Governmental agricultural policies and their impact on supply and demand for rice in Sri Lanka

Abstract

Rice is the main staple food in Sri Lanka. The domestic production is insufficient to meet the local requirements and Sri Lanka is dependent on imports of rice and wheat flour to feed its population. To increase the rice production and reduce imports the government has introduced several agricultural policies as expanded irrigation, guaranteed price scheme, paddy lands act, fertilizer subsidy, agricultural credit scheme, crop insurance scheme, and rice ration scheme. This study attempts to identify and evaluate the factors that are important in aggregate production, consumption decisions of rice, and measure the impact of various government policies on the sectors of the rice economy. The regression results suggests that the guaranteed price scheme provides only a small incentive to paddy production. Irrigation is a major contributory factor to rice production in the dry zone. The modern varieties, agricultural credit significantly affects yields. The rainfall and the cultivated acreage in the previous season affects the current rice area.