Sri Lanka blocks rice exports

June 12, 2008 (LBO) – Sri Lanka has slapped a minimum export price floor of 100,000 rupees (923 dollars) per metric tonne to block rice exports, information minister Anura Yapa said. World rice prices, which peaked in April, have since moderated.

Global commodity prices have been booming amidst money printing in reserve currency countries, especially the United States.

In the run-up to the 1973 commodity boom and oil shock – which was created by unprecedented US money printing that ultimately forced the dollar off the gold standard – even the United States banned the export of soy bean in a misguided effort to contain ‘inflation’.

Economists have pointed out that commodity booms or inflation cannot be solved by export bans or price controls but only through prudent monetary policy.

In Sri Lanka inflation is now ‘officially’ at 26.2 percent after the government scrapped an index that showed 29.9 percent inflation in April. However since the beginning of 2008, Sri Lanka’s monetary policy has been tight. Sri Lanka’s acting finance minister Ranjith Siyambalapitiya had proposed to the cabinet of ministers to restrict exports as local prices were high, he said Thursday