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Officials get kickbacks from dairy multinationals: Pelwatte

15 Sep 2019

Sri Lanka’s largest dairy producer, Pelwatte Dairy Industries Ltd. alleged that government officials receive certain benefits from multinational dairy companies in return for the protection and promotion of their products in Sri Lanka. Speaking to The Sunday Morning Business, Pelwatte Dairy Industries Founder Chairman Ariyaseela Wickramanayake noted that despite sufficient local milk production that could cater to local demand, government officials keep supporting the importation of milk powder. “Almost every retired health secretary is working for some multinational company. Would such people even support ending milk powder importation even if we have enough milk production?” he asked. These allegations come as milk powder importers decided on Friday (13) to suspend importation until the price of a kilogram of milk powder increased by Rs. 50 as promised, in keeping with the price formula for milk powder. The prices were supposed to be increased on 1 September, as the formula suggests milk powder prices be increased by Rs. 50 every three months. However, at the time of going to print, no such increase occurred as the Cost of Living Committee did not approve the price hike. Pointing out several examples, Wickramanayake noted that one of the directors at a leading multinational company that produces milk powder is a former Secretary of the Ministry of Health and the chairman of a hospital. “He is a medical doctor who should have been in the Ministry of Health, but is now selling milk powder,” he noted. Adding a second example, Wickramanayake noted that one of the former Director Generals of Health Services at the Ministry of Health, who during his tenure did not take any actions against melamine-contaminated milk powder, is now working for a New Zealand dairy company. “He didn’t file the action against the multinational company for having melamine in the milk powder and in return for that, they gave him a job after he retired. Now, he is there getting a Rs. 5 million monthly salary,” Wickramanayake told The Sunday Morning Business. According to the annual reports from the Central Bank of Sri Lanka (CBSL), Sri Lanka’s milk and milk powder imports have been growing gradually since 2015 and reached Rs. 54 billion in 2018. In 2015, milk and milk powder imports were accounted at Rs. 34 billion, while it was Rs. 36 billion in 2016 and Rs. 48 billion in 2017. Meanwhile, national milk production was also on the rise as it reached a record high of 471.5 million litres in 2018, from 396 million litres a year ago, and the number keeps growing gradually. He added that such unnecessary importation of milk, while it was possible to depend purely on local production, results in losses from Sri Lanka’s foreign exchange earnings and a weakening rupee. Further, he noted that the local dairy industry at the moment caters to 75% of the national milk requirement and is capable of catering to even 100% if given the opportunity. He added that the remaining 25% of the requirement can be addressed with the utilisation of 240,000 additional cows for milking purposes. According to Wickramanayake, at the moment, Sri Lanka has 1.3 million cows, from which only 240,000 cows are being used for milking purposes, allowing imports to be dumped in the country. “Go into any supermarket in the country and you will their shelves stocked with liquid milk that is 100% locally produced. You will see that there is enough supply of it, and in fact, they get sold like hotcakes. We don’t need imported milk.” According to him, multinational companies are enjoying very less taxation while local manufacturers are burdened with taxation, including the 3.5% Nation Development Tax (NDT), while no other country in the world taxes their agricultural productions to this extent. He proposed the removal of taxes on local milk, similar to India, so that it would encourage local milk production even further.


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