Legal Background
Paddy Marketing Board is a government institution established under Parliament Act No. 14 of 1971.
Mandate
The mandate of the Paddy Marketing Board is,
- To carry on the business of purchasing, selling, supplying and distribution of paddy and rice;
- To carry on the business and process of milling of paddy;
- To carry on any such other business as may be incidental or conducive to the attainment of the objects referred to in paragraphs (a) and (b) above;
- To do all other things which in the opinion of the Board are necessary to facilitate the proper carrying on of its business.
Institutional History
Period 1948 - 1971
The government purchased paddy trough the Department of Agrarian Services under a Guaranteed Price Scheme.
Period 1972 - 1978
Paddy purchasing, storing, milling functions were taken over by the Paddy Marketing Board (PMB) in 1972. The co-operatives collected the paddy from the farmer on behalf of the PMB, which hired private millers to process the paddy. The millers handed over the rice to Food Commissioner’s Department, which in turn issued it to the co-operatives for distribution to the consumers on ration. The PMB also involved in maintaining a "Buffer-Stock Scheme" for rice by using its regional warehouses in each region.
Period 1978 - 2000
The role of government in marketing paddy/rice was changed with the introduction of economic liberalization policies in 1977. In 1978, the PMB act was amended and allowed the private sector to involve in marketing rice based on competition. As a result of the intense competition, there was a dramatic reduction in the government's market share in purchasing paddy. In 1990 the Paddy Marketing Board became inactive due to shortage of employees because of termination of 2,560 employees paying compensation. A resolution was submitted to the Parliament on 05th April 2000 to dissolve the PMB but it was not success.
Period 2006 - 2007
In 2006, Sri Lanka Agricultural Products Marketing Authority was established under the Companies Registration Act to purchase paddy trough Co-operative Whole Sale Establishments, Co-operative Network and farmer organization. The adopted mechanism was to purchase paddy from five cultivation zones handled by five managers and supervised by five assistant commissioners. However the exercise was not successful due to non-availability of sufficient staff.
Period 2008 - To Date
A cabinet paper was submitted to the Cabinet of Ministers for reestablishing Paddy Marketing Board and approved on 25.07.2007. The new Director Board was appointed on 01/09/2007 and first board meeting of the re-established PMB was held on 09/01/2008. PMB re-commenced paddy purchasing in 2008 YALA season.
Main Business Background
Rice is the staple food in the country and is the main source of calories in the Sri Lankan diet. Therefore, paddy sector plays an important role in agricultural sector in Sri Lanka. In 2011 it has contributed 12 per cent to the agriculture sector GDP and 1.7 per cent to the total GDP. Paddy occupies the largest land area under agriculture and in the year 2011, the gross extent sown was 650,000 ha. Generally, paddy occupies about 45 per cent of the total permanent agriculture land holdings. A majority of the paddy farmers, 70 per cent, are smallholders with a land area of less than 1 ha. Paddy is cultivated during two seasons, Maha and Yala. Maha (October to March) season usually accounts for about 65 per cent of the annual production and the rest 35 per cent coming from the yala season (April to September). Two thirds of the paddy extent is grown under irrigated conditions and the paddy crop is heavily dependent on rainfall. After milling, paddy is known as rice. The average per capita consumption is about 300 grams of rice and it provides about 1,050 Kcal per day, meeting 45 per cent of the per capita protein requirement. Given the significance of the paddy sector in the Sri Lankan economy, all successive governments have placed a greater emphasis on increasing paddy production in order to achieve self-sufficiency. Therefore, a larger amount of investments were geared towards the improvement of the paddy sector.
Large scale irrigation projects, land development and settlement schemes, free provision of irrigation water, fertilizer subsidies and guarantied prices were some of the investments made in order to improve the sector performance. This has improved the paddy cultivation in the country and at present country is enjoying a self sufficiency level. In Sri Lanka, more than half of the production of paddy comes to the market as the surplus. In marketing this surplus, both the private and the government sector institutions play a role. However, the level of operation by these groups has changed significantly over the years.