Sri Lanka

Rice, wheat prices among highest in region

News and Press Release
Originally published

COLOMBO, 6 May 2011 (IRIN) - Sri Lankans are experiencing steep increases in two staple food sources, rice and wheat, because of severe floods and global shortages, says the UN.

A World Food Programme (WFP) analysis states that rice and wheat prices increased by 30 and 26 percent respectively on a year ago, making Sri Lanka one of the worst affected by rising food prices in South Asia.

"In Afghanistan, Bangladesh and Sri Lanka, both wheat and rice seasonally adjusted prices have increased the greatest compared to other countries in the region," according to WFP's April edition of Market Monitor, which tracks price trends in staple food prices in vulnerable countries. [ ] The increase in rice prices in Sri Lanka has been directly attributed to two floods in January and February that hit the main rice production areas - the north-central and eastern regions. [ ]

According to latest UN assessments, about 720,000 of the annual 2.7 million metric tons from the main Maha harvest season (mid-February to March) were lost.

Kulugammanne Karunathileke, secretary to the Ministry of Agriculture, said total losses could amount to about one million tons.

Rice and wheat, including bread, make up the largest portion of Sri Lanka's food basket. A March household income and expenditure survey by the Department of Census and Statistics shows per capita monthly rice consumption is 9kg and wheat, including bread, is about 1.9kg. [ ]

Rice for bread

Wheat prices have increased mostly due to global crop losses and previous governmental price hikes. In May 2010, after a hefty 2.6 million ton bumper rice harvest, the Sri Lankan government introduced a new tax of 10 cents per kilogramme of wheat to ensure rice farmers did not suffer losses.

Priyantha Geethanage, 43, a retail bread seller, said that with the sharp increase in wheat prices, more people had begun to opt for rice.

Overall bread consumption fell about 17 percent in 2010, according to the Census and Statistics Department.

Fallout eased

Even so, the effects of the price rises have been cushioned and could be mitigated. Harvest lost to floods could be alleviated by larger yields from areas outside the flood zones such as the Kurunegala and Anuradhapura districts, said Nimal Dissanayake, director of the Rice Research and Development Institute (RRDI).

"If the next harvest is a good one, suppliers will not be able to hoard buffer stocks," he said.

Susan Razzaz, senior country economist at the World Bank office in Sri Lanka, said despite such setbacks, the country had experienced accelerated economic growth last year and had increased overall spending power.

"Rice is the main staple of the population, including for the poor, but price increases will not cause large reductions in consumption. Instead, people are likely to consume less of other things if they have to," she said. GDP growth in Sri Lanka was 8 percent, with wages up and unemployment down.

However, Geethanage, father-of-three from the rural Galle District, whose income is directly tied to wheat prices, has found it increasingly hard to meet his family's food needs.

"It is very difficult to keep paying for all of this when the prices go up constantly," he said.