scale rice mill owners jacked up prices by between 17% and 40%.
The Government yesterday blamed the rice mafia and traders for creating an artificial shortage leading to the abandoning of the MRP. It was only last week that the Parliament unanimously voted tougher legislation and higher fines to punish unscrupulous traders and protect consumer interest. Previously, the MRP set for a kilo of Kakulu was Rs. 95, Nadu at Rs. 98, Samba at Rs. 103, and Rs. 125.
Following the cancellation of the Gazette, large-scale rice millers yesterday announced the new retail price, which saw the price of Samba increasing by 36% or Rs. 37 per kilo to Rs. 140, and Keeri Samba by Rs. 40 or 32% to Rs. 165. The poor man’s Nadu will cost 17% or Rs. 17 more at Rs. 115 per kilo.
“These prices announced are for the highest quality of rice and there are products that are below these prices as well,” Araliya Group Chairman Dudley Sirisena said at a media conference yesterday. However, in the market, the prices of Samba are much higher.
Cooperative Services, Marketing Development and Consumer Protection State Minister Lasantha Alagiyawanna said the Government rejects the prices announced by the Rice Mill Owners ‘Association as “not justifiable.”
Earlier in the day speaking at the weekly post-Cabinet meeting media briefing, Alagiyawanne refuted allegations that the vicious market conditions were created by the Government’s drastic measures – including MRP.
“Changes are bound to happen in an open economy, but these conditions were not created by the Government. Although 80-90% engage in fair trade, balance is involved in fraudulent trade. As a result, the Government has to intervene from time to time. The Gazette notifications are issued to protect the consumer, but it is difficult to maintain such controls for as long as a year or two in an open economy,” Alagiyawanna said in response to queries from journalists.
He also said if any party tries to increase prices unjustifiably, the Government with the Consumer Affairs Authority will intervene responsibly in the market to rectify the situation.
In a bid to counter possible shortages and maintain buffer stock, the Cabinet of Ministers at its meeting on Monday decided to import another 100,000 tons of rice from India and Thailand under a Government-to-Government (G2G) agreement as per a proposal by Trade Minister Bandula Gunawardena.
In August, the Government decided to import 6,000 tons of rice through the Sri Lanka-Pakistan Free Trade Agreement (FTA) as a short-term measure to address the shortage of rice in the market. Previously in June, the Cabinet decided to import 100,000 tons of Samba under the G2G deal.
State Minister Alagiyawanna assured that the importation of rice would not impact paddy prices in the upcoming Maha season and that the Government would intervene if needed.
“Paddy prices will not go down. If the paddy mill owners try to buy paddy at a lower price, then the Paddy Marketing Board will purchase stocks at the Government guaranteed price,” he said.
However, Sirisena at a separate media briefing, said that the large-scale mill owners were willing to purchase a kilo of Nadu at Rs. 62.50, Samba at Rs. 70 and Keeri Samba at Rs. 80.
The prices quoted by the private mill owners are much higher than the guaranteed price for paddy kilo, which is at Rs. 50 (Nadu), Rs.52 (Samba) and Rs. 55 (Keeri Samba). Previous guaranteed prices ranged between Rs. 30 and Rs. 32 per kilo.
The President’s Media Centre (PMC) in mid-September said that despite the guaranteed price for paddy, the market prices were much higher, with Nadu rice sold at Rs. 125 a kilo, Samba rice at Rs. 150 and Keeri Samba at Rs. 225, leaving consumers stranded. This prompted the Government under the Public Security Ordinance to impose an MRP, which however was abruptly abandoned yesterday.
Soon after the MRP was enforced, the PMC said large-scale rice mill owners reduced their daily rice production and distribution by more than 50%. During the raids carried out by the Commissioner-General of Essential Services on 8 September alone, 807,375 kilograms of rice were obtained from the rice warehouses owned by the large-scale mill owners at the Government controlled price and handed over to Sathosa.
The annual rice consumption requirement is around 2.4 million tons and the paddy harvest for the 2020/2021 Maha season and the 2021 Yala season is around 4.8 million. The collective production of rice is about 3.2 million tons.
“Despite the allegations made by various parties, as responsible businessmen, we will strengthen the Government to tackle the rice shortage in the country without further burdening the consumers or the farmers,” Sirisena said.
He said they will issue a sticker mentioning the prices and no one should pay more than the said amount.
“The farmers did not release the entire harvest to the market, we also received only a small quantity. Around 60-70% of the harvests are still with the farmers,” Sirisena said.
They hope that the farmers will gradually release the stockpiles as the mill owners have now set high rates to purchase paddy.
Sirisena also defended the Government decision to import 100,000 tons of rice, noting that it was the responsibility to maintain sufficient buffer stocks.
Lanka Rice Producers Association (LRPA) insisted the Government re-impose the MRP, warning that rice prices will skyrocket in the immediate future.
“Rice can be priced less than what is quoted by the large-scale mill owners,” LRPA President Suraj Jayawickrama said at a media briefing yesterday.
They proposed a MRP for a kilo of Kakulu at Rs. 105, Nadu at Rs. 110, Samba at Rs. 160 and Keeri Samba at Rs. 165.
LRPA claimed that the Government was responsible for the price crisis created for rice at present.
As per the association it costs around $ 40 million to import 100,000 tons of rice.
“Do not waste the balance foreign reserves to import rice which can be easily produced in the country,” they appealed to the Government.
They called on the Trade Minister to refer to the rice importers list of 2017, claiming that leading large-scale mill owners were also among them. “It is like handing over chickens to a fox,” LRPA quipped.
All Ceylon Farmers Federation National Organiser Namal Karunaratna claimed the Government decisions have further strengthened the paddy mill owners and traders, by lifting the MRP on rice.
He said the Government will not be able to stop prices of rice increases in the next few days, adding that a kilo of Nadu rice will be hiked to Rs.125-130.
“The mill owners are quite aware of the dire state the Government is in and now no one will be able to stop them from increasing the prices. The move of the Government has once again created another opportunity for them to burden the consumers and farmers,” Karunaratna charged.
