USDA projects Sri Lanka’s rice imports to hit five-year-high this year

By Nishel Fernando 
With the sudden policy shift to organic farming, which resulted in reduced harvest for Maha Season, Sri Lanka’s rice imports are set to hit a five-year-high this year, according to a latest report published by the United States Department of Agriculture’s (USDA) Economic Research Service.

According to USDA forecasts, Sri Lanka’s rice imports are set to increase by a record 453,000-600,000 tonnes to the highest levels seen since 2017, when paddy cultivations were adversely impacted by the drought in that year.
After posting bumper harvests for two consecutive seasons, rice crop in 2021/2022 Maha Season crop is estimated to drop by 14 percent due to the import ban on inorganic fertilisers and other agrochemicals announced in April last year, while farmers struggling to secure sufficient alternative inputs in the cultivation period of Maha Season, which accounts for nearly two-thirds of annual production. According to USDA, the harvested area fell by 11 percent to 975,000 hectares from a year earlier while the average yield declined 2 percent to 4.41 tonnes per hectare, almost 4 percent below a year earlier. 

The Cabinet of Ministers recently approved a proposal to provide compensation of Rs.25 per 1kg of paddy to restore the income level of paddy farmers affected by the government’s push towards organic farming, with an overall allocation of Rs.40 billion in funds.

“These reductions were largely based on the Government of Sri Lanka’s recent forecast for the February-April harvested Maha crop. The year-to-year decline in the Maha crop is largely due to the April-November ban on inorganic fertilisers and other agrochemicals. Sri Lanka’s rice imports have increased sharply since November, with imports exceeding 100,000 tonnes in December,” USDA noted.

In addition, rice prices in the country spiked by 52 percent from September last year to US$ 790 a tonne in January 2022 with smaller output, restricted imports and arbitrary price increases by large millers, USDA pointed out.

To reduce domestic prices, the government has cut the import duty to enable Sri Lanka State Trading Corporation to facilitate rice imports and has begun negotiating with regional peers to secure rice imports.  The government has already inked agreements with India and Myanmar to import rice directly. In addition, the government is also expecting 1 million tonnes of rice from China.