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Yala paddy floor price for first time to deter private undercutting
View(s):By Kapila Bandara
Yala season paddy harvest is now being collected at some state storages amid a shortage of some rice varieties and production is forecast at 2.09 million metric tonnes based on the land area cultivated as of May.
From Thursday July 3, the state-run Paddy Marketing Board opened its storages to gather paddy to supply a country in which, in a year, a Sri Lankan eats more than 100 kilos of the basic grain, a strategic commodity.
The Ministry of Agriculture will purchase Yala paddy at the farm gate, but Agriculture Minister K D Lalkantha said he will not disclose the strategy, alluding to tactics the private sector uses to buy paddy below cost.
The ministry this week set a new precedent in buying, setting a floor price for raw paddy. This appears to be an attempt to stabilise farm gate prices and prevent exploitation of farmers by private buyers who distort the rice market.
The buying price for Nadu, the medium grain variety, with a specific moisture content is Rs 102, Samba Rs 105, Keeri Samba Rs 112.
Deputy Agriculture Minister Namal Karunaratna announced the buying price for raw paddy with 14% moisture content. Rs 600m is available for purchases.
Paddy that does not meet the 14% moisture content will not be bought he said because the storages never had dryers. “There is no statutory basis either.’’
Newly harvested paddy has 21% moisture, research has found.
Successive governments have bought less than 5% of the harvest, data show. In 2016, the Sirisena-Wickeremesinghe Yahapalan government bought 1.7% of paddy produced at Yala — a little more than just 25,000 MT, barely enough for weeks.
Records show state purchases go back to the British colonial days when growers were told to sell two bushels (41.74 kg) per acre in Maha and a bushel in Yala. The guaranteed price was set in 1948 allowing farmers a say. The PMB came in 1971.
In 1977, the guaranteed price was Rs 1.91 a kilo and by 2018 it had reached up to Rs 41 a kilo.
Few remember the J R Jayawardana government’s much despised ‘food stamps’ from 1979 to 1989, which later evolved into so-called ‘Janasaviya’.
Deputy Minister Karunaratna said the Yala harvest is underway in Ampara, Kilinochchi, Mullaitivu, Trincomalee, Batticaloa, Wayamba and some areas of the south.
He called on growers to not sell raw paddy below the new floor price and urged traders to not buy below that price either. “We have advised the Consumer Affairs Authority to carry out raids immediately.’’
Minister Lal Kantha said rice farmers will be shielded from any loss or injustice and thanked the private sector for paying upto Rs 140 per kilo at Maha.
Mr Karunaratna said he met with groups representing small and medium millers and they agreed that the price for raw paddy was fair.
Usually there is a 12.5% weight loss from 100 kilos for example, when raw paddy is prepared to the 14% moisture content standard, he said.
Referring to rice prices, he said Nadu will sell at Rs 120 a kilo, Samba Rs 125, and Keeri Samba Rs 132. Nadu is price controlled.
The price factors in production cost, Mr Karunaratna said. “Red paddy production cost is Rs 72 per kilo. For white Nadu it is Rs 92.’’ Cost includes labour.
“The fertiliser subsidy is Rs 50,000 for two hectares and the price does not include it. If it was included, then the production cost falls further. Yala production cost is lower compared with Maha factoring in fuel price which has been fluctuating.’’
Much of the Yala output as usual will be Nadu. It was estimated in November that monthly consumption of Nadu is about 140,000 MT, while about 200,000 MT of all other common varieties are consumed monthly.
The Department of Agriculture made the Yala paddy production estimate of 2.09m MT in its crop forecast in June. But when processed as rice, the total tonnage will be less.
The net sown extent for Yala is 461,600 hectares. The cultivated area usually varies from one year to the next.
Just as the Yala crop is being gathered in some rice growing areas, there is a shortage of Keeri Samba, the oblong-shaped BG 360 variety. The food security panel decided late last month to import 40,000 MT of substitute rice, of which 5,000 MT will be shipped in by state institutions such as State Trading Corp and Sathosa, while private traders will account for the remainder.
In January, imported Nadu retailed for 218 a kilo, while Ponni Samba sold for Rs.228. Imported raw white cost Rs.213.
By then, along with the Maha harvest, farm gate price for short grain paddy fell by between a rupee and Rs.10, data show. A kilo costs between Rs.105 and Rs 135. Keeri Samba farm gate price dropped by between a rupee and Rs.11 a kilo to between Rs 108 and Rs 141.
Central Bank of Sri Lanka data show that import price (cost, insurance and freight) of rice in May this year was lower at US$922.73 (Rs 276,278) per MT versus a year ago at US$1,155 (Rs 346,271) per MT, a 20% drop.
The 2024 Yala production was 1.97 million MT. More than 481,300 hectares were cultivated, while the largest cultivation area was in Polonnaruwa district.
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