Milk foods: Price cap stays

By Malik Gunatilleke

A proposal made by domestic milk food companies to increase the price of milk powder by Rs. 25 has been rejected by the Consumer Affairs Authority (CAA) on the grounds that international milk food prices have come down in the past two months.

In April, the government reached an agreement with domestic milk food companies to maintain, until the end of July, a maximum retail price of Rs. 275 per 400-gram pack of milk powder. However, many milk food brands have succeeded in maintaining an even lower price than the government recommendation, hence the rejection of the Rs. 25 price hike proposal.

Trade and Consumer Affairs Ministry Secretary Dr. R. M. K. Ratnayake told The Sunday Times that certain milk powder brands were being sold for Rs. 260, while the CWE was selling some brands at Rs. 240. He said the request for a price increase had come from some of the major milk food companies. “They requested a price hike of Rs. 25, and it would have been granted if international prices had gone up. However, if other companies can sell at lower prices, then the price increase cannot be justified,” he said.

Dr. Ratnayake said the government was also looking to import an even lower-priced brand of milk powder from Australia so as to have a range of price options in the market.

Meanwhile, CAA chairman Rumy Marshud said the CAA had reached a separate agreement with milk food companies to keep current prices unchanged until the end of October. He said milk food prices in the international market had dropped in recent months, and that the milk food companies had agreed to maintain current prices over the next three months.

However, Fonterra Brands Ltd (FBL) corporate affairs director Roshan Kulasuriya said the present agreement with the government was signed with the understanding that a price revision would be permitted after the agreement ended on July 31. “We were told that at the end of the agreement, if the international market had shown increases over the past three months, we would be allowed to increase our prices accordingly,” he said.

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