An analysis of the paddy/rice value chains in Sri Lanka

This paper examines whether the structure of the paddy / rice market in Sri Lanka is competitive and efficient particularly by undertaking two tracer surveys. From these surveys it was revealed that the profit margins accruing to almost all the players involved in the paddy/rice value chains of both Nadu and Samba varieties are not excessive when compared with the average bank lending rate of 15 percent. The results of the tracer surveys also show that both the Nadu and Samba paddy/ rice value chains are economically efficient. There are concerns however, about the poor quality of rice milled by most small and medium scale traditional rice mills in the country. It was also disclosed that there is no hard and fast evidence to prove the allegation that the rice millers and wholesalers exploit both the rice producers and consumers by using oligopsonic oligopolistic practices in both the producer and consumer markets such as 'cornering of the market'.