The Government last week assured the public that there would be no shortage of milk powder in the market as it had bought time for price revision, but importers contested the claim and said if a price increase was not sanctioned, they would be compelled to discontinue the supplies.
Consumer Protection State Minister Lasantha Alagiyawanna said following talks with milk powder importers on Friday, there was agreement to defer the price increase by two months.
He urged consumers to refrain from panic buying as there was enough milk powder to continue the supplies to the market.
Importers however, said they had decided to slow down the supplies because without a price revision it would be unprofitable to continue.,
Ariya Milk Products CEO Lakshman Weerasooriya, a participant at Friday’s discussion, said they did not agree to supply their products at the prevailing prices as the price of a kilogram of milk powder had shot up by Rs. 300 in the world market.
He said milk food importers had been lobbying for a price increase since the beginning of this year and their request had been turned down three times.
“We requested in January for an increase of Rs. 50 and in March Rs 200 and in May Rs 300 as the world market prices increased and the rupee depreciated,” he said.
Exasperating the situation, the Sri Lankan banks are hard put for US dollars, making it difficult for importers to honour their bill payments.
“We have suffered up to Rs 1.5 billion losses in the past seven months and have outstanding bills amounting to US$ 6 million – the money to be paid to our suppliers for the last three weeks,” he said.
It is learnt the local banks are rationing the currency to customers.
This has resulted in around ten container loads of milk powder from Australia and New Zealand lying at the Colombo Port without being cleared for the past three weeks, importers said.
The Fonterra Sri Lanka also refuted the minister’s claim that they had agreed to supply at existing prices.
However, the company said that it was facing different challenges other than the foreign exchange issue and world market price increases.
“We have decided to go slow on supplies as we are concerned with health and safety issues of our workers during the heightening of the COVID-19 pandemic,” an official said.
The companies are asking for a price increase of Rs 350 on a kilogram of full cream milk powder . At present, a kilogram is priced at Rs. 945.
(Source: The Sunday Times – By Chrishanthi Christopher)