According to the sources, it has been reported that the Government of Sri Lanka that there is a temporarily reduction in the tax concessions on wheat flour imports just to boost local rice consumption and to protect paddy farmers who have excess stocks in this season. In this matter, the Minister of Finance informed to the reporters that the decline in wheat prices in international markets prompted the government to reduce tax concessions to discourage imports. Further, Sri Lanka currently has a surplus of rice and it is not possible to export this surplus, because of high production costs. Meanwhile, the farmers and agriculture authorities have also urged the government to take measures to increase rice flour consumption in the country to offset this surplus as it was narrated by the Minister.
Furthermore, however, the decision to reduce tax concession granted to wheat flour imports is temporary and we want to make sure that we do not put our paddy farmers into trouble. There is a hope to reduce the production cost for paddy so that the country could compete with other paddy producing countries to get a good price for our paddy. The government of Sri Lanka is expecting paddy rice output from the 2015-16 Maha crop (September – March) to increase about 7% to around 2.93 million tons from around 2.74 million tons last year. It has also been revealed that harvesting of the Maha crop is likely to complete by the end of this month. As per data, the USDA estimates Sri Lanka to produce around 3.3 million tons of rice, basis milled (around 4.85 million tons, basis paddy) and import around 50,000 tons in MY 2015-16 (October 2015 – September 2016).