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Trade Liberalisation and its Impact on the Rice Sector of Sri Lanka

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  • Rafeek, M.I.M
  • Samaratunga, P.A

Abstract

This paper examines the impact of trade intervention policies. The trade protection for the rice sector was estimated using both nominal and effective protection rates. These show positive protection to producers at the expense of consumers. Current analysis indicates that one rupee of resources is used to produce 56 cents worth of rice valued in foreign exchange. As trade is increasingly liberalised, protection will be eventually eliminated and rice farmers will be forced to produce rice at competitive prices. Consequently, the extent under rice is expected to decrease by 12 per cent and total production decreases by 16 per cent. Meanwhile demand for rice will increase as a result of the reduction in retail price. Overall welfare impacts reveal that it is a gain to the nation. However, the producers face welfare losses. Therefore concerted and simultaneous efforts are imperative to improve productivity growth and reduce the unit cost of production in order to improve the competitiveness of the rice sector so that it can compete with the rest of the world.

Suggested Citation

  • Rafeek, M.I.M & Samaratunga, P.A, 2000. "Trade Liberalisation and its Impact on the Rice Sector of Sri Lanka," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 3, pages 1-14.
    • Handle: RePEc:ags:saeasj:205593
    DOI: 10.22004/ag.econ.205593
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    References listed on IDEAS

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    1. Corden, W. M., 1971. "The substitution problem in the theory of effective protection," Journal of International Economics, Elsevier, vol. 1(1), pages 37-57, February.
    2. Shilpi, Forhad J., 1996. "Estimating the level of protection: The implications of seasonal price fluctuations," World Development, Elsevier, vol. 24(5), pages 929-937, May.
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    Cited by:

    1. Bingxin Yu & Shenggen Fan, 2011. "Rice production response in Cambodia," Agricultural Economics, International Association of Agricultural Economists, vol. 42(3), pages 437-450, May.
    2. Wasantha Athukorala & Clevo Wilson, 2017. "Distributional impacts of irrigation-induced agricultural development in a semi-subsistence economy: new evidence," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 59-75, January.
    3. Prasanna, R.P.I.R. & Bulankulama, S.W.G.K. & Kuruppuge, R.H., 2012. "Factors Affecting Farmers` Higher Gain from Paddy Marketing: A Case Study on Paddy Farmers in North Central Province, Sri Lanka," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 2(1), pages 1-13, March.
    4. Weerahewa, Jeevika & Gunatilake, H.M, 2006. "Timber Market Liberalization in Sri Lanka: Implications for Forest Conservation," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 8, pages 1-20.

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