Govt allocates Rs.500 m for paddy purchases

by Manjula Fernando

To face the bumper paddy harvest expected in the forthcoming Yala season the Government has allocated Rs.500 million to purchase paddy and an additional Rs.1100 million in the pipeline for State banks to issue loans for private sector buyers, Treasury Secretary Dr. P.B.Jayasundara said yesterday.

He said the Government paddy purchasing programme which was very effectively carried out during the Maha season will be continued in this season also to maintain a steady paddy price for local farmers.

"We are expecting over one million Metric tonnes of paddy harvest this season," the Secretary said, adding they have already geared the State mechanism to start purchasing paddy from farmers.

The Government has fixed buying rates at Rs. 16.50 for Samba and Rs.15.50 for other varieties. "We have made available Rs.500 million for district secretaries to purchase paddy and are hoping to increase funds if necessary."

Warehouses owned by the CWE, Paddy Marketing Board and the Food Commissioner will be taken over by the Government in case there is a shortage of storing facilities.

"We hope to issue a special gazette notification in this regard shortly, if we feel the existing storage facilities are insufficient to meet the exigency," he said.

While strengthening the Government paddy purchasing mechanism at district secretary level to ensure a steady price for farmers, the Government will continue incentives for private banks that grant credit facilities for private sector paddy buyers.

The repayment period for low interest loans issued to purchase paddy in the Maha season has also been extended from September this year up to March 2006.

Dr. Jayasundara said this measure was taken to lift the burden on the private sector paddy buyers and help them contribute effectively through this season as well.

The Central Bank has directed State and private banks to provide credit facilities for small, medium and large scale mill owners at a seven per cent interest rate. The per capita credit facility has also been increased from Rs.50 million to Rs. 75 million strictly under condition to adhere to Government stipulated buying rates.

"These measures are expected to maintain a steady market price for rice between Rs.27 to Rs.30," the Secretary said explaining that lifting the wheat flour subsidy and introducing a new tax on imported rice (Rs.9 per kilo) will boost consumption of local produce.

The Government will impose Rs.9 levy on every one kilo of imported rice.

Sri Lanka is self-sufficient in paddy. As part of its move to get rid of excess stock, the Government will release rice for WFP's humanitarian assistance work in the country.

An agreement to release 20,000 metric tones of rice to WFP at a price of Rs.30 per kilo was singed at the Treasury recently.

A bumper paddy harvest of one million metric tonnes is forecast for the Yala season. Harvesting will begin this month.

There was a 1.9 million MT record paddy production in the 2005 Maha season. Private banks have issued loans amounting to Rs. 846 million while State banks have granted Rs.544 million worth of loans to private buyers at a 7 per cent interest rate during the Maha season.