Abstract:
This study addresses the limited research on district-level paddy price fluctuations in
Ampara, a key rice-producing region in Sri Lanka, which has been overlooked in favor of
national-level analyses. It aims to analyze short- and long-term price dynamics of various
paddy grain types using ARDL modelling, incorporating the effects of rice imports and inter
district production. The research integrates quantitative and qualitative approaches to
identify factors driving price volatility and assess its impact on farmer income and economic
vulnerability. Findings will inform policy recommendations to enhance price stability and
market resilience in Ampara’s paddy sector. Employing a mixed-method approach, the
research combines time-series analysis using the Autoregressive Distributed Lag (ARDL)
model and data collected over 22 years (2000-2022). The data includes total production in
the Ampara district, annual rice import quantities for Sri Lanka, and prices of short-grain,
long-grain red, and long-grain white rice. The study focuses on understanding the effects
of local production levels, imports, and market dynamics on short- and long-term paddy
price behavior, particularly for short-grain, long-grain white, and long-grain red rice
varieties. The ARDL model reveals that rice imports and production levels negatively
influence short-grain rice prices in neighboring districts, while long-grain white rice prices
exert a positive influence on short-grain prices. Similarly, long-grain white and red rice
prices are sensitive to both local and external production factors, reflecting broader market
dynamics that affect price stability. The study highlights the significant roles of historical
prices, imports, and inter-district production in shaping current price trends. The findings
underscore the economic vulnerability of paddy farmers, particularly during harvest
periods when price drops reduce income stability. Although government policies are aimed
at price stabilization through procurement programs, they are often insufficient due to
infrastructural and financial constraints.
