The coming months will reveal whether the newly elected National People’s Power administration can rewrite the script of the country’s rice economy.
For years, a recurring spectacle has played out in this country’s rice economy, one where the central characters — Dudley Sirisena, large-scale millers, and the Government — engage in an enduring tug-of-war over paddy pricing and market control.
In this, the victor has almost always been Sirisena, wielding his influence as one of the country’s biggest rice mill owners. Meanwhile, the consumers — the unwitting audience — watch from the sidelines, bearing the brunt of escalating prices and disrupted supplies.
Strategy
Each season, whether Maha or Yala, Sirisena and his allies in the milling industry execute a well-rehearsed strategy. They acquire paddy at terms favourable to them, often leaving farmers with suppressed prices and financial uncertainty. The Government’s Paddy Marketing Board (PMB), meant to act as a safety net, has repeatedly failed to counteract the millers’ dominance. As a result, farmers struggle to cover debts, and consumers grapple with inflated retail prices.
The situation spotlights a systemic issue: the failure of market regulation. Farmers, who invest heavily in cultivation, often end up with negligible profits.
The PMB, meant to act as a safety net by buying paddy at guaranteed prices, has failed to counteract the millers’ dominance. This leaves farmers vulnerable to exploitation, and consumers exposed to exorbitant retail prices in a climate where a handful of large-scale rice millers are set to earn Rs 50 billion as profits from rice sale.
Long has this theatrical saga of Sirisena-versus-Rice-versus-Government played out, and it shows no signs of curtain call.
The star of the show, predictably, has been Sirisena, whose team of millers dominates the stage. Meanwhile, the audience — the consumers — dutifully buy their tickets (or, in this case, overpriced rice) to witness the spectacle. The act? Sirisena and his millers sprinting across the field, gleefully hoisting paddy sacks while rewriting the playbook of supply and demand. It’s a comedy of errors for some, a tragedy for others, but for the consumers stuck in their seats, there’s no interval in sight.
Sirisena and the millers seem to hold the golden formula for success, winning every season — be it Maha or Yala. While they reap the rewards, rice farmers are left clutching at straws, unable to turn a profit from the millers’ low-ball offers or the meager support provided by the Paddy Marketing Board. It’s a harvest of inequality, where the farmers’ hard work feeds monopolistic gains, leaving little for the cultivators themselves.
Under Sri Lanka’s current climate of rice price monopolies, maintaining the Maximum Retail Price (MRP) for rice remains an uphill task for the Government. For Nadu rice, the MRP has been set at Rs. 220 per kilogram by the Ministry of Trade, yet retail prices exceed this in the market. The recent reports show Nadu rice selling at over Rs. 230 per kilogram. This disparity is attributed to alleged artificial shortages created by large-scale mill owners, despite excellent seasonal paddy harvests.
Keeri Samba rice, known for its premium quality, is in short supply. The Maximum Retail Price (MRP) for Keeri Samba is set at Rs. 260 per kilogram. However, actual market prices stay well over it due to monopolistic practices.
The rice price monopoly has been a significant public grievance exacerbating food affordability issues, economic hardship, and social unrest.
Dominated by half a dozen influential rice mill owners, the industry’s structure permits them to manipulate supply chains, creating artificial shortages and inflating prices during periods of political or economic crisis.
These traders or Maha Parimana Haal Moal Himiyo ( Large scale rice mill owners) are known to hoard rice stocks, particularly during times of turmoil, exacerbating food insecurity fears. By withholding supply, they create artificial scarcity, leading to price surges that directly burden consumers.
The rice market in Sri Lanka, it seems, is not a free-for-all — it’s more of a private club with a very exclusive membership. The large-scale millers have such a firm grip on the supply chain that small producers don’t get a fair chance to step onto the field. New players? Forget about it. It’s like trying to join an exclusive VIP party where the door is locked, and the bouncers are the millers themselves.
Plot thickens
Sirisena, the stalwart of the Sri Lanka’s Rice Millers’ Association, has again donned his cape of righteousness to defend his role in the country’s contentious rice market. With an air of indignation, Sirisena has firmly rejected allegations that his Araliya Rice Mill is part of the infamous “rice mafia.” Instead, he insists that his enterprise plays by the book, adhering to Government regulations and diligently working to sell rice at controlled prices.
Surrender
But the plot thickens. Sirisena said the real culprits behind the chaos are not the millers but broader systemic failures — due to Government policies and an apparent vacuum of regulatory oversight. In a move that could rival the drama of a courtroom finale, Sirisena even threw down the gauntlet, inviting critics and politicians to fix the system rather than scapegoating his business. He went a step further, offering to surrender his business to the Government if it could conclusively prove his role in the rice market’s woes.
Sirisena has voiced concern over the growing use of Nadu rice in beer production, which he says is worsening the ongoing rice shortages in the market. Echoing this sentiment, the Small and Medium Scale Rice Mill Owners’ Association has flagged the diversion of raw Nadu rice, a staple variety, to alcohol production as a significant factor contributing to reduced availability for household consumption.
So, is this the heartfelt plea of a misunderstood miller, or a strategic PR masterstroke? One thing’s certain: Sirisena’s knack for shifting the spotlight away from monopoly accusations might be his most valuable stockpile — second only to his warehouses of rice.
The consumers are left with limited access to the rice varieties they want — Nadu, for example — while the big guys dictate prices like they’re auctioning off gold bars. With fewer options and no ability to shop around for competitive prices, families are left in a tight spot, watching their budgets shrink with every grain of rice they buy. And let’s not forget the ongoing food security concerns — when your rice supplier has too much control, it’s more than a mere price hike; it’s a threat to your plate.
