In a far reaching move, the Government yesterday stipulated the maximum retail prices for rice, the staple food of the vast majority of Sri Lankans. Hopefully, this will afford relief to a populace that has been suffering as a result of high rice prices for a number of months.
While the mechanisms of enforcement of the new price structure are yet unclear, what is certain is that rice traders will not be able to fleece consumers any longer through artificially inflated prices. Thus this is a step in the right direction.
There are those who argue that such price controls are not really compatible with the concept of an open economy. True, the basis of an open economy is healthy competition for emptying the consumers` wallets. But the State cannot remain an onlooker if the public is victimised by economic forces, trade manipulations or a combination of such factors. It has to take the side of the consumer, without necessarily harming the interests of the farmers and traders.
The prevailing rice crisis is a clear-cut case for State intervention. First, the Government declared rice as an essential commodity several months ago. There is a school of thought that this step should have been taken years, if not decades, ago considering the importance of rice in Lankans` day-to-day lives.
But the Government deserves plaudits for this declaration even at this point. Now comes the fixing of price ceilings for a number of rice varieties. Another important step was a duty waiver for imported rice.
The authorities are now looking forward to a bumper harvest from the current crop. This is indeed a possibility if early reports are any indication. It will help bring down rice prices in the market to some extent, thereby reducing the consumers` CoL burden.
Imports of rice consignments from several countries will also take the consumer in the same direction.
But it would be naive to think that this crisis is confined to Sri Lanka. According to the latest reports, the entire Asian region (where the staple food is invariably rice) is facing a `rice crisis` of an unprecedented scale. Food prices are going up globally and rice is no exception.
The looming rice/food crisis in Asia has gained worldwide media attention especially after dire warnings by the UN Food and Agriculture Organisation. The world has realised somewhat late in the day that the increasing use of food crops for making biofuel is having a direct impact on retail prices of food worldwide. With more crops channeled to ethanol manufacture, the remainder commands a higher price.
Another worrying factor is the use of rice and other grains for animal feed. The unprecedented rise of oil prices (a crude oil barrel recently crossed the US$ 115 mark) also affects food prices, in the form of extra transport costs which are ultimately recovered from the consumer. Climate change is also affecting agriculture worldwide, as rainfall patterns are disturbed and droughts become frequent. The use of arable land for `development` is another major issue.
Is there no solution in sight to the food crisis? That would be a pessimistic assessment even amid these challenges. Sometimes even the simplest of ideas can be a part of an overall solution. One frequently-quoted example is the low productivity of farms in Sri Lanka and elsewhere in the Third World. Better-yielding and more disease resistant paddy varieties must be cultivated using more modern (mechanical) methods. The latter will in any case be inevitable as more youth leave agriculture for white collar jobs.
All rice growing and consuming must join hands in an endeavour to produce such paddy varieties, under the banner of the International Rice Research Institute based in Manila. Another essential requirement is better storage facilities for rice stocks - which basically applies to all fruits and vegetables as well.
Indeed, there has never been a better time than now to expedite the Government`s Api Wawamu Rata Nagamu (Let us grow more food to develop the Nation) programme which aims to revive agriculture across the island including the newly liberated East. Its long-term aim is reducing our dependence on food imports.
This is praiseworthy as we have become more vulnerable to external shocks and price hikes in an import-centred environment.
Still, we must be prepared for more price hikes in the future, as worldwide rice consumption increases with no corresponding rise in production. There will be no simple solutions to this global crisis, but a concerted effort on the part of all rice producing countries will help ease Asians` hunger pangs.