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Prices of imported food items soar, shortages possible
The prices of a variety of imported food items shot up from Friday, January 1, after the three levies announced in the budget became effective. The items include chick peas, dhal and canned fish products with traders warning that the new levies would have a spiralling effect on the prices. Food outlet owners said they had been forced to raise prices, even of the packet of rice bought by tens of thousands of working people.
The levies raised include the Nation Building Tax (NBT), the Value Added Tax (VAT) and the Port and Airport Development Levy on imports. Saddled with the increase in taxes on the one side and price controls placed by the Government on the other, food importers warned that they would be forced to restrict imports and this could lead to shortages in the weeks ahead.
They said that with the new taxes from January 1, the price tags on imported items would have to be increased and they had no option but to pass this on to customers to avoid heavy losses.
Food importer M.S.M. Zaneer said that his business would face huge losses and it was impossible to adhere to a maximum retail price due to the fluctuating rate of the US dollar in relation to the rupee and the world market prices of the commodities.
“As an importer I have to deal with overseas markets and buy products on their terms. I have to increase prices due to the high cost mainly due to the rising dollar rate. Yet the maximum retail price is regulated by the Government and we are finding it difficult to make profits or break even,” he complained.
The Food Commodity Traders Association, too, expressed concerns over the increase in taxes and the maximum retail prices on imported food items. A spokesman said that if the Government wanted to maintain maximum retail prices it should at least reduce the Customs duties.
He said the interim budget had placed a maximum retail price on seven imported food items and later four more were added.
He also warned that traders were now reluctant to bring in imported food products and there might be scarcities soon.
He claimed that essential items such as as sugar, onion , potatoes, canned fish products, chick peas, Masoor dhal and some spices were imported as local produce was not sufficient to meet the local demand.