Powdered milk food crisis continues: CAA to mull price revision this week



With five powdered milk food importers seeking an immediate price revision, the Price Committee of the Consumers Affairs Authority (CAA) is expected to meet this week amidst the growing crisis, which continues to starve the marketplace of imported products.

"We are now working out the price calculations", says J. M. A. Douglas, CAA’s Director-General.

The importers have asked for a Rs. 250/- increase on a kilogram pack, but the quantum will be determined by the Committee on the basis of profits or losses they had made coupled with distribution, handling and demurrage costs, he explained.

A revision is justified at this juncture as global prices of spray-dried milk food have zoomed, interjected Roshan Kulasuriya, Director, Corporate Relations, Fonterra Brands Lanka.

"We are looking at a difference of US$ 1,800 as world market prices have climbed to US$ 5,000 plus from US$ 3,200 per metric ton", he said. "How can a business continue to absorb such substantial losses?"

Asked whether the CAA has been accommodative towards a price increase on the basis of spiraling global prices, he replied, "We have made representations and discussions are ongoing".

That’s right. The CIF value of a ton of powdered milk has shot up to US$ 5,400, Douglas acknowledged. "It is not that a price revision is inappropriate, but we have to consider the aspect of affordability also as milk food is consumed by rural folk, particularly children as well".

As the market leader, Fonterra has a large footprint in Sri Lanka with a 65% stake. The company imports and markets the popular ‘Anchor’ milk powder, the No. 1 choice amongst brands.

Apart from hoarding of powdered milk food by unscrupulous trader, there are consignments not being cleared from the Colombo port by certain importers, the DG said. "These factors have also contributed largely towards the critical shortage in the market".

Recalling the recent raids on hoarders at Welisara and Seeduwa, Douglas warned that traders who resort to unethical business practices will be prosecuted. "We will continue with our raids".

There is an artificial demand in the market, Kulasuriya insisted. "Customers who earlier purchased one packet are now buying four when they find products in the market".

"The import and distribution of ‘Anchor’ milk powder are happening as usual", he stressed, dismissing reports that the company had cut down on production levels. "We have cleared all our consignments from the Colombo port and Fonterra will continue to honor its commitment towards customers".

"The fact that we continue to invoice and release stocks despite a pricing issue is evidenced by lorries which still call over at our Biyagama plant to transport ‘Anchor’ milk food for distribution", Kulasuriya noted. "But, the question is for how long can we go on like this?"

Of course, there was a delay earlier in releasing stocks to the market as every consignment was lab tested following contamination fears, the director recounted. "It was a situation beyond us as we could not expedite the scientific examination process".

Asked about the price revision sought on 400 gm packs of milk food, he replied, "We have asked for a Rs. 250/- increase on a kilo and based on this quantum, it is the CAA which generally decides on the small packs".

Despite a shortage of powdered milk in the market, why is that the business community is disinterested in importing new brands to meet the market demand?, Kulasuriya queried. "That’s because it is not profitable".

Dependence on powdered milk food should be discouraged, the Medical Officers’ Forum (MOF) suggested. "Sri Lankans are now over-using this commodity which is not a healthy practice".

During the times of ancient kings, were all those marvels built such as reservoirs and stupas after consuming powdered milk?, it asked. "Sri Lanka has plenty of fresh fruits and a variety of porridge (kola kenda) which can replace milk food".

The family health bureau should embark on a concerted campaign to promote fruit juices and porridge as an alternative to milk powder, it noted. "This should go hand-in-hand with a sustained effort by the government to develop the liquid milk segment".

It is absolutely senseless spending billions of rupees on milk food imports when, apart from developing the liquid milk industry, there are other viable options, the MOF commented. "The time is now opportune to wean away people from powdered milk, the over-use of which can have a deleterious effect on the human body".

In instances where breast milk is unavailable, the use of infant milk formulas could be justified, but certainly not for older children and adults, the M0F said.

The government should also take a stern view of misleading advertisements which depict mothers and children to promote brands of powdered milk food, it said. "Products which claim to enhance memory power or cure osteoporosis should also come under the microscope".

The MOF pledged to continue its efforts to create greater awareness on the unhealthy practice of consuming milk food", it stressed. "We will go full throttle on this issue".

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