Effectiveness in managing demand and supply of rice to regulate the price and ensure availability in the Sri Lankan rice market

Rice consumers in Sri Lanka are inconvenienced by the lack of availability of quality rice at an affordable price, particularly from October to January of every year. While the government frequently intervenes through the imposition of a maximum retail price, there are concerns from paddy farmers that their net return is not adequate to sustain household expenditure. This article examines the effectiveness of the maximum retail price in ensuring access to rice at affordable prices for consumers and fair returns for producers in Sri Lanka by analysing production, market prices, and import quantities of rice from 2015 to 2022. Market prices are found to have consistently exceeded maximum retail prices during the period considered, indicating the ineffectiveness of the government pricing policy, while a weak correlation between the price of paddy and rice suggested anti-competitive behaviour and opportunism among leading millers. This highlights the need for strategic policy measures to minimise the effect of opportunism to improve market efficiency.