By: Staff Writer
July 12, Colombo (LNW): Sri Lanka has launched a major policy shift by removing long-standing restrictions on how surplus rice can be used, paving the way for manufacturers to produce beer, wine, biscuits, cakes and animal feed from excess paddy. The move, announced by President Anura Kumara Dissanayake, is being presented as part of a broader strategy to protect farmers from price collapses while transforming the country’s agricultural economy.
For decades, government regulations effectively limited rice to direct human consumption. Officials now argue that such restrictions have become outdated, particularly as harvest volumes fluctuate between the Yala and Maha cultivation seasons.
By revoking the restrictive gazette notification, authorities hope to create entirely new markets for surplus production rather than allowing excess stocks to flood traditional food markets and depress prces.
The President has pointed to Japan as a successful model where rice has been diversified into numerous value-added industries, creating stronger demand while supporting agricultural incomes. Sri Lanka now hopes to replicate aspects of that model by encouraging investment in food processing and industrial manufacturing.
Government research institutions responsible for reducing post-harvest losses have already begun developing commercial rice-based products. Officials say rapid commercialization could help absorb future surpluses while generating new export opportunities.
The initiative also fits into the government’s wider economic strategy of shifting Sri Lanka towards an export-oriented production economy. Authorities are simultaneously targeting significant growth in food, beverage and agricultural exports, including ambitious plans to expand coconut, processed food and rubber exports.
However, the timing of the announcement also reflects mounting pressure from the farming sector.
Paddy farmers across several districts are protesting over government purchasing prices announced for the current Yala harvest. The Paddy Marketing Board has fixed buying rates at Rs.120 per kilogram for Nadu, Rs.130 for Samba and Rs.140 for Keeri Samba.
Farmer organisations argue these prices fail to cover soaring production costs. They insist that a guaranteed minimum price between Rs.140 and Rs.150 per kilogram is essential simply to remain financially viable.
Production expenses have risen sharply due to higher fuel prices, expensive machinery rentals, labour shortages, costly seed paddy and continued dependence on privately purchased fertiliser and agrochemicals despite government subsidy programmes.
Many farmers also complain that private mill owners are purchasing paddy for prices as low as Rs.90 per kilogram, leaving cultivators burdened with debt despite healthy harvests.
Although the government has allocated Rs.16 billion to purchase paddy through the Paddy Marketing Board, farmer unions warn that demonstrations could intensify unless official buying prices are revised upward.
Against that backdrop, expanding industrial demand for rice could provide an alternative outlet that reduces dependence on conventional rice markets. Whether the policy delivers higher farm-gate prices will depend on how quickly manufacturers invest in processing capacity and whether new value-added industries generate sustained commercial demand for Sri Lanka’s growing rice harvests.