Estimation of selected factors affecting rice imports in Sri Lanka

For ensuring the price stability and food security in Sri Lanka, it is important to estimate the drivers of the import rice demand, as rice is the main diet of majority of the Sri Lankans. The purpose of the study was to estimate the impact of the exchange rate, inflation rate, production, and gross domestic product (GDP) on rice imports in Sri Lanka during the period of 1990 to 2023 while finding the existence of short and long run relationships between the dependent and independent variables. In this study, the log transformed data were used for improving the linearity among the dependent and independent variables and for boosting the validity of the models. Autoregressive distributed lags (ARDL) model was employed to find out the long and short run relationships among the variables. The findings imply that GDP positively impacts rice import demand while production negatively affects it in both the short and long run. During the study period, exchange rate and inflation rate impacts were not significant. The diagnostic tests of restricted error correction model (RECM) and unrestricted error correction model (UECM) further verify the reliability of the fitted models. The high predictive accuracy of the ARDL model, confirmed by a low mean absolute scaled error (MASE) of 9.40 % and mean absolute percentage error (MAPE) of 3.59 %, suggests that domestic production and GDP are the primary, significant drivers of rice import demand. This study will help policymakers, government, and other related parties to get ideas about the economic environment for managing and stabilizing the domestic agriculture while ensuring food security effectively.