Sri Lanka to face milk powder shortage soon
View(s):Sri Lanka is on the verge of facing a severe shortage of milk powder as local importers have been struggling for their survival due to heavy taxes and depreciation of the rupee.There could be a milk powder shortage in the country in February and March next year if the government does not bring down taxes, milk powder importers warned.Along with the devaluation of the rupee which is now at Rs. 142 a dollar from Rs.132 before the budget and the increase in total taxes including the PAL and NBT to Rs. 285 from Rs. 135 per kilo gram , the import price of milk powder has been increased, Maliban Milk Powder Company Chief Executive Officer D.L.Weerasuriya told the Business Times.
“We have been asking Finance Minister Ravi Karunanayake to give them an appointment to discuss this issue during the past two weeks , but there was no reply from the ministry as yet”, he said adding we don’t receive any profit and the loss we are incurring is increasing.”Under this circumstance, they have no alternative other than halt imports and close down packaging or curtail imports, he warned. Sri Lanka’s annual consumption of milk powder is about 58,000 metric tonnes, of which 50,000 metric tonnes were imported, industry officials said, pointing out the heavy dependence on imported milk powder.
The government has fixed the maximum retail price at Rs 325 per 400 gram milk powder packet and the companies are paying a sum of Rs. 285 per kilo gram for taxes alone, he said adding that when considering the packaging and other costs including transport charges and rebates, the milk powder companies cannot survive any more. After a January 2015 budget, the government forced milk powder firms to cut prices by Rs.152 a kilo and in the 2016 budget concessions were given only for local milk powder manufacturing companies ignoring the milk powder importers, he said.
Leon Clement, Managing Director of Fonterra Brands Sri Lanka said “In Sri Lanka, local milk supply is unable to meet Sri Lankans’ demand for dairy and therefore, we still require imported milk powder”. As a dairy co-operative, we are committed to helping grow the local industry through significant investments in training and infrastructure so we can increasingly meet this demand with local supply.“However, high existing duties and recent levy increases in the 2016 budget on imports will impact our ability to make a meaningful difference to the local dairy industry,” he added. A senior official of the Diamond Milk powder company noted that they cannot absorb the tax hike and the impact of rupee depreciation.