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Milk powder shortage to continue for 6 weeks

11 Oct 2021

  • Importers yet to place orders
  • Stocks to take weeks to reach SL
  • Asks local producers to walk the talk
  • Not happy about local producers’ price hike
BY Shenal Fernando Despite the increase in milk powder prices, the supply of milk powder to the local market is not expected to reach optimum levels for at least another one-and-a-half months, The Morning Business learns. Speaking to us, industry sources assured that they will be doing their utmost to rectify the existing milk shortage in the local market by releasing their existing stocks. However, their current existing stocks are limited as the repeated accumulation of losses over the past six months has severely affected their capacity. Therefore, industry sources told The Morning Business: “We will be placing orders over the coming week. While shipments from New Zealand used to take one month, due to the current shipping delays, it will take about one-and-a-half months for stocks to arrive. Meanwhile, whatever the limited stocks we have, we will issue more to the market. However, it will take a little time for the milk shortage to be fully addressed.” In the interim, milk importers have called on local milk producers to contribute and increase their supply to the local market to address the prevailing supply gap. Milk importers further pointed out that local milk producers have also increased their milk powder prices in tandem with them although the latter aren’t being exposed to the increase in world market prices nor are they subjected to the same restrictive cost structure as milk importers, which includes costs such as freight costs, insurance costs, or duties. As per milk importers, several local milk producers have, over the recent past, publicly stated that they possess sufficient capacity to meet the local demand. Therefore, the milk importers have pointed out that this is a perfect opportunity for local milk producers to increase their supply to the market to address the needs of the local consumers. According to an official from the Consumer Affairs Authority (CAA) who wished to remain anonymous, State Minister of Co-operative Services, Marketing Development, and Consumer Protection Lasantha Alagiyawanna had removed milk powder, liquefied petroleum gas (LPG), cement, and wheat flour from the essential commodities list via an extraordinary gazette on Friday (8), following which the Chairman of the CAA had removed the maximum retail prices (MRPs) on these products by issuing another gazette. Moreover, according to milk importers, they had initially proposed a price increase of Rs. 350 for 1 kilogramme (kg) of milk powder and Rs. 140 for 400 grams (g). However, following discussion with the Government and considering the current status of the country and the effect on the consumer, it was decided that the price of 1 kg of milk powder will be increased by only Rs. 250 and the price of the 400 g pack would be increased by only Rs. 100. Therefore, following the price revision, 1 kg of milk powder would be sold at Rs. 1,195, while a 400 g pack would be sold at Rs. 480. Milk importers further told The Morning Business that neither the Government nor they can control the world market prices and thus cannot be held responsible for the increase in milk powder prices, and that this current increase covers only their cost of sales. They further stated that if the current status quo with regard to the exchange rate and world market prices remains the same, they will not pursue a further price hike.


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