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Consumer Affairs turns down imported milk price hike

29 Mar 2021

  • Importers requesting price increase since last year

  • Formula supposed to revise prices every three months

 By The Morning Business Desk    Regardless of sustained lobbying by milk powder importers in the country, the Consumer Affairs Authority (CAA) will not increase the local prices of imported milk powder, The Morning Business learns. When inquired whether the CAA would consider a price hike in the near future, Chairman Maj. Gen. (Retd.) Shantha Dissanayake told us that there will not be a price hike as such. Milk importers’ requests from the CAA to increase the prices of imported milk powder have been turned down on a number of occasions. In August last year, local milk powder importers planned to request a price increase for imported milk powder from the CAA – the second such request to be made in the span of three months. A well-placed source told The Morning Business at that point that the initial request made in May 2020 was rejected in July by the CAA, with the reasons believed to be the looming general election and concerns about a loss of popularity for the Government. Industry stakeholders believe that the prices of imported milk powder should be increased by a minimum of 5% every year and noted that the industry is not in favour of having price controls for imported milk powder. The last revision of imported milk powder prices was made in December 2019 where the price of a 1 kg pack of imported milk powder was reduced by Rs. 40 while the price of a 400 g packet was reduced by Rs. 15. This revision was made to reflect the reduction of the Value-Added Tax (VAT) and National-Building Tax (NBT) announced by President Gotabaya Rajapaksa in November the same year. The last time imported milk powder prices were increased was in September 2019 by the former Government and it was done via a milk powder pricing formula. In September 2019, the price of a 1 kg pack of imported milk powder was increased by Rs. 50 and the price of a 400 g packet was increased by Rs. 20. Industry sources noted that the milk powder pricing formula that was in use at that point was a trial formula for a period of one year and it is no longer in use, adding that it was anyway complicated and there was a need for a simpler formula. Even though the new Government has not been seen to be implementing the formula periodically, it is unclear whether they have given up on it or not. Meanwhile, Sri Lanka’s local milk production, which is less than half of the local demand, is set to be doubled this year to gradually meet 100% of the national milk demand by 2023, according to the State Minister of Livestock, Farm Promotion, and Dairy and Egg-Related Industries. Central Bank of Sri Lanka (CBSL) data states that in 2018, the total milk production in Sri Lanka increased by 19% to 471.6 million litres, compared to 396.2 million litres in 2017. Cow milk production increased by 17.7% to 385.7 million litres, while buffalo milk production increased by 25.3% to 85.9 million litres in comparison to 2017. According to the annual reports from the 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.


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