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
India’s ban on Jane Street raises concerns over regulator role

Indian tax authorities and market regulator are considering widening their probe of United States trading giant Jane Street Group to investigate it for tax evasion in addition to an earlier charge of price rigging in the Bombay Stock Exchange’s benchmark Sensex, according to media reports.
The tax evasion charge comes on the heels of market regulator, the Securities and Exchange Board of India (SEBI), seizing 48.43 billion rupees ($570m) and banning four Jane Street-related entities from operating in the market for alleged price manipulation in the National Stock Exchange (NSE).
SEBI’s order has roiled the Indian markets, raising questions about regulator surveillance and investor protection in the world’s largest options trading market. Trading in India’s weekly equity index options has slumped by a third on the ban on Jane Street, the Reuters news agency reported on Thursday.
Trading of equity options lets investors buy or sell a stock at a predetermined price and date. As the Indian market rapidly grew to handle more than half of all global options trades, retail investors entered the market too.
Questions of price manipulation have dogged this rapid rise but remained vacuous until a New York court case in April 2024, where Jane Street alleged that its rival, Millennium Partners, had stolen its algorithms that helped it make in the Indian options market. A whistleblower, Mayank Bansal, then made presentations to SEBI showing Jane Street’s trading patterns. Bansal had agreed to speak to Al Jazeera about his interaction with SEBI on the matter, but then backtracked.
On July 3, in a detailed interim order, the regulator said that “by preponderance of probability, there is no economic rationale that can account for this sudden burst of large and aggressive activity, other than the intent to manipulate the price of securities and index benchmark”.
SEBI has alleged that Jane Street accumulated large long positions in stocks that are a part of the NSE’s Bank Index and built large short positions in index options at the start of trade. Around market closing time, it would reverse its trades in the cash and futures segments, pushing down the index and earning large profits in the options segment.
This activity was blurred by its offshore entities making some of these trades.
“Lawyers [can] push back with SEBI on jurisdiction-related issues, but when underlying [Indian] securities are issued, SEBI can take action,” Joby Mathew, managing partner at the law firm Joby Mathew and Associates and a former legal officer at SEBI, told Al Jazeera.
Jane Street has disputed SEBI’s findings and has hired lawyers to represent it before SEBI in the case. It has deposited the 48.43 billion rupees ($563m) of allegedly ill-gotten gains in an account pending the investigation and final report.
[Aljazeera]
Business
Connectivity sought among small island nations via shared tech innovation in solar energy

Sri Lanka played host to a pivotal regional energy summit this week as the International Solar Alliance (ISA) held its 7th Regional Committee Meeting for Asia and the Pacific in Colombo, reaffirming its commitment to making solar energy economically viable across the Global South.
ISA Director General Ashish Khanna lauded the government of Sri Lanka’s leadership, announcing a bold new agenda that could accelerate private sector investment, drive down solar energy costs and connect small island nations through digital tendering and shared technological innovation.
“We were honoured to have the Prime Minister of Sri Lanka, Dr. Harini Amarasuriya, and Energy Minister Kumara Jayakody present, Khanna said. “Asia-Pacific nations are home to 4.3 billion people — 60% of the world’s population. While 97% now have access to electricity, the dream of solar energy remains unfulfilled in many smaller countries and island states. This meeting was about changing that.”
The ISA, now comprising 124 member nations, is positioning itself as the largest multilateral agency of the Global South. With a vision anchored in equitable partnerships, its new framework focuses on four core pillars: policy and regulatory reform, enabling private investment, enhancing local institutional capabilities and sharing scalable technology.
“We want to ensure each country builds its own institutional ability to choose what’s best for its context, Khanna said. “This includes our STAR-C centres — Solar Technology Application Resource Centres — now in 17 countries and soon to be linked to a global digital knowledge hub.”
A highlight of the meeting was the signing of country partnership frameworks with Sri Lanka, Fiji, Solomon Islands and Kyrgyzstan. These frameworks are designed to guide collaboration over the next 3–5 years and accelerate solar goals through technology deployment, capacity building and financing strategies.
Importantly, the ISA also announced a game-changing initiative for six small island developing states (SIDS), aiming to aggregate demand across countries and conduct digital tendering. “This platform will help these nations secure solar power at the lowest possible prices, fast-tracking implementation in just one or two years, Khanna said.
Responding to The Island Financial Review, Energy Minister Eng. Kumara Jayakody, who chaired the regional meeting, provided a candid overview of the country’s solar trajectory and energy policy ambitions.
“As of now, nearly 13% of Sri Lanka’s total energy mix comes from solar, Jayakody said. “Last month alone, more than 70% of our energy came from renewable sources. We are firmly on track to meet our medium-term targets and our policy roadmap aims to expedite this transition within the next three to four years.”
He acknowledged the limitations faced by Sri Lanka due to its variable demand and relatively high share of daytime solar usage, but outlined the country’s efforts to enhance energy stability through battery storage, pumped hydro, and diversified load management.
“We are now tendering for a 60 MW battery storage system and developing the detailed design for a 600 MW pump storage project at Mahaweli, the minister revealed. “EV charging infrastructure, especially during daytime hours, is also a key part of our energy strategy — that is another form of storage.”
Questions from the press also touched on the stability of solar supply in island contexts, investment barriers, and compensation challenges faced by past developers in Sri Lanka. Minister Jayakody responded firmly, clarifying that the government is negotiating with investors transparently and moving ahead with new tenders.
By Ifham Nizam ✍️
Business
Online discussion on tariffs slightly invigorates stock market

