Sri Lanka rice importers forced to cancel orders amid state food controls
Sri Lankan rice importers canceled orders due to a narrow import window ending December 20 and shipping delays caused by bad weather in Tamil Nadu. Price controls and a high tax of ₹65 per kilogram (about $220 per tonne) further discouraged imports. These factors, combined with regulatory uncertainties, created supply challenges and increased market risks.
ECONOMYNEXT – Several Sri Lanka importers have cancelled orders for rice due to a narrow window to ship products, and price controls, with bad weather in India leading to vessel delays, trade sources said.
Sri Lanka lifted food controls on the people through licensing, imposed during Rajapaksa regimes, till December 20, allowing private companies to import rice.
But the window was too narrow, a trade source said.
“There has been bad weather in Tamil Nadu which delayed shipping,” an industry official said. “We were only given till December 20.
“We cannot do miracles. There is the threat of re-exports if there is a delay. So many importers have cancelled orders.
In addition to the small window, a tax of 65 rupees a kilo (about 220 US dollars a tonne or close to 50 percent of the export prices of 450 dollars plus) imposed on the people, remains.
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In addition to the tax, which is keeping prices about 50 percent higher than the rest of the world, Sri Lanka also imposed price controls on rice, further increasing risks for importers and traders.
Price controls were abandoned in Sri Lanka in 1978, but has come back triggering shortages.
The Consumer Affairs Authority has created shortages in a number of essential goods in the recent past and also decimated the poultry egg sector with its price controls.
Sri Lanka has high import duties and also licensing to give easy profits to politically connected producer lobbies which led to the birth of oligopolies in essentials like food and housing items.
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Source : Economy Next
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