Business
Rising price of rice in Sri Lanka: The roots and remedies
By Manoj Thibbotuwawa
Rice is the dietary staple and the major domestic crop cultivated in Sri Lanka since ancient times. Therefore, the production and availability of rice are closely tied to food security as well as political stability in the country. Every government since independence has given prominence to the goal of achieving self-sufficiency in rice. Accordingly, a significant amount of resources are allocated for the supply of irrigation water, land development, research on technological improvements, farm mechanisation, and support facilities such as credit, subsidised inputs, and farmer welfare measures.
As a result, the cultivation of paddy and production of rice increased steadily with Sri Lanka reaching near self-sufficiency in rice and rice imports dropping to an insignificant amount. Despite these achievements, problems relating to the paddy and rice sector continue to occupy a foremost place among the country’s socio-economic issues. At present, supply shortages and rising retail prices have caused severe social unrest. In this background, this blog identifies the current problems in the rice sector and suggests some policy recommendations.
Demand and Supply Dynamics of Rice
Rice is an essential consumer good with inelastic demand in the local market and the consumption of rice is important not only to the economy but to Sri Lankan culture as well. Based on 2016 per capita consumption of 104.5 kg per annum, the annual national rice demand was 2.1 million MT which is equivalent to 3.2 million MT of paddy. After adjusting for seed paddy, processing, waste and other requirements, Sri Lanka needs to produce 4 million MT of paddy to fulfil the above national demand. No significant change in national requirement is expected in the near future due to the balance between gradual reduction in per capita consumption and population growth.
Sri Lanka managed to achieve this target over the last two years and is on course to achieve the same this year as well. The 2020 Yala output of 1.9 million MT paddy (equivalent to 1.3 million MT rice) produced around September 2020 was sufficient to feed the country for about six months. The 2020 Maha output of 3.1 million MT paddy (equivalent to 2 million MT rice) produced around March 2021 is sufficient to feed the population for about nine months. The Department of Agriculture estimated a harvest of 1.5 million
MT for the 2021 Yala. Therefore, any current or speculatory rice shortage is not expected.
The Problem: Pricing Dilemma
The rice market has a delicate system of price determination that is associated with availability in the market. It is connected to seasonal harvests of Maha and Yala leading to high fluctuation of prices over certain months of the year. From January, the prices of paddy and rice decline gradually and reach their lowest in March with the major Maha harvest. It increases slightly from April and undergoes a minor slump during July-August when the minor Yala harvest reaches the market. The rise of the prices of all types of rice is quite sharp from September onwards reaching the peak in December and begin to decline again in January continuing the cycle. The difficulties faced by consumers due to a sharp rise in rice price during September-January is one of the most politically sensitive issues in the country.
Severe disruptions happened to this usual pricing mechanism in recent times by the cooperative decision making and anti-competitive practices of large and leading millers who have large storage facilities, purchasing power and economic stability. Farmers are inherently disadvantaged in the market because a large number of farmers sell their harvest at the same time due to lack of capacity to store paddy and credit bound relationships due to up-front capital requirement for uncertain several months.
Cooperative decision-making by large millers who handle a sufficiently large (about 33.8%) share of purchase in the paddy market gain an oligopolistic advantage by releasing large stocks of rice to the market during the harvesting period to create a glut so that they can purchase paddy at minimum prices. Also, their anti-competitive practices such as exclusive supply agreements, horizontal cartel practices and compelling farmers to sell paddy only to them prevent small scale millers from purchasing paddy. Curtailing stocks thereafter create a scarcity of rice to maintain a high price till the next harvest period.
The Remedies
Different command-and-control methods such as adhoc price controls and emergency regulations were used by successive governments to control the market. These were easy to enact, yet have proven ineffective. Therefore, measures that provide facilitation, monitoring, and regulation should be the key strategies of the government in both the rice and paddy markets while allowing market forces of supply and demand to determine prices.
Promoting competition is the key to constrain the oligopolistic market power enjoyed by the large millers. However, small and medium millers will find it difficult to survive in the market due to strong competition from the successful, large ones that dominate the space with wide-ranging products including premium and mass markets. Thus, small and medium millers should be empowered through credit facilities to buy paddy and to upgrade their mills to achieve economies of scale and production cost advantage.
Further, organising them under a suitable collective business model such as cooperatives will facilitate competition while providing a sustainable solution. In the meantime, as a short-term measure, the Paddy Marketing Board (PMB) can increase its purchases so that these can be milled by small and medium millers on a quota basis and distributed through Sathosa.
While the Consumer Affairs Authority Act, No. 09 of 2003 was designed to control anti-competitive practices that harm consumers, this is constrained by resource limitations and information asymmetry. This can be minimised by establishing a market information system with mandatory reporting under Section 12 of the Paddy Marketing Board Act No. 14 of 1971 which provides for recording data on production, sale, supply, storage, purchase, distribution and milling of paddy and rice.
Other than the anti-competitive practices, the cost of production of paddy and bargaining power are also factors that determine the price received by farmers. Modern technologies should be promoted to optimise the input use so that the cost of production could be minimised. The current policy drive on organic farming could be rationalised to reduce the dependency on costly imported inputs such as chemical fertiliser and agrochemicals gradually.