Stock market activities improved slightly yesterday with the announcement of the government’s intention to hold an online discussion with the US Trade Representative, to try and reduce the tariffs proposed by the United States, the Ministry of Finance said. ‘This gave an impetus to the market and it recorded significant retail and institutional participation in the market, a top analyst said.
The discussion was attended by the Secretary to the Ministry of Finance, Dr Harshana Suriyapperuma, and relevant government officials, “to promote trade and investment relations between the two countries.”
Amid those developments both indices moved upwards. The All Share Price Index went up by 96.9 points, while S and P SL20 went up by 21.5 points. Turnover stood at 7.6 billion with a number of crossings. The top crossings reported were; JKH , where 76 million shares crossed to the tune of Rs 910 million; its shares traded at Rs 21.50, Dialog 22 million shares crossed to the tune of Rs 417 million; its shares traded at Rs 19.10.
HNB 650,000 shares crossed for Rs 232 million; its shares sold at Rs 357, Aitken Spence 1.6 million shares crossed to the tune of Rs 226 million and its shares traded at Rs 142.50, CT Holdings 284,000 shares crossed to the tune of Rs 168 million; its shares traded at Rs 591, Seylan Bank (Non- Voting) 2.4 million share volumes crossed for Rs160 million; its shares traded at Rs 66, Dipped Products two million shares crossed to the tune of Rs 122 million; its shares traded at Rs 61, Tokyo Cement (Non- Voting) 1.1 million share volumes crossed for Rs 79 million; its shares traded at Rs 72, Overseas Realty 1.8 million shares crossed for Rs 58.1 million; its shares traded at Rs 32 and Central Finance 200,000 shares crossed to the tune of Rs 54 million; its shares traded at Rs 270.
In the retail market top six companies that mainly contributed to the turnover were; JKH Rs 275 million (11 million shares traded), Capital Alliance Holdings Rs 266 million (15.6 million shares traded), Access Engineering Rs 218 million (3.5 million shares traded), Hela Clothing RS 175 million (47 million shares traded), Ceylinco Insurance (Non- Voting) Rs 175 million (118,000 shares traded) and Commercial Bank Rs 135 million (793,000 shares traded). During the day 350 million share volumes changed hands in 37700 transactions. It is said that the manufacturing sector led the market, specifically JKH, while the banking and financial sector also made a significant contribution to the market, especially HNB.
Yesterday the rupee opened at Rs 301.45/55 to the US dollar in the spot market, up from Rs 301.58/70 to the dollar, a day earlier, while bond yields were flat, dealers said.
The 2029 tenor edged down slightly, dealers said, while the others opened broadly steady from the previous close. A bond maturing on 15.12.2026 was quoted unchanged at 8.10/20 percent. A bond maturing on 15.09.2027 was quoted unchanged at 8.45/50 percent. A bond maturing on 15.12.2028 was quoted at 8.97/9.02 percent, from 8.95/9.00 percent. A bond maturing on 15.10.2029 was quoted at 9.46/48 percent. A bond maturing on 15.12.2032 was quoted at 10.40/50 percent, from 10.40/45 percent. A bond maturing on 01.06.2033 was quoted at 10.70/75 percent.
By Hiran H.Senewiratne ✍️
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