Rice crisis at boiling point; PMB is denied Treasury funds

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The Paddy Marketing Board (PMB) now has no buffer stocks of rice–which it typically releases to the market to control prices when they skyrocket–after the Treasury rejected an Agriculture Ministry request for Rs. 2bn for the fifth time.

The Ministry asked for Rs. 2bn immediately for the PMB to buy a buffer stock but needed a total of at least Rs. 6bn to maintain healthy quantities, Agriculture Ministry Secretary Gunadasa Samarasinghe said. According to him, the Treasury only approved a mere Rs 250 million. This, too, was a loan to the PMB from the Farmers’ Trust Fund.

“A buffer stock will enable the Government to keep rice prices in the market steady,” Mr. Samarasinghe said, adding that the Ministry hoped the Treasury would consider the gravity of the situation in terms of how it would affect the people.

But a senior Treasury official revealed that the PMB was yet to settle Rs 21 billion in unpaid loans it obtained from two State banks to buy rice to maintain buffer stocks.

“The Treasury is still paying off both these debts as well as the interest,” he said, requesting not to be named. “We are not prepared to release any more billions to the PMB given that it has continually defaulted on these loans.”

To maintain a buffer stock of 10,000 metric tonnes of rice, the PMB needs an estimated Rs. 3bn, the Ministry Secretary said.

Another senior Agriculture Ministry official indicated that the Treasury had bypassed the PMB to release Rs. 13 billion in March to District and Divisional Secretariats to purchase rice for free distribution among 2.9 million low-income families. He spoke on condition of anonymity.

Should the country experience a severe food shortage, the PMB had no buffer stocks to intervene and manage such a situation, he warned. The Government will also not be able to step in if there was a sudden sharp increase in prices, as it did not have a reserve to release as price control.

The Agriculture Ministry has submitted five Cabinet papers so far asking the Treasury to release the funds but all were rejected.

The Treasury official said it was prepared to release funds needed to purchase rice for essential purposes.


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