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Another hike in milk powder prices?

16 Oct 2021

  • Importers to increase prices further if global prices rise by 30%
  • Global milk powder prices hit 7-year high last week
BY Yakuta Dawood In a backdrop where global milk powder prices hit a seven-year high last week, local milk powder importers stated that if the prices increase by a further 30%, they’d have no choice but to increase local prices of imported milk powder once again, The Sunday Morning Business learns. Speaking to us, a representative from the milk powder importing industry explained that local importers were obligated to make such decisions due to the surge in global milk powder prices, despite their utmost attempts to protect consumers. “If the global prices increase by 30%, we need to make a revision to increase the price of imported milk (powder), and if the global prices are reduced by 30%, then we again have to revise to make the selling rate lower for consumers. However, as per the current status quo, we can revise the prices without approaching the Government, but we do keep them informed as we are a responsible industry,” the representative said. Immediately after the Government lifted the maximum retail prices (MRP) for milk powder, importers initially proposed a price increase of Rs. 350 per kg and Rs. 140 for 400 g of milk powder. However, following discussions with the Government, and considering the current status of the country and the effect such an increase would have on the consumer, it was decided that the price of 1 kg of milk powder will be increased by Rs. 250 and the price of 400 g by Rs. 100. Therefore, following this price revision, a 1 kg packet of milk powder would be sold at Rs. 1,195 and a 400 g packet would be sold at Rs. 480. Commenting with regard to this, the industry representative mentioned that this move taken by the Government was commendable, even though there was a possibility of a milk powder shortage in the market for at least two months. “The supply will only normalise after December. We should have started importing milk powder two months prior, but we couldn’t due to the Government’s decision to control prices. However, even if it looks like the cost is increasing in the short term, in the long run there will be much better offerings to the consumer,” the representative said. Speaking to us last week, industry sources assured us that they would do their utmost to rectify the existing milk shortage in the local market by releasing existing stocks. However, these existing stocks were limited, as the repeated accumulation of losses over the past six months severely affected their capacity, it is learnt. “We will be placing orders over the coming week. While shipments from New Zealand used to take one month, due to the current shipping delays, it will take about one-and-a-half months for stocks to arrive. Meanwhile, we will issue whatever limited stocks we have to the market. However, it will take a little time for the milk (powder) shortage to be fully addressed,” industry sources further explained. In the interim, milk powder importers called on local milk producers to increase their supply to the local market in order to address the prevailing supply gap. Meanwhile, when inquired if the pricing formula that was introduced in 2019 was a good measure to be reimplemented, the representative responded in the negative, as they said it was again a mechanism to control the prices. “The pricing formula for imported milk powder can be used as a platform to determine the prices through discussions between the stakeholders,” the representative added. Attempts to reach the Consumer Affairs Authority (CAA) proved futile.

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