Large-scale rice millers exploit farmers by purchasing paddy at rates lower than the Government-guaranteed price, reaping substantial profits while leaving farmers at a disadvantage.
This systemic issue is exacerbated by the inefficiency of institutions such as the Paddy Marketing Board (PMB), which, despite its mandate to safeguard farmers’ interests, often fails to provide adequate market support.
For instance, during the last Yala season, the PMB had purchased 119 million metric tons of Keeri Samba paddy from Ampara. The country’s daily rice consumption alone stands at 6,500 metric tons. Such figures highlight the gap between institutional procurement efforts and actual market demand, leaving room for millers to dominate the market, manipulate prices, and maintain their monopolistic control.
The PMB plays a crucial role in Sri Lanka’s rice economy, tasked with purchasing paddy from farmers, storing it in government-owned warehouses, and releasing it during times of scarcity. Funded by loans from the Bank of Ceylon, People’s Bank, and the Treasury — with Cabinet-approved allocations — its operations are subsidised heavily by the Government. Even salaries of PMB employees are paid by the Treasury, reducing operational pressures that private entrepreneurs face, such as covering wages and storage costs from income generated by stockpiling paddy.
Despite these advantages, the PMB is in debt, owing Rs. 28,000 million to banks and the Treasury. This raises questions about its efficiency and financial management under previous Governments. Although substantial funds were allocated to purchase paddy, the PMB failed to generate revenue from its marketing operations. The disconnect between its objectives and performance is evident, highlighting what critics describe as systemic mismanagement.
Private millers, by contrast, must cover all costs, from worker salaries to warehouse maintenance, with their own revenue. Yet, they manage to sustain operations while competing in the same market. This stark contrast underscores the inefficiencies within the PMB. Addressing the inefficiencies within the PMB is critical to ensure it fulfills its mandate without becoming a financial burden on the State.
The high prices of Nadu rice stems from several factors, including market manipulation and supply chain inefficiencies. Nadu rice, which accounts for about 60 percent of the country’s rice consumption, has been at the centre of controversy due to hoarding by large-scale millers. These millers reportedly withhold rice stocks to artificially limit supply, creating price hikes. This oligopolistic behaviour is further exacerbated by political influence which complicates Government intervention
Despite a record paddy harvest in the Yala season this year, prices have not decreased as expected. Instead, distribution inefficiency and market dominance of a few players have prevented the benefits of increased production from reaching consumers. Some millers reportedly engage in disproportionate trade practices, such as exchanging large quantities of one rice variety for limited supplies of Nadu, compounding shortages
Price controls
Historically, price controls and other regulatory measures have been attempted but often failed to provide lasting solutions. Addressing these issues needs not only regulatory enforcement but also structural reform to reduce the power of monopolistic millers and improve market transparency.
This situation isn’t only about a few bad apples — it’s a sign of a much deeper issue in the country’s economic framework. The public’s growing frustration is clear and the calls for Government intervention such as strengthening the Paddy Marketing Board are getting louder.
Will the NPP Government with its left-wing principles, permit the likes of Dudley Sirisena and a few other large-scale millers to continue controlling rice prices is the question looming over the Government.
President Anura Kumara Dissanayake said as part of their strategy, the Government will increase market presence by using state-owned warehouses and Sathosa outlets for rice distribution.
It will enhance paddy purchasing by strengthening the PMB to ensure fair prices for farmers and consumers. Stricter regulatory measures to curtail anti-competitive practices by large millers are to be put in place.
President Dissanayake said they will acquire a portion in the market to control the situation. Addressing the rice price monopoly needs better regulation of the agricultural market, improved transparency in pricing mechanisms and a focus on fair competition.
Rice imports
Plans are under way by the Government to give rice at reduced rates to the public starting this Maha season. It has instructed millers to conform to this otherwise the Government will implement stringent laws to maintain lower rice prices or even import rice to ensure lower prices.
On the instructions of the President, the Consumer Affairs Authority has prepared a report on the availability of rice in warehouses of millers. Millers purchase paddy at rates lower than the government-guaranteed price. This leads to significant profit-making at the expense of farmers
However, rice prices remain high, and Sirisena and other major millers are accused of withholding stocks, preventing prices from stabilising even when supply is sufficient. Millers sometimes use middlemen to procure paddy, further reducing the farmers’ share of profit. These intermediaries often drive down prices by claiming market saturation or quality concerns.
Farmers complain about non-transparent pricing mechanisms. Without access to real-time market information or Government intervention, they are unable to assess whether the prices offered by millers are fair. Over time, these issues discourage many small-scale farmers from continuing rice cultivation.
To counter the dominance of large-scale rice millers profiting, the Government will secure paddy stocks. Government warehouses can store up to 201,000 metric tons of paddy. Plans to renovate dilapidated facilities could increase this capacity to 300,000 metric tons. The Food Commissioner General’s Department also has warehouses that could raise the storage capacity to 500,000 metric tons — which could meet the rice market demands.
Small- and medium-scale mill owners are to process paddy into rice and this will be distributed through the Sathosa network, enhancing competition against dominant millers. These initiatives will stabilise supply.
Rice mill registration
To regulate the market, the Government recently made rice mill registration compulsory for paddy stockpiling, ensuring only registered millers could purchase stocks thus complementing Government investment in irrigation and fertiliser subsidies that facilitate the paddy harvest. In the absence of adequate paddy stocks in Government warehouses, the State’s only option to control rice prices lie in enforcing legal measures or acquiring a portion of the market through direct intervention.
