President AKD announced the removal of a decades-old gazette that restricted rice primarily to direct consumption, allowing surplus rice to be legally processed into products including beer, wine, biscuits, cakes and animal feed.
The government asserted that expanding industrial demand for rice will create new markets, stabilize prices and reduce the financial damage caused by seasonal oversupply during major harvests.
Officials have already directed research institutions specialising in post harvest loss prevention to accelerate the development of commercially viable rice based products.
The President has cited Japan’s rice diversification strategy as a model demonstrating how secondary industries can generate significant economic value while strengthening agricultural sectors.
The initiative forms part of a broader national objective of converting Sri Lanka into an export oriented production economy with stronger earnings from processed agricultural goods. Beaches& Islands
However, while policymakers focus on future industrial opportunities, farmers remain preoccupied with immediate financial survival.
The Ministry of Trade has announced Paddy Marketing Board purchasing prices of Rs. 120 per kilogram for Nadu, Rs. 130 for Samba and Rs. 140 for Keeri Samba under the current Yala procurement programme beginning this month.
Farmer organisations have rejected these prices outright. The National Agrarians’ Unity and other farming groups have insisted that production costs have climbed so dramatically that growers require at least Rs. 140 to Rs. 150 per kilogram across all paddy varieties simply to break even. Some legislators have similarly argued that actual cultivation costs now range between Rs. 135 and Rs. 150 per kilogram.
Farmers have blamed rising fuel costs, higher machinery rental charges, increasing labour wages, expensive seed paddy and persistent shortages of affordable fertiliser for driving production costs to record levels.
Many cultivators have also accused private rice millers of exploiting weak bargaining power by purchasing harvests for prices as low as Rs. 90 per kilogram, leaving producers struggling with mounting debt despite favourable harvest conditions.
In response, the government has allocated Rs. 16 billion to finance Paddy Marketing Board purchases and absorb part of this season’s harvest.
Farmer unions, however, have argued that procurement volumes remain insufficient and have warned of expanded protests reaching Colombo unless guaranteed prices are increased.
The government’s rice diversification strategy therefore represents more than an industrial policy.
Its success is likely to be judged by whether new processing industries create enough commercial demand to strengthen farm incomes, reduce dependence on volatile domestic food markets and encourage long term investment in Sri Lanka’s agricultural sector, while easing tensions over paddy pricing.
