Milk powder price hike stopped

Mohammed Naalir

COLOMBO: There will be no hike in milk powder prices within the next months, the Government assured consumers yesterday.

“The Government has abolished taxes on milk powder, incurring a loss of Rs.3 billion annually, to afford relief to the masses,” Trade Commerce and Consumer Affairs Minister Bandula Gunawardane said yesterday.

Minister Gunawardane held extensive discussions on this issue with President Mahinda Rajapaksa and leading milk powder importers. The importers have pledged their cooperation towards this measure.

The Minister pointed out that milk powder prices are maintained at Rs.195 for a 400 gram pack after milk powder has been categorised as an essential commodity despite sellers seeking approval from the Consumer Affairs Authority to increase the price by around Rs.50-60.

He said milk powder importers were facing a very difficult situation as there has been a drastic rise in the prices of milk powder in the world market mainly due to adverse climatic conditions in producing countries. Milk producing countries including Australia were hit by a severe drought last year, causing the deaths of a large number of cattle.

“This was the main reason for the increase in milk powder prices and it would take more than four years to bring the dairy industry back to normal.”

He dismissed suggestions that local factors were behind the anticipated price rise. “The prices have increased not due to any local impact. No one can exert influence on milk powder prices in the world market”, he added.

The prices of milk powder have increased by 212 per cent from 1997 levels. Since March this year world market ‘prices’ of ‘milk powder’ have increased from US$ 2,700 for a metric tonne to about US$ 4,000, a 48 per cent rise.

He explained that it was no longer possible for milk powder companies to sell their products at prices imposed by the Government in this context. “Several companies have stopped the import of milk powder due to this situation,” the Minister remarked.

The country spends Rs. 1.8 billion every year to import milk powder and the amount is expected to be increased to Rs. 2 billion this year.

Sri Lanka imports nearly 5,000 metric tonnes of milk powder monthly.