Columns - The Sunday Times Economic Analysis

Self sufficiency in rice and its economic benefits

By Nimal Sanderatne

One of the significant post independent achievements of the country has been the attainment of self-sufficiency in rice. At the time of independence the country imported about one half of its requirements of rice and a huge quantity of wheat flour to feed about 7 million persons.

Today, with the population rising three fold to nearly 21 million, the country is able to fulfil its requirements of rice. However it still continues to import a substantial quantity of wheat, a near substitute for rice. Although the per capita consumption of wheat has fallen somewhat in recent years, the import quantities and costs of wheat imports are high.

The attainment of self-sufficiency has brought with it new concerns about remunerative prices for paddy farmers, the storage of paddy and the disposal of a presumed excess of rice in the country. There is an idea that excess rice could be exported. This is more political rhetoric catering to national sentiments than a realistic objective.

Rice self-sufficiency

The country achieved self sufficiency in rice several years ago. From 2005 to 2010 paddy production in the country was adequate to meet the country’s rice consumption needs, except in 2007 when there was a shortfall. In 2009, domestic rice production was 7 per cent more than the consumption requirements. In 2010 the excess was about 14 per cent. The expectation is that there would be a surplus this year too with a good harvest in Yala.

The country exports a small quantity of local varieties of rice demanded mainly by Sri Lankans abroad. There is also a small quantity of quality rice, such as Basmati that is imported. This too may decline with various quality rice of similar varieties being produced by companies involved in agricultural production. The country is likely to have a surplus of paddy production in excess of domestic rice consumption needs once the North and East comes into its full potential production of paddy. How the country copes with the surplus is an important issue.

The current surplus of rice is not a large quantity. In the foreseeable future, it is not likely that the country would have a huge surplus of rice. Paddy production in particular is vulnerable to weather conditions and climate changes and there are both good years and bad, in paddy production. In about every three years there is a fall in paddy production due to drought, floods or both.

Therefore a correct characterization of a surplus is one that takes into account this cyclic nature of production. Self sufficiency in rice therefore means that over a period of time the country has adequate stocks of rice. The country must have adequate stocks of rice from good harvests to meet shortfalls at other times. This is essential to ensure national food security. It is now opportune for the country to build an adequate buffer stock to meet years of poor harvests and protect itself from high costs of imported wheat as another world food crisis is likely to happen again.

The country is unlikely to have huge surpluses as consumption is increasing. There would be an increase in rice consumption due to the annual increase in the country’s population by about 200,000 persons. Therefore rice consumption would continue to increase. There are a large number of persons who are undernourished and whose per capita consumption is low.

The improvements in their livelihoods would result in increased per capita consumption of rice. There has been an increase in rice consumption in recent years and decreased consumption of wheat flour. This is a good development for health reasons, as much as for economic reasons. Rice is nutritionally better and especially superior to the extracted wheat that is mostly consumed in the country. When the price of rice relative to the price of wheat is favourable, it would result in an increase in rice consumption. The substitution of rice for wheat means that the country would be saving foreign exchange expenditure: a dollar saved is a dollar earned.

Export of rice

The export of rice is not a realistic option for several reasons. In the first place, the surplus of rice is not likely to be a large quantity that is necessary for export. Further the varieties of rice produced locally are not those that are in demand internationally and the costs of production of paddy and the prices fetched locally are higher than the international price for rice.

Large rice exporting countries produce rice at much lower costs. For these reasons there isn’t a possibility of exporting rice. Increased consumption of rice due to the population increase, an increase in per capita consumption, the substitution of rice for wheat and policies to encourage rice consumption should take care of the expected increases in production in the next few years. The possibility of converting excess rice for other by-products should be a long term strategy. The surplus of rice has to be utilised in other ways as the export of rice is not a realistic option.

Alternate uses of rice

The solution to the problem of increased production lies elsewhere. There are many ways by which the extra rice crop could be utilized.

Increased domestic consumption of rice by the substitution of rice for wheat consumption and the use of rice for producing by-products are ways of using the rice surplus. Increased production of rice should not be looked at as a problem. There is no serious problem caused by the current increase in rice production.

The use of rice as a substitute for wheat flour should be for not only direct consumption but also in the use of rice for preparation of foods like bread. However it must be recognised that such substitution has limitations, as rice does not have the chemical properties of wheat for baking and other methods of food preparation. Therefore, rice would have to be used in combination with wheat. However a greater substitution of rice is possible in prepared foods like string hoppers, hoppers and sweet meats that can be prepared with rice flour.

With relative prices being more favourable for rice relative to wheat, such substitution would occur and thereby increase the consumption of rice. The by-products of rice are not confined to these traditional foods. There is the possibility of rice being converted to alcohol. Several alcoholic beverages could be prepared from rice; the most noteworthy is Sake that is rice based. Other forms of liquor could also be produced from rice and some of these are exportable high domestic value added products. Alternate ways of using rice for food preparations and conversion to other uses must now be explored in earnest.

Summing up

The increased production of rice should not blind us to the fact that the country’s average yield levels are less than the potential and the costs of production are high. Increased productivity in paddy should still remain an important objective of agricultural policy. Export of rice is not realistic.

The surplus of rice would provide an opportunity to reduce the high levels of undernourishment of a significant proportion of the country’s population. Although there is an adequate production of rice for current needs, there is a significant proportion of the population that is not having access to adequate quantities of food.

The attainment of higher paddy production offers opportunities for meeting their needs. The increase in population and increases in per capita consumption or rice with greater substitutability of rice for wheat will absorb much of the increased production. Alternate uses of rice provide another means of utilising increased rice production.

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