Sri Lanka’s reduction in domestic rice supplies is spurring its return to the global market. Sri Lanka’s recent rice crops have been affected both by untimely flooding and its worst drought in 37 years. Subsequent seed shortages and diminished reservoir levels are hampering recovery efforts.
Although Sri Lanka started the year with ample carryin stocks still available from the record 2015/16 crop, the government has depleted most of these stocks by releasing them to stabilize prices.
Despite the government’s urging traders to sell their rice stocks, the sale of private stocks has been limited as traders continue to wait for higher prices. With these constraints on domestic supplies, prices have continued to rise.
As a result, Sri Lanka is set to import a record 700,000 tons in 2017. Several countries, including Indonesia, India, and Pakistan have supplied limited amounts of food aid. However, the bulk of the imports are being negotiated through agreements with neighboring countries including India, Thailand, Vietnam, and Burma. In addition, the Sri Lankan government has substantially lowered the import tariff to encourage additional imports.
Over the past 60 years, Sri Lanka has become far less dependent on imports due to a steady increase in production. In the 1960s, Sri Lanka accounted for almost 10 percent of global rice imports while it has been virtually absent from the global rice market since 2000.
The anticipated imports in 2017 would cause its share in global trade to surge once again.