Experts argue that this monopoly stems from historical consolidation, where large mills have amassed storage and processing capacities far beyond small-scale competitors.

In the heart of Sri Lanka’s agrarian economy, where rice fields stretch across every district, a silent crisis unfolds. The nation’s staple food sector, vital for feeding over 22 million people, remains plagued by a lack of effective regulation. Dominated by a handful of powerful mill owners, the industry operates in a vacuum of oversight, leading to distorted pricing, squeezed farmers, and burdensome costs for consumers. Despite promises from successive governments, meaningful reforms have yet to materialise, raising alarms about long-term food security in a country where rice is not just sustenance but a cultural cornerstone.

The roots of this issue trace back to the post-independence era, but recent seasons have amplified the problems. With production hitting record highs – such as 2.75 million metric tons (MT) in the 2024/2025 Maha season from over 800,000 hectares – the bounty should translate to stability. Instead, the absence of robust controls allows market distortions to persist, benefiting a select few at the expense of the many.

The Grip of Mill Owners on the Market

At the core of the rice sector’s woes is the unchecked influence of a small cadre of mill owners, often dubbed the “rice mafia” in local parlance. These entities control the journey from paddy field to consumer plate, dictating prices with little interference. Paddy, the raw material, is purchased from farmers at depressed farmgate rates – wet paddy at around Rs. 80 per kg and dried at Rs. 95-100 per kg – despite the potential for higher returns in a fair market.

This dominance creates an inflexible retail structure where prices are artificially inflated. For instance, a gazette notification issued on December 9, 2025, capped the maximum retail price for nadu rice at Rs. 230 per kg. Yet, this measure has done little to curb excess profits, as mill owners absorb the margins without passing savings to buyers. The system thrives on a lack of transparency, with no mandatory reporting on procurement or sales volumes, allowing these tycoons to manipulate supply chains. In the current 2025/2026 Maha season, production is estimated at 1.25 million MT, but the private sector’s hold ensures that market dynamics favour hoarders over equitable distribution.

Experts argue that this monopoly stems from historical consolidation, where large mills have amassed storage and processing capacities far beyond small-scale competitors. Without antitrust-like regulations, smaller players are sidelined, perpetuating a cycle where the powerful grow stronger. Farmer cooperatives, once envisioned as a counterbalance, have been undermined by inadequate support, leaving individual growers vulnerable to predatory buying practices.

Government’s Hesitant Hand

Successive administrations have acknowledged the rice sector’s regulatory gaps, but action has been sporadic and ineffective. The current government, like its predecessors, has opted for collaboration with private stakeholders rather than assertive intervention. The ministry of agriculture has emphasised the market’s vast scale as a barrier to full control, allocating funds to the paddy marketing board (PMB) for limited purchases – covering only about 80,000 MT annually.

In a bid to address farmer grievances, revised minimum prices were announced for the 2025/2026 Maha season: Rs. 120 per kg for nadu paddy, Rs. 130 for samba, and Rs. 140 for keeri samba. A guaranteed minimum price scheme through the PMB aims to provide a safety net. However, enforcement remains a glaring weak point. Farmer groups report that procurement capacities are insufficient, forcing most growers to sell to private buyers at below-minimum rates. Calls for a floating price mechanism, which could align costs with actual supply and demand, have gone unheeded.

This inaction is not new. Past regimes have issued similar gazettes and pledges, only to see them falter amid political pressures and lobbying from influential millers. The result is a regulatory patchwork – price caps without monitoring, subsidies without strings – that fails to dismantle the entrenched power structures. As one agricultural economist noted, “The government is treating symptoms, not the disease. True regulation would require breaking the cartel-like hold, but that demands political will that’s been absent.”

Farmers Caught in the Squeeze

For Sri Lanka’s rice farmers, who cultivate across Maha (September to March) and Yala seasons with the aid of irrigation and mechanized tools, the lack of regulation translates to economic hardship. Average yields stand at an impressive 3,679 kg per hectare, bolstered by modern practices, yet profits evaporate at the farmgate. The disparity is stark: while raw material costs equate to about Rs. 150 per kg of processed rice, retail prices hover much higher, siphoning gains to intermediaries.

Many farmers, especially in rural districts, face mounting debts from inputs like fertilizers and seeds. With government procurement limited, they have no leverage against private buyers who dictate terms. This vulnerability exacerbates rural poverty, as rice farming employs a significant portion of the workforce. In seasons of abundance, like the recent ones, oversupply should lower prices, but without regulation, it instead depresses farmer incomes while mill owners stockpile for future gains.

Rising Costs and Food Insecurity

The ripple effects extend to urban households, where rice constitutes up to 30 per cent of daily caloric intake. Prices have trended upward relentlessly – nadu rice at Rs. 230 per kg in early 2026, up from Rs. 220 in 2024 – with no relief in sight. This inflation hits low-income families hardest, straining budgets amid broader economic challenges.

Food security is at stake in a nation self-sufficient in rice production. The unregulated market risks artificial shortages, where hoarding drives spikes despite ample harvests. Without intervention, experts warn of potential vulnerabilities to climate shocks or global disruptions, as the system lacks resilience. Calls for comprehensive reforms – including mandatory audits, competition laws, and expanded public procurement – grow louder, but until implemented, Sri Lanka’s rice sector remains a tale of untapped potential and unequal burdens.

In a country where rice symbolizes prosperity, the absence of regulation undermines that very foundation. As the 2026 harvest progresses, the question lingers: Will the government finally step in, or will the status quo prevail.