Sri Lanka's Cabinet has approved a 7.5 billion rupee program offering interest-free loans to small and medium-scale rice millers, as the government acknowledges the Paddy Marketing Board cannot handle the entire harvest. The initiative comes as inflation reaches a three-year high of 7.2 percent.
Sri Lanka's Cabinet has approved an interest-free loan scheme aimed at supporting the country's rice milling sector. Under the program, small and medium-scale rice millers will be eligible for loans of up to 25 million rupees each to purchase paddy at government-guaranteed prices. Agriculture Minister Lal Kantha indicated during a parliamentary debate that the scheme is necessary because the Paddy Marketing Board lacks sufficient capacity to purchase the entire national harvest at fair prices.
The government has set guaranteed paddy prices at Rs. 120 per kilogram for Nadu, Rs. 130 for Samba, and Rs. 140 for Keeri Samba varieties. However, Minister Kantha acknowledged that Rs. 120 is inadequate for farmers in low-yield areas producing only 60 to 80 bushels per acre, suggesting increased productivity is needed to address farmer profitability. Opposition Leader Sajith Premadasa disputed the pricing structure, describing it as economically unsustainable for farming families. Drawing on government production cost estimates of Rs. 70 per kilogram for Red Nadu, Premadasa calculated that farmers would earn approximately Rs. 100,000 per acre seasonally, or roughly Rs. 16,666 monthly—an amount he argued was insufficient to sustain families.
Premadasa further highlighted what he characterized as a contradiction in government policy, noting that despite a domestic rice surplus of 3.2 million metric tons against a national requirement of 2.5 million tons, the government has imported rice. The loan scheme approval coincides with broader economic pressures on Sri Lanka, as national inflation jumped to 7.2 percent in the 12 months to July 2026, marking the highest rate in over three years and exceeding the central bank's 7 percent target ceiling.
