Sri Lanka To Buy 509,000 T Rice

Sri Lanka will spend about $132.34 million to bridge a deficit of 509,000 tonnes, said T P Leelaratne, additional secretary to the Ministry of Trade, Commerce & Food.

We have not had such a high (rice) deficit in the recent past, Leelaratne said. Since rice is this countrys main staple, we cannot substitute it with anything else.

He said below normal rainfall since October last year had significantly reduced output from the islands main Maha rice crop harvested in March.

The Maha rice crop this year was 896,750 tonnes, down more than 40 per cent from the usual yield, he said.

 

The islands second rice crop, the Yala, which was harvested in August, totalled 466,083 tonnes against an average of about 600,000 tonnes, he added.

Given Sri Lankas annual requirement of 1.9 million tonnes and with 50,000 tonnes kept as a buffer, were looking at a shortfall of about 509,000 tonnes this year, Leelaratne said.

Sri Lanka had an exceptionally good rice harvest of 1.8 million tonnes in 1995 when it imported only 9,000 tonnes.

The demand for rice has also gone up following recent hikes in bread prices after the government slashed a subsidy on wheat flour, he added. As bread prices shot up, Sri Lankas monthly wheat flour consumption fell to 45,000-48,000 tonnes from 62,000 tonnes, Leelaratne said.

The burden from the bread price hike too has fallen on rice. Now bread consumers too have converted to rice.

Leelaratne said 140,000 tonnes of rice had already been imported. The government has slashed duty on the import of rice, prompting private traders to import more.

At the moment were having enough rice to feed the country. Imports have managed to keep prices from going through the ceiling, he said.

But economists said large imports of rice are unlikely to tip the scale in the countrysbalance of payments. Actually were looking at a situation where our trade balance is going to improve this year on account of a weak economy, said Channa Amaratunga, an economist at Asia Capital.

Imports of investment goods have fallen eight per cent for the first eight months of this year. We predict that the trade balance overall will improve by about 18 per cent in dollar terms this year, Amaratunga said.

Sri Lankas trade deficit in the first eight months of this year fell 20.9 per cent to $836 million from $1,057 million a year earlier, the Central Bank said last week.

Exports rose to $2.63 billion in the eight months from $2.44 billion a year earlier, while imports fell to $3.47 billion from $3.50 billion, the bank said.

Analysts say Sri Lankas economy has slowed after being hit hard by intensified fighting with Tamil rebels and a drought which caused severe power cuts earlier this year, curtailing business. virtual="/incs/right.asp"-->