Demand
for fresh milk seen rising in Sri Lanka
Faced with shrinking or static demand for branded milk powder, Sri
Lanka's milk industry is setting its sights on achieving growth
in fresh liquid milk where demand is seen rising.
"That's
where growth will come - in fresh milk," says Mathew Oldham,
managing director at New Zealand Milk Lanka (Pvt) Ltd, marketers
of Anchor and the Newdale range of fresh milk products.
The company,
gearing its relatively new fresh milk facility at Biyagama to meet
growing demand for fresh milk, says it plans to introduce a range
of new products in the market this year but Oldham declined to give
details.
Oldham, in a
recent interview, also said they were opposed to government plans
to raise milk powder duties to boost local milk production and demand,
noting that it would result in a negative impact on consumer prices.
Some countries
in the world have increased duties on imports to protect the local
industry. "The result is that the industry will grow inefficiently
and at the end of the day the consumer would be paying more for
fresh milk than before," he said, responding to comments some
weeks back by Livestock Minister S.B. Dissanayake on plans to raise
milk import duties to boost local milk production.
According to
official figures, total powdered milk consumption in Sri Lanka fell
to 48,100 tonnes in 2000/01 (March to April) from 48,400 tonnes
in the previous financial year after consumption levels rose from
42,400 tonnes in 1995/96, 43,500 tonnes in 1996/97, 47,100 in 1997/98
and 45,400 in 1998/99. Trade sources attributed declining trends
in powdered milk consumption to a slight shift to fresh milk.
New
agriculture policy is being formulated
By Naomi Gunasekera
The government is working on a national policy on agriculture that
will balance the interests of producers and consumers, Minister
of Commerce and Consumer Affairs Ravi Karunanayake said.
"I have
a twin problem. One is ensuring that the domestic industry does
not get wiped out and the other is ensuring that the consumer gets
a decent rate (price)," he said in an interview (see Tackling
MNCs and consumer needs)
Following talks
between Prime Minister Ranil Wickremesinghe, Agriculture Minister
S.B. Dissanayake and himself, a national policy is being worked
out and will be announced soon, Karunanayake said.
Giving an example
of the dilemma facing the government, he said that it could import
and sell potatoes at Rs. 35 but local producers sell at Rs. 50.
"Are we
going to cut off the local producer or are we going to protect him?"
he asked.
The danger of
not protecting local producers was that prices of imports would
rise with the depreciation of the rupee or that shipments could
be disrupted by external events such as a war, he said.
"That is
where the balance is required and we thought of considering the
equitable return to the farmer in deciding on the prices,"
he said.
Karunanayake
also said state outlets such as Sathosa and Salu Sala would be revamped
and made more customer-friendly but not privatised. A new subsidiary
called Sathosa Retail will be formed linking all retail outlets.
Salu Sala, which
he described as a "defunct company", will be converted
and made to compete with the likes of Odel and House of Fashions
to serve consumers better, he said.
Promises
to IMF
Govt. to freeze wages, raise prices
The government has promised the International Monetary Fund (IMF)
it would freeze private sector wages and hiring while raising administered
prices and closing several public institutions.
The pledges
were contained in a revised Letter of Intent to the IMF sent just
before the lending agency last week announced the resumption of
disbursements under the standby loan facility that was suspended
after the former regime failed to keep to IMF-dictated performance
targets.
"As part
of our medium-term strategy, efforts will be made to reduce the
wage and pension bill from 2003," said the letter signed by
Finance Minister K.N. Choksy and Central Bank Governor A.S. Jayawardena.
Indicating that the state sector will layoff staff on a large scale,
they have said: "Every department and agency will be required
to rationalise their cadre significantly over the next three years,
starting with the elimination of vacant positions, and to consolidate
functions."
For this year,
the government has set aside Rs. 102 billion to finance one-off
expenses from this consolidation and rationalisation of functions
within the government, said the letter which spells out what the
United National Party-led government intends to do to get money
from the IMF.
With expenditure
control being "a key pillar of fiscal policy in the 2002 Budget",
the government promised the IMF to raise postal tariffs and "adjust
other administered prices as necessary."
The inflation
target for the year has been raised to 7-8 percent, from the five
percent in the original programme, because of "the need to
further increase the administered price of several key items."
The letter also
said: "We also intend to achieve savings by closing a number
of redundant public institutions."
It also promised
that labour market reform is being initiated with the introduction
of strict time limits for the processing by the Labour Commissioner
of dispute resolution, arbitration, and termination cases.
"These
efforts to reduce delays will be linked to the establishment of
a binding formula for compensation of terminated employees,"
it said. It pledged "more decisive" reforms of the two
state banks, Bank of Ceylon and People's Bank.
"The government
is considering the options for deepening state bank reform,"
it said. "Options for more decisive reform of these institutions
are being considered."
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