Small-scale farmers should be organised under suitable operational units such as The Japan Agricultural Cooperatives (JA) so that their farming efforts are coordinated and consolidated to increase their collective bargaining power. Decisions on rice importation should be based purely on market conditions given by the proposed market information system. These strategies can stabilise the prices of paddy and rice without severe fluctuations and make paddy farming a viable livelihood with a sustained income for small-scale farmers.
Link to blog: https://www.ips.lk/talkingeconomics/2021/10/07/rising-price-of-rice-in-sri-lanka-the-roots-and-remedies/
Manoj Thibbotuwawa is a Research Fellow at IPS with research interests in agriculture, agribusiness value chains, food security, and environmental and natural resource economics. He holds a BSc (Agriculture) with Honours from the University of Peradeniya, an MSc (Agricultural Economics) from the Post-Graduate Institute of Agriculture at the University of Peradeniya, and a PhD from the University of Western Australia. (Talk with Manoj – manoj@ips.lk).
Business
Flagship Colombo terminal held back by equipment tender failures
The Colombo East Container Terminal (CECT), Sri Lanka’s flagship port project under the Sri Lanka Ports Authority (SLPA), remains unable to reach full operational capacity, more than four years after construction began, industry insiders say. Despite near-complete infrastructure and a strategic vision to bolster Sri Lanka’s position as a regional maritime hub, the terminal is paralyzed by a single missing component: straddle carriers, essential machines for moving containers between ships and yard storage.
“The terminal is essentially ready. Quay cranes, yard cranes, automation systems, and supporting infrastructure are all in place. Only straddle carriers are missing, and without them, full-scale operations are impossible,” Tharanga Jayasinghe, President of the Port Finance Divisional Independent Employee Association, told journalists.
Addressing a press conference held in Colombo Jayasinghe said that the delay is not due to employee performance. “SLPA staff have delivered outstanding results at the Jaya Container Terminal and partial operations at CECT. The responsibility to bring CECT fully on track now lies squarely with SLPA management and the authorized decision-makers overseeing this strategic national investment.”
Since 2021, the procurement of straddle carriers has gone through five tender attempts, each canceled or revised, resulting in significant lost time. Early tenders focused on leasing the machines, then on diesel-powered carriers, before SLPA made a strategic shift to hybrid straddle carriers, in line with CECT’s green terminal vision and international shipping standards.
Despite this shift, delays have persisted due to what employees describe as “questionable technical decisions and favoritism toward predetermined bidders.” The third tender round, which allowed both diesel and hybrid options, drew particular criticism. A compliant hybrid bid offering superior lifecycle efficiency was overlooked in favor of a diesel-only supplier, prompting legal action. While the case was pending, SLPA revoked the award and canceled the fourth tender, further prolonging the project.
CECT, a nearly USD 1 billion investment entirely financed by SLPA, represents one of the largest infrastructure projects ever undertaken by a Sri Lankan company. Funded during the economic recession that began in 2021, it is considered a source of national pride. Yet, Jayasinghe warned that this pride is overshadowed by concerns over repeated procedural missteps and apparent favoritism.
The current, fifth tender has raised new alarm. Qualification criteria appear to have been significantly diluted, allowing a previously favored company—reportedly with limited experience—to re-enter the process. For approximately USD 50 million worth of 30 hybrid straddle carriers, bidder experience requirements have been reduced to manufacturing just 15 units over five years, a stark contrast to the standard benchmark of 500 units for equipment of this scale.
According to Jayasinghe, these relaxed criteria risk awarding the contract to an under-experienced supplier, potentially undermining CECT’s operational credibility and discouraging shipping lines from engaging with the terminal. Observers note that one internationally recognized supplier withdrew from the process, citing lack of transparency and perceived bias.
Industry insiders warn that delays at CECT are not merely operational concerns—they also create openings for competing regional ports to capture Sri Lanka’s container traffic. “The demand is ready, but the terminal’s readiness is being held back by indecision and procedural mismanagement,” Jayasinghe said.
SLPA employees, he added, have long safeguarded national port assets from corrupt practices. Their vigilance secured the East Container Terminal (ECT) in 2021, and today they are raising alarms over the CECT tender process. Commercially, SLPA continues to perform well, including a recent Rs. 5 billion transfer to the Government Consolidated Fund. Shipping lines remain eager to engage with CECT, underscoring that the challenge is not demand but readiness.
The unanswered questions are stark: why has a strategic national procurement repeatedly failed, who is promoting inexperienced suppliers, and who will be held accountable? Until these issues are addressed, CECT remains not merely delayed, but denied—its potential, strategic importance, and the trust of the nation hanging in the balance, Jayasinghe added.
by Chaminda Silva ✍️
Business
SOLA Festival Returns: Building a Long-Term Model for Conscious Festival Culture
SOLA Festival returns to Sri Lanka’s south coast as an evolving cultural movement, continuing its mission to redefine festivals through community collaboration, sustainability, and conscious design. The festival will take place on the 30th and 31st of January at The Doctor’s House, Madiha.
