ECONOMYNEXT – Sri Lanka can avoid a food shortage from July to mid-August following a decision to relax open account imports for 10 essential foods, in conjunction with a fuel distribution scheme for local suppliers and traders, Trade Minister Nalin Fernando said.

“We have allowed the import of 10 essential items from today onward. With this, we expect to meet our needs without shortages, and also to reduce prices through competition,” said Fernando speaking at a government press briefing on Friday July 01.

Open account imports for 10 essential items are permitted effective Friday. These are, according to a previous statement Fernando had made in parliament, rice, wheat flour, sugar, potatoes, red dhal (lentils), onions, dry chillies, dry fish, beans and milk powder.

Open account imports allow food to be cleared on suppliers’ credit which can be settled later through official or unofficial means. Sri Lanka, banned open accounts in May in an attempt to reduce Unidyal style net settlements being made for what officials called ‘non-essential’ imports. However, the ban also hit food imports, which are usually imported long term relationships on suppliers credit. It is estimated that the island needs about 150 to 250 million US dollars a month for food imports according to industry officials.

Minster Fernando said he had been approached about the possibility of allowing a price increase in rice by 25 rupees a kilo, but he had to deny this request as Sri Lanka’s prevailing price controls on rice varieties cannot be changed at present.

“We’re also importing rice. We expect to import about 75,000 to 100,00 metric tons of rice a month,” he said.

The government is also looking to allocate fuel for the transport of essential foods. Sri Lanka is currently in the throes of an unprecedented energy crisis brought about by a crippling dollar shortage. Dire warnings of a possible food crisis over the the next few months have also been raised by various parties including Prime Minister Ranil Wickremesinghe.

“There has been a drop in lorries operating out of Economic Centres (state-run agricultural exchanges) due to the fuel issue. We have a special programme in place to distribute fuel to lorries at these centres through army camps. This will be coordinated by district secretaries and fuel will be supplied to the lorries from tomorrow (July 02),” he said.

“We will provide diesel to transport goods to [state-run retailer] Sathosa and supermarket chains. Diesel will also be given to wholesale outlet’s lorries,” he added. (Colombo/Jul02/2022)