ECONOMYNEXT – Sri Lanka’s vegetable prices have collapsed at the main fresh produce exchange in Dambulla, a media report said as farmers rushed to bring in supplies after prices spiked in the immediate after math of Cyclone Ditwah.
High prices give incentives for farmers to harvest fresh food – even a little early – and transport contractors and collectors to pay higher prices to bring goods to market.
“A large number of farmers have come to the market,” one trader told Sri Lanka’s Derana Television.
“Prices are substantially lower. Green chillies was 200 rupees in the morning, it is now 100. Two days before chilli was 1000 rupees (a kilogram).
Eggplant (brinjals) was 300 rupees a kilo, a farmer said.
Carrot was 750 rupees a kilo, another trader said. Two days ago, reports said carrots were 5,000 rupees a kilo when roads were impassable in the hill country.
“The road are open so we came,” a man who appeared to be a collector said. “But today prices are down.”
Price come down due to excess of farmers and insufficient buyers.
In Sri Lanka vegetables are grown on high ground (goda idam) while rice is grown on inundated land. There however appears to be widespread destruction of newly sown paddy land.
Some vegetables like carrots are also grown in the hill country, which were cut-off from the markets due to roads blocked by rock falls and landslides.
“In the last couple of days prices were high because there were no supplies,” a shop owner said. “Today prices are normal.”
In Sri Lanka in crisis times the Consumer Affairs Authority which imposes price controls is the biggest threat to food security and the farming sector.
In March 2020, the CAA imposed price controls on vegetables and forced collectors who had transported goods to Colombo at high prices to sell at large losses and destroyed their working capital.
When frightened collectors stayed at home, farmers already hit by Covid were left destitute as no one came to collect vegetables in the next few day.
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During the economic crisis the Trade Ministry and CAA imposed priced controls on eggs forcing farmers to kill layer chicks for meat as they could not feed the flock at the prices dictated by the price control agency.
No action was taken against the CAA for bankrupting chicken farmers or for causing losses to businesses and mosts importantly for disrupting price signal and undermining the market mechanism.
Sri Lanka’s Consumer Affairs Authority contributory party to economic crisis: Minister
The CAA like other regulator go through elaborate formulae to calculate ‘costs’.
Industry sources say day old chick prices have collapsed at hatcheries after Cyclone Ditwah as many poultry farms have been flooded killing off both layer and broiler flocks.
Some hatcheries are culling DoCs by the thousands, industry sources say.
It is not clear whether the CAA will swing into action and wreak further havoc on the battered chicken farmers again by slapping price controls, but threats have been made against other shop keepers who have paid high transport costs to bring stocks to flood hit areas.
During the last currency crisis, the CAA and the Trade Ministry not only forced farmers slaughter their layer flocks also forced hatcheries to cull parent birds as they could not keep feeding the flock after the demand for day old chicks disappeared from price controls.
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During Covid and the economic crisis that, the CAA made goods go off shelves with its price controls and gave birth to blackmarkets in multiple goods, in what classical economists call the ‘supreme idiocy’.
In the first year of the new administration the CAA imposed price controls on nadu rice
The central bank cut suppressed interest rates (cut rates0 pouring excess liquidity in the banking system and triggered a balance of payments crisis.
Similar actions by the Federal Reserve triggered a commodity bubble pushing up wheat and maize prices, hitting people in poor countries in particular with high food and energy prices until rates were hiked around March 2022 and prices started to ease from around May.
However excess liquidity is now down making it difficult for heightened prices to be sustained.
(Colombo/Dec03/2025)
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