Milk powder issue in the market

Milk powder available .... not available!
 True reason?
 Solution at hand ... with a price increase
 Nespray boycotting Sri Lanka!

The biggest problem these days in the market is the shortage of milk powder. Though Anchor is available at one time ... at another time it is Maliban that is available. Though at another time it is Highland that is available, it is not not available all the time as such. When none of these things are available, customers are forced to depend on milk powder of malt type or expensive liquid type milk or else milk without fat. This unfortunate situation was not something that customers had to face before this at any time in the past.   All this started happening after the period that allegations began to surface about chemical poison in milk powder. During that time since the public began to keep away from milk powder, the stocks of milk powder were left over and on account of that, companies began to limit imports of milk powder to the market.


Whatever it is, when such a situation came to a close and though the market began to come back to normal, milk powder did not seem to come into the market as expected. At the beginning there were complaints that all milk powder required by customers are not available in the market because supermarkets were engaged in a strategic move to finish off wholesale stocks of  only trade names chosen by them. But by now the problem has taken on a new outlook. In fact,  by now a situation has arisen where no type of milk powder is available.

The true reason for this situation is kept back from the public. Though news spread around that a number of containers with milk powder are being hidden at Orugodawatta and various other places, statistics confirm that by such a move it cannot affect requirements of milk powder for the whole country.

The 20 containers of Fonterra that has been brought into the country means that it would suffice only for one week of requirements of the masses in this country. Though there are other brands of milk powder being imported to the country, whether they be at Orugodawatta or not, it cannot make a notable impact for this milk powder shortage that people in the whole island are facing.

What then is the true reason for these companies not to issue sufficient stocks of milk powder?

What has happened is something similar to the tax phenomenon where rice-mill owners buy paddy and then create an artificial shortage of rice in the country. All this has happened because the companies are not permitted to increase the price of milk powder. These companies purchase milk powder at the rate of US $ 5000  per metric ton. As a result of the government jacking up import taxes and the CIF price, the relevant companies have been unable to acquire the normal profits they earned before from milk powder. It is for this reason that these companies have requested for an increase of Rs. 250 for milk powder. However, the government has still not consented to it. Anchor, Raththi of Fonterra as well as Nespray of Nestle, Milgro of Maliban and other brand names are not in a position to continue their industry by facing loss after loss.

Under such a similar situation  at one time the Maliban Company boosted their price according to their whims and fancies in which case the government brought the situation under control saying that legal steps would be applied in such a case. In the meantime, there is news that the Nestle Company has decided to put a stop to exports of milk powder to Sri Lanka in the future. It is learnt that as exporting milk powder is a loss for them, such exports would be stopped but that malt beverages including their other products would not be affected in the process.

The government is now bringing out the point that they have not taken steps to increase the price of milk powder for a period of 1 1/2 yeas and are now to reconsider the demand made on them by milk powder companies.

Consumption of milk powder per day in Sri Lanka is close upon 250 metric tons. Though there is a rumour about liquid milk to be introduced as an alternative, the government is still not in a position to implement it and issue milk in liquid form as a practical measure of distribution.

Even the Consumer Authority has admitted that the only solution that the government could give in the case of this milk powder issue is to permit an increase in price. A high official of Consumer Authority had given a statement to a weekend newspaper recently saying that accordingly, the relevant Commission would meet in this respect and take steps to increase the prices either on a common basis or according to each brand of milk powder.

An increase in milk powder is certainly something that would hit the consumer in the stomach, so to say. In the future what is in store is the elections. In this case what decision the government would be taking is not clear.