Sri Lanka lifts price controls on rice

Oct 26, 2010 (LBO) – Sri Lanka has lifted price controls on rice originally imposed to prevent a sharp price spike caused by low harvests and state controls that prevented imports from coming in to stabilize prices. The government’s information office said the consumer affairs authority has lifted a 70 rupee per kilogram price cap on rice, the information department said in a text message.

Different grades of rice had different price controls.

In April 2008 during the so-called ‘food crisis’ Sri Lanka’s rice prices rose above global levels forcing the government to relax import controls.

The state has raised taxes on both wheat flour and potatoes to force especially poor people to eat expensive rice, which is kept high by taxes on close substitutes.

In early 2010 rice prices rose higher than even 2008 levels due to a supply shortfall triggered by drought. Prices were brought down with imports from Pakistan.

Pakistan is a rice exporting country, but Sri Lanka’s farmers cannot produce standard export grade rice despite getting large production subsidies in the form of cut-price fertilizer.

Sri Lanka is currently experiencing a good rice harvest and rice prices are lower, but a recent i