Sri Lanka rice export controls not a blanket ban: minister

Cabinet spokesman, minister Keheliya Rambukwelle said special varieties of rice grown targeting the export market will be allowed out.

About a third of Sri Lanka's minor 'Yala' cropping season was destroyed by drought in 2012, though there were estimated stocks of 1,200,000 metric tonnes with a state rice marketing firms, farmers and private traders.

Sri Lanka's farmers who receive around 26 billion rupees of fertilizer subsidies from taxpayers have not been able to produce standard export grades of rice, but some firms have started exporting in a small way.

An export ban would disrupt supplies to customers and make Sri Lanka exporters unreliable. The export restrictions came despite incentives promised in the budget for rice export businesses

Sri Lanka is estimated to consumer about 200,000 metric tonnes of rice a month.

By a gazette notification issued on June 27 Sri Lanka set an minimum export price of 300,000 rupees for a tonne of paddy and rice (HS code 10.06).

The notice said 'specific varieties of rice" targeted at export markets could be shipped with export licenses.

Sri Lanka's state can restrict citizens from importing or exporting items by gazette notification without allowing for a parliamentary or public debate for citizens to protest under the country's Export and Import Control Act of 1969.

Analysts say the Act is one of a series of enacted by the legislature after gaining self determination from British rule to restrict economic freedoms of citizens. In India the system was known as the 'license Raj', helping make the country a laggard in Asia.

The world saw severe trade restrictions from the late 1960s as the US printed money amid to fight the Vietnam War and fund President Nixon's fiscal excesses, triggering cracks in the Bretton Woods system of soft-pegs.

The Bretton Woods system of soft pegs collapsed in 1971 as Nixon closed the gold window. He also placed export controls as prices of basic foods, including edible oils shot up as the dollar weakened.

The export restrictions sometimes called the 'Nixon shock' were later removed. Sri Lanka virtually closed the entire economy in the 1970s after the Bretton Woods system collapsed.

Sri Lanka also restricts the import of rice through taxes and also taxes other grains in a in an attempt to force citizens to eat rice and enrich rent-seeking farmers.