Sri Lanka’s monthly milk powder consumption has reduced by more than half in the last three years as prices went up threefold while the manufacturers battle it out with 4-5% margins, said Ravi Jayawardena, Group Chief Executive Officer (CEO) at Maliban Group.

Speaking at a webinar held by Capital Alliance Limited (CAL) yesterday (28), he said that the 

monthly milk powder consumption in Sri Lanka which stood at 7,000 MT pre-Covid has come down to 3,000 MT in the last three years.

He said the reduction in volumes is mainly due to the price increase in which 400g milk powder went up from Rs. 375 to Rs. 1,100 due to the increase in US Dollar from Rs. 196 to 320, increase in global milk prices and government taxes.

He added that the sale of the 400g which contributed to about 70% of the milk powder sales volume has now come down to 50%.

He added due to the inspection by the Government on milk powder as an essential item, the manufacturers have kept single-digit margins between 4-5%.

Jayawardena also said that due to the macro factors that contributed to the price increase, about 1.7 million households out of the total 5.6 million households have stopped the usage of milk and biscuits.

However, he said that in the last 6 months, over 1 million households have come back although the overall consumption has dropped.

He said that it would take a minimum of two years for the domestic milk powder industry to pre-Covid volumes in consumption.

Further, he said that since most of the milk powder manufacturers are importers, it is a ‘very dollar-dependen’ industry which has a direct impact from the dollar stabilisation on the prices despite the global prices fluctuating between 15-20% maximum.

Jayawardena said that In Sri Lanka the annual production of liquid milk is about 450 million litres, out of which white milk consumption is about 50 million litres while 100 million litres are used to convert into milk powder by local manufacturers while others are used for yoghurt, ice cream and other similar products.