Near-term milk powder price hike ruled out

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The Consumer Affairs Authority (CAA) has turned down a collective request made by milk powder importers in Sri Lanka to increase the prices of imported milk powder, as the Government intends to maintain the prices in the near-term

 Co-operative Services, Marketing Development, and Consumer Protection State Ministry Secretary K.D.S. Ruwanchandra confirmed that the application request submitted to the CAA had been rejected.

Secretary - COOP

He explained: “The Government has not amended the maximum retail price for imported powdered milk,” as the price of milk powder cannot be increased on such grounds.

Also, Ruwanchandra said that such an amendment to the maximum retail price for imported milk powder would not take place in the near future, indicating that a possible price hike cannot be anticipated on a recent day with regard to the aforementioned product.

The milk powder importers sent an application requesting the rise of the price to the CAA in the month of May. Thus, the price per kilogramme of the product was requested to be heightened by Rs. 60 to Rs. 70.

As reliably learnt by The Sunday Morning Business on an earlier occasion, the importers requested this price increase to reflect the losses incurred by the industry due to the rupee depreciation.

As per the view of the industry sources, they believe that “having price controls in a country like Sri Lanka is hard, as we are a developing and progressing country. Price controls are not good; there has to be a much better mechanism. Healthy competition should be there.” Accordingly, they request the Government to introduce a pricing formula for imported milk powder products based on a scientific mechanism to reflect global milk powder prices domestically, ensuring periodic revisions without the intervention or requests from the industry itself.

“We think it is better if we implement a formula. We are confident in getting a formula from the Government because it would make the system better; there would be no need for people to send applications, because the Government can do the reviewing part, and then they can give a determination. Prices can be increased or reduced and it will be done transparently,” sources explained.

However, the Covid-19 pandemic has not caused a significant impact to the importers thus far except for the fact that the Sri Lankan Rupee (LKR) depreciated drastically, especially since March 2021.

The last time that the imported milk powder price increased was in September 2019. Nevertheless, that price increase was, in fact, implemented under a milk pricing formula. Accordingly, the price of a 1 kg packet of imported milk powder was increased by Rs. 50, while the price of a 400 g packet was increased by Rs. 20.

That pricing formula was amended by the previous government into a simpler one, as it had been identified as too complicated. This newly implemented formula was scheduled to be revised quarterly based on global price fluctuations. 

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