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Consumer Preference and Price Behavior Analysis for Selected Rice Varieties in Sri Lanka

Kuruppu. I. V.

Price of agricultural commodities acts as a significant driving force in any economy. In many developing countries price of agricultural commodities creates food insecurity hence, this is more prominent in countries that depend on agriculture. Agriculture has been identified as the backbone of the Sri Lanka and rice is considered as the staple food in the country. Therefore, continuous analysis and monitoring of rice price is a must to identify potential market behavior for rice price and to take necessary actions to maintain stability. In light of that, this study aims to analyze the price behavior of most common rice varieties (Samba, Nadu, Raw White, and Raw Red) in Sri Lanka, linking it with consumer preference. Both nominal market price (NMP) and real market price (RMP) was analyzed. NMP of all rice types had increased continuously. However, RMP from 2008 to 2013 had gradually decreased. The average price of Samba always retained LKR 15.00/kg higher than Nadu, LKR 18.00/kg higher that Raw Red and LKR 21.00/kg higher than Raw White. Further, NMP of Samba had increased by eight per cent, Nadu by nine per cent, Raw White by 11 per cent and Raw Red by 10 per cent annually. Time series plots were derived for each rice types separately. Price increment or decrement of different rice varieties demonstrated a strong positive relationship with each other. Also, 60 percent of Sri Lankans are preferred to consume Samba, Nadu and Raw White. Raw Red consumption is mainly concentrated in the Southern Province of Sri Lanka. Few large scale millers scattered within the major paddy producing areas exercise an oligopolistic behavior and, as a result sudden variations in prices were observed in off-seasons.
KEYWORDS: Consumer preference, Price behavior, Rice varieties

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