Rice is the single most important crop occupying 34 percent (0.77 /million ha) of the total cultivated area in Sri Lanka. On average 560,000 ha are cultivated during Maha and 310,000 ha during Yala making the average annual extent sown with rice to about 870,000 ha. About 1.8 million farm families are engaged in paddy cultivation island-wide. Sri Lanka currently produces 2.7 million tonnes of rough rice annually and satisfies around 95 percent of the domestic requirement. Rice provides 45% total calorie and 40% total protein requirement of an average Sri Lankan.
It is projected that the demand for rice will increase at 1.1% per year and to meet this the rice production should grow at the rate of 2.9% per year. Increasing the cropping intensity and national average yield are the options available to achieve this production targets.
The current cost of production of rough rice is Rs. 8.57 per kg. The cost of labor, farm power and tradable inputs constitutes 55%, 23% and 22% respectively. The labour cost has risen at a higher rate than other costs over the last few years.
While the global demand for rice will increase at 1.95% the production will increase at 1.62% per annum making the tradable rice volume to be doubled in another 20 years’ time. As a result, the rice price would decline at 0.73% per year. On the other hand, the domestic price of rice on par with Thai A1 super (the cheapest in the world market) would be higher by 50 -70 USD per t than the internationally traded rice. This situation will place Sri Lanka under increase pressure to produce cheaper and high quality rice in the coming years. over the years prices of rice has become cheaper than neighbouring country India.