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Rs. 200 hike for milk powder finalised

27 Sep 2021

  • Cost of Living Committee decides hike amidst shortage
  • Forwards recommendation to Cabinet
  • Cabinet expected to approve decision by Tuesday
BY Shenal Fernando  Amidst the shortage of milk powder in the market and sustained lobbying by milk powder importers for a price hike, the Cost of Living Committee has now finalised a price hike of Rs. 200 per kg of imported milk powder, The Morning Business learns.  The recommended Rs. 200 price hike was determined by the Cost of Living Committee at its meeting with the Consumer Affairs Authority (CAA), last Friday (24), CAA Chairman Maj. Gen. (Retd.) D.M.S. Dissanayake told us. The recommendations of the committee will be presented to the Cabinet of Ministers today (27) and it is reported that the Cabinet will make its decision regarding the recommended price hike of milk powder by tomorrow (28). Milk powder is considered an essential item in Sri Lanka with price controls imposed by the Government; the price of 1 kg of milk powder is Rs. 945, while the 400 g packet is priced at Rs. 380. If the Cabinet of Ministers decides to implement the recommended price hike, the price of 1 kg of milk powder would rise to Rs. 1,145. This recommendation by the Cost of Living Committee comes in the backdrop of continuous lobbying efforts by milk powder importers for a price revision over the past six months. According to milk powder exporters, an increase in global milk powder prices and shipping costs along with the depreciation of the Sri Lankan rupee (LKR) against the US dollar (USD) has led to sustained losses for them over the period. Moreover, in June 2021, milk powder importers collectively requested a price hike from the CAA, citing reasons such as the depreciation of the rupee. However, this was not approved by the CAA. As a consequence, a shortage of milk powder emerged in the market as milk importers started taking measures to ensure survivability. In response, the Government removed import taxes levied on milk powder imports. Nevertheless, this measure was described as inadequate as it only amounts to a Rs. 35 reduction – Rs. 15 in import duty and Rs. 20 in Ports and Airports Development Levy (PAL) – while value-added tax (VAT) is not exempted. Leading up to the committee meeting on Friday, the milk powder importers had demanded that the Government increase the maximum retail price (MRP) of 1 kg of imported milk powder by Rs. 350, The Morning Business learns. However, according to industry sources, the Government has refused to allow such a significant price hike considering its adverse effect on the consumer. Consequently, the milk powder importers amended their demand and are now seeking a phased out price hike, involving a Rs. 200 price hike now and a further price hike of Rs. 150 on a later date.


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