Government rolls back price controls on rice

• Admits price controls a failure in the long-run
• Decides to import 100,000 MT of rice to maintain buffer stocks

The government this week decided to remove maximum retail prices (MRPs) imposed on rice with immediate effect and to import 100,000 metric tonnes of rice to address rice shortages in the market indicating a failure in price control measures.

After considering the shortage of rice that is currently prevailing in the local market, the Cabinet of Ministers on Monday decided to cancel the gazette issued by the Consumer Affairs Authority (CAA) early this month imposing MRPs on several types of commonly consumed rice varieties.

The State Minister of Co-operative Services, Marketing Development and Consumer Protection, Lasantha Alagiyawanna noted that the CAA would rescind the relevant gazette notification with immediate effect.

 The price controls imposed on several essential items including rice and sugar evidently led to shortages of such commodities and black market activities. 

In response, the government appointed a Commissioner General of Essential Services under the ‘Public Security Ordinance’ to impalement price controls giving necessary powers to seize ‘hoarded’ rice and sugar stocks by millers and traders.

However, Alagiyawanna acknowledged that price controls are not an effective measure in the long-term under the market mechanism while defending the actions taken by the government so far. 

He stressed that the government’s priority is to protect farmers and consumers from unfair practices of some traders. 

Meanwhile, he noted that the Trade Ministry would import 100,000 metric tonnes of rice in order to maintain a buffer stock under the government custody to avoid rice shortages in the market.

The Trade Ministry plans to import these rice stocks from India and Myanmar by directly engaging with respective government authorities.

According to Alagiyawanna , the buffer stock would be sufficient to meet 50 percent of the country’s monthly rice acquirement. Sri Lanka’s annual rice consumption is estimated at 2.4 million metric tonnes.