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Rice prices: MRP undermined by stock shortages?

26 Jun 2022

 
  • Large-scale mill owners split on control price sales
  • No rice available for MRP: traders
  • Around 80% of small-scale rice millers have abandoned profession: Ranjith
  • Calls to enforce paddy purchase price compliance
  • CAA maintains pressure on large-scale millers
  • Adequate rice stocks being imported
By Maneesha Dullewe  Following the Consumer Affairs Authority (CAA) setting a Maximum Retail Price (MRP) for rice with effect from 10 June, which many stakeholders regard as a commendable move, questions arise as to whether rice is actually available at the MRP, as well as the availability of rice stocks itself given reports of scarcity. With the CAA gazette of a MRP of Rs. 210 for domestically-produced white and red rice, Araliya Group Chairman and Rice Millers’ Association President Dudley Sirisena called on rice producers to sell rice according to the Government’s control price, urging millers not to profit from consumers who were suffering. However, large-scale mill owners seemed to be in two minds about selling rice at the Government’s control price, with a dispute between Sirisena and another large-scale miller, resulting in both trading allegations at each other at a press conference held last week. A visibly-upset Sirisena walked out of the press conference calling on the Government to intervene and confiscate stocks of rice held by millers who do not sell at the control price. Speaking to The Sunday Morning, a trader who operates near the Dambulla Economic Centre noted that despite the imposition of the MRP, there had been a shortage of local rice in the market for about two weeks, with only the imported rice varieties available. “There has been no local rice in the shop for two weeks. Dudley Sirisena’s Araliya mill said that they would provide rice at Rs. 216 per kg. I have put in an order at Rs. 216 but this has not been supplied yet. Another mill that I have contacted has also not supplied rice yet. No goods are being distributed these days and even though only Araliya said that it would provide rice at Rs. 216, I have not received stocks yet since there are problems with transport for their lorries due to diesel shortages,” he explained. Meanwhile, speaking to The Sunday Morning, All Ceylon Small- and Medium-Scale Rice Mill Owners’ Association President B.K. Ranjith said: “There is no drop in prices visible in the market, however there is a shortage in stocks since production is hampered and millers have left the industry.”  Adding that about 80% of small-scale rice millers had abandoned the profession, which would further complicate the supply of rice to the market, Ranjith noted that while the rice millers were of the opinion that there should be a price control, there was an issue in actually enforcing this given the high prices of paddy.  Moreover, he said that while the country could manage with the existing stocks for at least three months, rice needed to be released to the market properly to ensure this: “While domestically-produced rice is facing a shortage in the market, there is enough paddy sufficient for three months. However, there is a rice shortage because of the exorbitant increase in paddy prices.”  Ranjith also noted that as per Sirisena’s declaration, other large-scale mill owners should also follow through for the price changes to become effective. “Dudley Sirisena made a positive decision and we respect it. What we want is for other mill owners to also follow through on this, since they have large rice stocks in store that they have obtained in a manner that would enable them to sell at the control price. If they undertook to sell rice in this manner the smaller millers would also be able to do so.”  The available stocks of rice would last the country three more months at the minimum and could even last four months with the addition of the Yala harvest, Ranjith stressed.  Meanwhile, when The Sunday Morning made inquiries from the Consumer Affairs Authority (CAA) on the resulting impact following the imposition of the MRP, a high-ranking CAA official, who wished to remain anonymous, pointed out Sirisena’s recent statement as the best example of changes in the market following the MRP.  “The fact that they are providing rice to the market at prices somewhat at the levels of the MRP is a huge victory that followed the imposition of the MRP. However, I can’t say with certainty that rice is being sold everywhere at the controlled price, since there are traders who have priced their rice higher than the MRP,” he noted, however adding that the actions of the CAA had ensured a certain measure of change: “We have exerted massive pressure upon traders, and we will definitely continue to exert this pressure.” When asked about the availability of local rice stocks, the official acknowledged that there was a shortage in domestically-produced rice. “Supplies are flowing into the market as usual at the moment and although there are shortages in certain areas, we can’t really say that there is a massive shortage. The CAA also expects that this shortage will be resolved in the near future.” Similarly, commenting on the status of rice availability in the market following the MRP, Trade Ministry Secretary S.T. Kodikara remained firm that while shortfalls were expected, the Government was taking all necessary steps to ensure that such shortages were not felt by the consumer and that the CAA move to protect consumers was having its required effect due to these efforts to minimise shortages.  “The Government continues to maintain its stance on the controlled price of rice, there is no issue in this regard. However, the market prices of rice could have gone down following the MRP, since we are also trying our best to ensure that the prices are reduced. For instance, we are also importing rice, and when there is an increased influx of rice into the market, the price automatically reduces.” Kodikara stressed that accordingly, there was no overall rice shortage in the market, since it was being supplemented with imports: “We are continuing to import, and we are also receiving rice under the Indian credit line. Therefore, it’s likely that rice is available in the market at prices lower than the MRP.” When asked about the future availability of rice, Kodikara said: “According to our present calculations, we have identified the amount of the monthly local rice production and we import the shortfall to complete the monthly rice requirement. Therefore, there is no chance of a rice shortage. While there is of course a shortage of domestically-produced rice, we import the remainder as necessary. “On the expectations that the present monthly production and the future Yala harvest will be lower than expected, we have estimated the monthly shortfall. However, we are ensuring that this shortage is not felt by the consumer. When it comes to essential food commodities, the Agriculture Ministry provides us estimates on the monthly production, which we use to determine the imports. Not only the State, but the private sector has also stepped in. Working in connection with the private sector by providing them various facilities to undertake imports, we are also paying close attention to the quantities received at port on a daily basis.” 


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