Sri Lanka agro firm warns price controls are hurting quality

Oct 22, 2008 (LBO) – A top Sri Lankan agro enterprise has warned that state controls of prices would block quality gains of agricultural produce with government slapping price ceilings on rice in the wake of a global bubble in April. "In the question of price control of rice what has happened is that you equate any type of rice and that sadly is a shortfall in this price control mechanism," chairman of CIC Agri Business B R L Fernando said.

"If you look at the some of the methodologies of price controls put in this country it is mitigating against quality."

CIC is a retailer of packeted branded rice. Fernando was speaking at the launch of herbal juice under its Juiceez brand, which is said to have traditional Ayurvedic medicinal properties.

Sri Lanka's rice used to be sprinkled with small pebbles, until the advent of branded rice by large millers who mechanically removed the stones before sale.

Branded rice also has the potential to hold prices when prices fall steeply. Agricultural commodity prices are volatile, and branding is one way to stabilize prices.

Farmers could also get into forward contracts with such firms ensuring their financial security.

But with price controls there is no incentive to im