Paddy marketing still an unaddressed issue

• The crisis also exposes governance gaps in agricultural forecasting and planning

Sri Lanka’s recurring paddy marketing crisis is once again unfolding in full view, exposing not merely a seasonal imbalance between supply and demand, but a deeper structural failure in agricultural policy, market regulation, and state intervention. At harvest time, farmers find themselves unable to secure a proper price. They plead for a fair price for their produce. Yet, despite repeated assurances by successive governments, the cycle of distress sales, price volatility, and middleman dominance continues almost unchanged. The situation remains unchanged under the current government.

At the heart of the current crisis is a familiar paradox: while the country celebrates bumper harvests and claims of self-sufficiency in rice production, the farmers who produce the staple food remain economically vulnerable.   

The Paddy Marketing Board (PMB), established precisely to stabilise this system, has consistently failed to function as an effective market buffer.  It is no longer in a position to compete with the oligopoly of mill owners who are not only market influencers but also call the shots in politics behind the scene.

This imbalance becomes particularly acute during peak harvest seasons in major rice-producing districts such as Anuradhapura, Polonnaruwa, Kurunegala and Ampara. Farmers, lacking storage capacity and immediate cash flow, are compelled to sell quickly. Private millers, aware of this urgency, depress prices strategically. The government has chosen not to interfere with pricing this time.

Compounding this problem is the chronic lack of modern post-harvest infrastructure. Paddy drying floors, storage silos, and transport logistics remain inadequate, especially for smallholder farmers. This structural weakness increases post-harvest losses and reduces the bargaining power of producers. In effect, the farmer is not participating in a competitive market. They are trapped in a vicious circle.  

Policy inconsistency has further aggravated the situation. Over the years, governments have oscillated between market liberalisation and heavy-handed intervention. Import restrictions on rice are frequently imposed to protect domestic farmers, only to be relaxed later when shortages or price spikes occur. Similarly, guaranteed price schemes are announced with political urgency but are not always backed by timely budgetary allocations or efficient procurement mechanisms. 

The crisis also exposes governance gaps in agricultural forecasting and planning. Paddy cultivation decisions are still largely made without reliable, real-time data on national demand, water availability, or stock levels. As a result, mismatches between supply and market absorption capacity are common. When output increases beyond market handling capacity, prices collapse; when output falls, consumers face inflationary pressure. 

Another dimension of the crisis lies in the concentration of market power within the rice milling industry. A small number of large-scale millers control a significant share of processing capacity in key regions. While they play an important role in the supply chain, their bargaining advantage over dispersed small farmers creates a structural asymmetry. In the absence of strong competition policy enforcement or farmer cooperatives with real market influence, price discovery remains skewed.

What is required is not another ad hoc intervention or short-term price support announcement, but a fundamental restructuring of the paddy marketing ecosystem. First, the Paddy Marketing Board must be transformed into a professionally managed stabilisation agency with guaranteed procurement financing, early-season market entry and transparent pricing formulas. Second, investment in decentralised storage infrastructure must be accelerated.

Third, the role of farmer organisations must be strengthened beyond nominal representation. Cooperative-led milling and marketing models—successfully used in countries such as India in states like Punjab and Kerala—offer lessons in reducing middlemen dependence and improving farmer margins. Sri Lanka’s fragmented smallholder base requires collective bargaining structures if it is to achieve meaningful market power.

Finally, policy coherence is essential. Import policy, price support mechanisms, and production incentives must be aligned within a predictable framework rather than adjusted in reaction to political pressure or short-term shortages. 

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