The Hon. Wasantha Samarasinghe - Minister of Trade, Commerce, Food Security and Cooperative Development

¶ 01 Hon. Speaker, the Hon. Leader of the Opposition raised this question yesterday under Standing Order 27(2). I now provide the answer.

¶ 02 1. At present, around 20,000 farmers are engaged in potato cultivation and about 7,000 farmers in big onion cultivation.

¶ 03 Potato harvesting happens in both Yala and Maha seasons: primarily May to October for Yala, and roughly December to March for Maha. Big onion is mainly harvested during August to October in the Yala season.

¶ 04 Sri Lanka’s domestic production in 2024 was reported as 42,207 metric tons of potatoes and 8,828 metric tons of big onions.

¶ 05 Based on 2024 production, domestic supplies met approximately 20% of total national demand for potatoes and about 3% for big onions.

¶ 06 2. Policy interventions, namely placing imported potatoes and big onions under the Special Commodity Levy (SCL) and adjusting levy rates, have provided significant relief to farmers. During domestic harvest periods, the Government increases the SCL rates, discouraging profitable import inflows from flooding the market, thereby creating a more favorable price environment for farmers to sell at competitive prices. This step also protects farmers from sudden price drops due to import surges and helps them cover production costs.

¶ 07 By stabilizing market prices, farmers are encouraged to cultivate in upcoming seasons, supporting the long-term sustainability of domestic potato and big onion production. The SCL shields local farmers from intense competition posed by lower-cost imports that often arrive below domestic production cost, which would otherwise depress farm-gate prices. Higher levies during harvest ensure fair and stable prices for farmers, contributing to production sustainability, reduced long-term dependency on imports, and food security.

¶ 08 3. Details of imported quantities, applicable levy rates, effective dates, and SCL revenue collected will be submitted to Parliament in due course. The data must be sourced from the Department of Inland Revenue and Sri Lanka Customs. I will table the past import, levy, and collection details subsequently.

¶ 09 For the period January to August 2025, Annex 1 provides import volumes of potatoes and big onions: - January: Potatoes 19,527 MT; Big onions 28,537 MT - February: 13,848; 29,199 - March: 16,408; 17,374 - April: 14,020; 28,502 - May: 16,810; 26,272 - June: 14,514; 30,597 - July: 16,662; 27,901 - August: 17,109; 29,354

¶ 10 Accordingly, in the first 8 months up to August: - Potatoes: 128,898 MT (monthly average ~16,112 MT) - Big onions: 217,736 MT (monthly average ~27,217 MT)

¶ 11 4. In line with the National Tariff Policy approved by Cabinet on 20 June 2024, import levies (customs duties, SCL, and cess) are routed to the Tariff Policy Committee chaired by a Deputy Secretary to the Treasury. The Committee’s recommendation is then submitted to the Cabinet for approval, after which the subject Minister, acting under powers conferred by statutes, publishes the levy adjustments by Gazette.

¶ 12 5. Based on decisions of the Food Policy and Security Committee on 18 August 2025 and a discussion chaired by the Minister of Finance, Fiscal Management and Economic Development on 19 August 2025, the National Tariff Policy Committee met and, considering the Committee Secretary/Convener’s recommendations and the limited time and data, agreed to submit the SCL revisions for big onions and potatoes for Cabinet approval. Cabinet approved on 25 August 2025, and the Gazette was issued thereafter. A subcommittee of the Food Policy and Security Committee reported three recommendations on 18 August 2025 to be referred to the Tariff Policy Committee for optimal decision making. I table that subcommittee report.

¶ 13 6. To balance producer and consumer needs, we expect to introduce seasonal taxation for selected food items. Higher import levies during harvest will prevent profitable import inflows undermining local produce, stabilize farm-gate prices, and protect livelihoods. In off-harvest periods, reducing levy rates will allow adequate imports, prevent shortages, and stabilize retail prices. Levy schedules will be announced before harvest periods to provide predictability, promoting domestic production, safeguarding access to food, and protecting consumers from undue price volatility.

¶ 14 Hon. Speaker, these are the answers to the Hon. Leader of the Opposition’s questions. He asked whether this resembles the prior sugar tax fraud. No—these are policy-based levy decisions properly followed. He also asked whether traders benefited by pre-stocking before levy changes. No—according to Annex 1, even in August, big onion imports were about 29,000 MT, with daily arrivals around 800–1,000 MT. Annual domestic consumption is roughly 300,000 MT for onions and about 220,000 MT for potatoes. Therefore, there was no scope created for windfall gains to intermediaries or undue consumer burden through these levy measures.

¶ 15 Thank you.