Price Control - Can it deliver the goods?

“Naturally, both whole sale and retail dealers will be reluctant to sell the rice stocks at hand at the government stipulated prices, for it is bound to be a loss to their business. There's also the possibility that the new regulations might lead to poor quality rice being imported into the country and high quality rice being sold at black market prices.”
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by Dinesh Peiris


(April 19, Colombo, Sri Lanka Guardian) The government's gazette notification to impose price controls on rice, which came into effect from midnight 16th April, is indeed a late but commendable measure in the right direction given the crisis of spiralling rice prices in the market and rumours of further price hikes after the New Year. Though it is unclear as to why the government kept dragging its feet up to now, without enforcing price control, the rice prices could have been kept even lower, had the government resorted to price control at the first signs of crisis. Despite the gazette notification, prices are still too high for many of us, but now at least the public, has the guarantee that the price hikes would be kept under control in the future.

Nevertheless, if one were to consider the controversial issues that surround rice, from paddy harvesting to the sale of rice, it would be naive to think that price control alone will resolve the crisis.

Earlier this year, due to shortage of stocks, and the monopoly of the handful of big time mill owners, the government was compelled to declare rice an essential food item which, hitherto, was outside the essential category even though rice has been the main staple of the populace since ancient times. However, this move came too late to prevent the sale of large stocks of rice as animal fodder to a private company. Then, the government's intervention to stabilise the rice prices by importing 20000 metric tons of ponni samba from India turned out to be a miscarriage as the higher-ups in the Co-operatives have unscrupulously sold the stocks to Pettah wholesale dealers at higher prices. These two instances are cases in point of the shameful malpractices of public officials in the face of a national crisis.

With status quo being such, it is highly questionable whether the introduction of price controls will succeed in delivering the intended outcome. Naturally, both whole sale and retail dealers will be reluctant to sell the rice stocks at hand at the government stipulated prices, for it is bound to be a loss to their business. There's also the possibility that the new regulations might lead to poor quality rice being imported into the country and high quality rice being sold at black market prices.

Therefore, it is imperative that relevant authorities keep a hawk eye on both private sector traders as well as their own high ranking employees who might unashamedly bungle the government's efforts to bring relief to consumer with the sole motive of financial gain. Stern action must be taken against officials who fish in troubled waters.
- Sri Lanka Guardian