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Milk powder importers shocked by cabinet decision

29 Sep 2021

  • Says ‘we will not import at a loss’
  • Milk powder shortage set to continue
  • Consumer Affairs Authority caught unawares
By Shenal Fernando Local milk powder importers are shocked at and dismayed by the decision taken by the Cabinet of Ministers on Monday (27) to not proceed with the recommended price hike of Rs. 200 per kilogramme (kg) of imported milk powder, The Morning Business learns. Last Friday (24), the Cost of Living Committee finalised a price hike of Rs. 200 per kilogramme of imported milk powder and recommended the same for the Cabinet of Ministers. Speaking to us yesterday (28), industry sources lamented over the failure of the Cabinet to consider the practical realities that require a price hike, and claimed that milk powder importers can no longer bear the financial burden of providing milk powder at such a subsidised rate. Sources pointed to the fact that milk powder importers have been importing at heavy losses over the past six months and can no longer operate at these rates. Industry sources further held that the Government is welcome to intervene and import/sell milk powder at these rates, if they so wish. As such, all signs appear to point to the further extension and exasperation of the prevailing milk shortage in the country. Meanwhile, sources within the Consumer Affairs Authority (CAA) claimed that they were blindsided by the decision of the Cabinet of Ministers and are not aware of the justifications supporting the decision. When The Sunday Morning Business inquired about this decision from CAA Chairman Maj. Gen. (Retd.) D.M.S. Dissanayake and State Ministry of Co-operative Services, Marketing Development, and Consumer Protection Secretary K.D.S. Ruwanchandra, both claimed ignorance regarding the justifications relied on by the Cabinet of Ministers in making such a decision, and held that such questions must be referred to the Cabinet. Our repeated attempts to contact Minister of Trade Bandula Gunawardana proved futile. When Ministry of Trade Secretary Bhadranie Jayawardhana was contacted, she requested all questions regarding the price hike to be referred to the Secretary to the State Ministry of Co-operative Services, Marketing Development, and Consumer Protection. Initially, milk powder importers were requesting the Government to increase the maximum retail price (MRP) of 1 kg of imported milk powder by Rs. 350. However, following discussions with government authorities, milk powder importers amended their demand and were seeking a phased out price hike involving a Rs. 200 price hike now and a further Rs. 150 hike on a later date. Milk powder is considered an essential item in Sri Lanka with price controls imposed by the government, where the price of a 1 kg packet is priced at Rs. 945 and the price of a 400 g packet is priced at Rs. 380. The last time imported milk powder prices increased was in September 2019 under a milk powder pricing formula, which was later abandoned by the current Government. In the last revision, the price of a 1 kg packet of imported milk powder was increased by Rs. 50, while the price of a 400 g packet was increased by Rs. 20. Since then, the price of milk powder in the world market has increased by over 30% and the current price revision requested by local milk powder importers is based solely on such increment in world market prices and doesn’t factor in the effects of other developments such as the depreciation of the Sri Lanka rupee or increased shipping costs, industry sources claimed.


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