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Rice: Economic Boom or Bust? Part VII

Bojoon.com and CIC has teamed up to review one of the most controversial debates of Sri Lanka - is rice as an industry worth the effort.

The discussion so far...

Rice as an industry comes under heavy fire as an unprofitable venture notes Dr. Sumith Abeysiriwardena - Senior Consultant Researcher of CIC Agri Businesses. Yet, he points out, instead of being abandoned as such, rice production over the last 6 decades has increased by 12 times!

He points out the tremendous demand for rice, ease of handling the grain, especially in terms of storage, and as a crop the only use that can be made out of marshy lands. He continues that with our technology and our unique hydraulic systems our productivity is high and asserts that history has proven that rice is more than our staple, but also our stronghold against our many enemies.

He describes while countries like Australia is making a concentrated effort to create a viable export and domestic industry, we have decreased our rice consumption for wheat, making us vulnerable to adverse foreign influences.

He feels that though buffer stock comes with its own set of problems, it provides a good solution to stabilize our staple, especially with agriculture been such a vicious cycle. Our neighbors' plans and actions certainly seem to be reciprocating his very thoughts.

The discussion continues:

Managing Director and CEO of CIC Agri Businesses Keerthi B. Kotagama agrees with Dr. Abeysiriwardena and goes on to show that there is an imminent need for Sri Lanka to build a buffer stock. Even if the most optimistic statistics are taken, says Kotagama, numbers show that by the end of year 2008 Sri Lanka is heading towards a chronic shortage in rice.

If year 2008 is assumed to produce the same figures of year 2006 and thus assumed to yield 4.3 MT/Ha (which is a very optimistic figure, stresses Kotagama) and if the population is considered to be at 20 Mn with the wheat imports coming down from 950,000 MT to 450,000 MT due to high wheat prices and if this balance 500,000 MT wheat consumption was to be replaced with rice, then we can derive the following calculations, says Kotagama:

In 2004, per capita rice consumption was 105 Kg/year.

In 2004, per capita wheat consumption was 35 Kg/year

If wheat imports were to come down by 50 per cent in 2008, then rice consumption should increase by the same amount, which is approximately by 15 Kg/head/year, reasons Kotagama.

With the increase in paddy prices, the extent cultivated in year 2008 should also increase. On the strength of this footnote, the following can be derived, explains Kotagama:

Sri Lanka cultivates two seasons of rice - the Maha, which is harvested in March and the Yala, which is harvested in September. Even when the most optimistic figures are taken, and the extent Maha season harvested is assumed to be 524,803 Ha and the extent Yala is assumed to have harvested is 282,960 Ha, the average yield at its highest would be 4.3 MT/Ha.

Kotagama points out that this average yield is assumed without taking into consideration the effects of floods and other adversities that affect the harvest. If the above figures were achieved, then it can be calculated:

Even though there is a higher demand for rice during December, if it were assumed that in all 12 months that the rice consumption is 200,000 MT / month, Sri Lanka would be facing a rice deficit from early November points out Kotagama and illustrates his point through the following table:

This is the most optimistic situation stresses Kotagama. Even with these high figures, that has discounted the effects of recent floods and any other possible calamities that would affect rice production, Sri Lanka needs to build a buffer stock of at least 350,000 MT for consumption from beginning of November.

Join Daily News next Friday as bojoon.com unravels with CIC many mysteries and misinterpretations surrounding rice cultivation in Sri Lanka.

Share your own opinion by simply dropping an email to [email protected]. For more information of who we are, do visit www.bojoon.com.

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