Food price policy in Sri Lanka

This paper examines selected aspects of staple food markets in Sri Lanka in order to draw conclusions about the role of the state in promoting price stability and equity for producers and consumers. The paper describes the food security system in Sri Lanka, and carries out a time-series analysis of price seasonality and margins in rice marketing 1980-95. Interactions between rice and wheat markets in the context of national food availability are also examined. Private rice marketing channels are found to be competitive and efficient, but in recent years conflicting signals have been created by policy decisions taken separately in the rice and wheat markets. It is concluded that a large proportion of state organizational involvement in staple food markets is redundant, because trade policy instruments are capable on their own of achieving government food security objectives, without recourse to so much state involvement in marketing channels.