Sri Lanka facing milk powder shortage
View(s):Sri Lankans are to be deprived of their morning and evening cup of milk tea as several leading milk powder importers have taken a collective decision to suspend imports due to heavy costs.
Milk powder companies cannot continue to run their business like this anymore and are left with no choice but to stop imports and also stop selling existing stocks of whole milk powder, importers claimed.
There could be a milk powder shortage soon if the government does not allow companies to increase the price of a milk powder packet, several milk powder company heads told the Business Times.
These companies are incurring a loss of Rs. 30 to 40 million per month and are now compelled not to clear the milk powder stocks from the port and not place new orders until the government grants them permission to increase milk powder price by Rs. 100, they warned.
Along with the devaluation of the rupee which is now at Rs. 184 a dollar and the increase in total taxes including Rs. 15 as Duty, 15 per cent VAT, 7.5 per cent PAL and 2 per cent, NBT to Rs. 170 from Rs. 135 per kg, the import cost of milk powder has been increased.
In addition the world market price of milk powder is now at a high level. But a few years ago government levied only Rs. 2 per kilo as duty for the milk powder as milk is an essential food item.
The cost of one metric ton of milk powder in the world market is US$ 3,250-3,350. It can go up to US$ 3,400-3,500.
Against this backdrop, milk powder companies requested the Consumer Affairs Authority and the Cost of Living Committee to allow them to increase the price of one kilo of imported milk powder by Rs.100 to cover import costs.
They pointed out that the removal of price control on milk powder and VAT removal is the only solution to this problem.