Page last updated at 13:34 GMT, Thursday, 17 April 2008 14:34 UK

Sri Lanka puts cap on rice prices

A Sri Lankan farmer harvests his annual rice crop at Piliyandala, a suburb of Colombo
Traders say the conflict in Sri Lanka is affecting rice supplies

The Sri Lankan government has introduced limits on rice prices.

New price limits came into effect on Thursday, covering most varieties which are eaten in the country.

Consumer Affairs Minister Bandula Gunawardena told the BBC that selling above the price limit is prohibited under the Consumer Protection Act.

But some wholesale shops in the capital Colombo were closed on Thursday. Traders said the price limits made their business uneconomic.

Other countries in Asia have been suffering from food price rises, and shortages of rice and other basic foodstuffs.

"The government has taken a hasty decision without consulting us," the president of the Old Moor Street Traders' Association, K Palaniandi Sunderam, said.

"We can't sell at the price that the government is imposing because we have bought the rice already at a higher price."

He also said the country's civil war was having an effect on supplies, with restrictions on movement meaning that the harvest from the north could not reach the south of the island.


Under the new scheme, the maximum retail price of the most popular rice, samba, is 70 rupees per kilo ($0.65).

Mr Gunawardena said a consumer court has been specially set up to punish retailers who violate the price ceiling.

Selling, displaying, hiding stock or misleading the public were now offences, and the public could complain to the Consumer Protection Authority, or the civil authorities of the area, he said.

Rejecting the suggestion that there was a rice shortage in Sri Lanka, he said it was a propaganda campaign that was launched before the New Year by "groups with vested interests" to artificially increase rice prices.

Two weeks ago wholesalers in Colombo asked the government to try to persuade India to lower the price at which it was selling non-basmati rice - but the government has not responded yet.

Mr Gunawardena said that traders were free to import any amount of rice, without tax, from any country.

But India has now stopped exporting non-basmati rice.

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