The government will release money to rice mill owners this week under a concessionary loan scheme intended to keep paddy moving off farms during the Yala harvest, Deputy Minister of Agriculture Namal Karunaratne said.
Mill owners will be able to borrow up to Rs. 25 million interest-free to buy Yala season paddy. The funds will be disbursed through District Secretaries, Karunaratne said, with the aim of keeping purchasing uninterrupted and holding market prices steady through the harvest peak.
The state has already bought more than 45,000 metric tonnes of paddy this season.
Why millers rather than the state
The scheme routes public money through private buyers because the state cannot absorb the crop itself. Agriculture Minister K.D. Lalkantha told Parliament the Paddy Marketing Board does not have the infrastructure to buy the island’s total yield, and that its procurement capacity falls well short of national output.
Lalkantha said Cabinet had approved the loan scheme for small and medium-scale millers on condition that they buy at the state-mandated rates — Rs. 120 a kilogram for Nadu, Rs. 130 for Samba and Rs. 140 for Keeri Samba.
He also conceded a limit to that floor: Rs. 120 is not viable for farmers in lower-yielding areas. Raising productivity on low-yield land, he said, is the only real fix.
Where the money comes from
The loans draw on the Rs. 7.5 billion supplementary estimate Parliament approved on 21 August for Yala paddy purchases — money reallocated from Agriculture Ministry funds expected to go unspent this year rather than raised as new borrowing. Tuesday’s announcement is the first account of how that allocation will actually reach farmers.
The guaranteed price remains contested. Opposition Leader Sajith Premadasa has argued the Rs. 120 floor sits below the state’s own stated cost of production, leaving farmers short on every kilo, and has criticised continued rice imports against a domestic surplus. A government production cost report released in July put Yala paddy costs at between Rs. 76 and Rs. 119 a kilogram depending on variety.
Neither report gave a repayment period for the loans, a total number of mills eligible, or how much of the Rs. 7.5 billion will go to the loan scheme as opposed to direct Paddy Marketing Board purchases.