Developed in close partnership with the local community in Madiha, near The Doctor’s House, where the festival has established its home, the SOLA Festival was conceived as a response to the increasingly extractive nature of tourism, which too often takes more from local communities than it gives back. The festival is guided by the core values of Respect, Inclusion, Sustainability, Creativity, and Collaboration, bringing people together through music, workshops, immersive experiences, and community-led initiatives.
Founded by a collective of designers and event makers from Copenhagen, SOLA aims to become one of the first fully waste-free and circular festivals in Asia and a global role model for sustainable events. Chief festival organisers, designers Susanna and Miranda, whose portfolio includes installations and designs for Copenhagen Fashion Week as well as projects with Collective Fashion Justice, explained that the idea for the festival was inspired by how incredibly warmly they were welcomed into the local community in Sri Lanka and their desire to give back and support that community “We started SOLA to show that festivals can bring joy, creativity, and music while also giving back to the communities and environments that host them,” says Susanna. “SOLA was conceptualized and created with a strong focus on working in harmony with nature and fostering meaningful community connections. Together with ouramazing partners, we want to prove that conscious, community-led events are not only possible, but inspiring, joyful, and sustainable.”
Following its inaugural edition in 2025, SOLA Festival has positioned itself as an annual event in Sri Lanka, growing thoughtfully each year with a long-term vision rather than as a one-off project. The 2025 edition welcomed 800 guests, featured international and local DJs, and hosted five activities and workshops, laying a strong foundation for the festival’s future direction.
This year, the festival is looking to nearly double the number of attendants, and will feature over a dozen DJs from more than five countries including internationally renowned Yung Singh, and local legend DJ Shiyam.
More than a music festival, SOLA is a multidimensional platform for art, learning, sustainability, and connection, and in keeping with this vision, the programme also includes traditional, community centric, creative activities including communal weaving sessions, natural dye workshops, drum circles, beaded fabric jewellery workshops, make-your-own merch sessions and more.
SOLA is being developed within the principles of a circular economy, and the organisers view SOLA as a project to be built and refined over many years, with each edition deepening its impact. As the festival grows, SOLA aims to involve more local and international collaborators, with the goal of becoming an international role model for sustainable events.
Sri Lanka’s long-standing values around craftsmanship, resourcefulness, and care for the earth are central to this vision. The team believes the country has the potential to become a global leader in sustainable tourism.
Community collaboration remains at the heart of the festival’s programming. For the upcoming dition, SOLA is working with a growing network of partners, including ApiHappi, Selyn Fairtrade, Sarana Sri Lanka and Sambol Foundation. The official banking partner for the event is Hatton Nation Bank.
The SOLA team, together with a local school and WeCare will conduct a beach clean-up ahead of the festival. Post the clean-up, the children will participate in a crafting session focusing on recycling and upcycling everyday waste, while learning about plastic and street dogs. Sambol Foundation will host a natural dye workshop before the festival and the fabrics will be used for festival installations. Selyn Fairtrade, House of Lonali and ApiHappi, will contribute fabric that local women will use to make reusable decorations for the event, ensuring the festival avoids purchasing all new materials in the future. Selyn has also taken on producing festival merchandise and running a fabric bead workshop. The festival will open with a traditional Sri Lankan fire ceremony, organised in collaboration with Sarana Sri Lanka. SOLA will also organize a fundraiser in collaboration with WeCare, an organisation dedicated to the wellbeing of local street dogs.
Business
HNB Assurance PLC Recognized Among Sri Lanka’s Best 20 Workplaces for Women 2025
HNB Assurance PLC was recognized among Sri Lanka’s Best 20 Workplaces for Women 2025 by Great Place to Work Sri Lanka, for the Company’s long-standing commitment to fostering an empowering workplace for women.
Over the years, HNB Assurance has introduced several progressive initiatives to support women at different life and career stages, including flexible work arrangements, caregiver and maternity support, leadership development programs, and platforms such as in.she, which champions women’s growth both professionally and personally. These efforts have contributed to a workplace where women are not only represented but are actively enabled to succeed.
Commenting on the recognition, the Executive Director / Chief Executive Officer of HNB Assurance PLC, Lasitha Wimalaratne stated, “Being recognized among Sri Lanka’s Best 20 Workplaces for Women is a powerful affirmation of who we are as an organization. At HNB Assurance, inclusion is not an initiative, it is a mindset embedded into how we make decisions and how we care for our people. We firmly believe that when women are empowered, organizations become stronger. This recognition belongs to every woman contributes to our culture every day.”
Navin Rupasinghe, Head of Human Resources / DGM of HNB Assurance PLC stated “This recognition reflects years of intentional effort to build a workplace where women feel heard and inspired to reach their full potential. From flexible policies to leadership pathways and a deeply people-centric culture, we have focused on creating an environment where women can grow without compromise. We are proud of how far we have come and remain committed to continuously raising the bar. Lastly, I’d like to thank Great Place to Work for this recognition as it motivates us to keep evolving our people practices and building a workplace where women can grow.
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