The Government claims that milk food importers have agreed to reduce domestic milk powder prices in December despite not receiving any relief from the Government in the way of tax concessions.
In his Budget speech the President proposed that the Special Commodity Levy on milk food should be increased from Rs. 5 a kilo to Rs. 15 a kilo. However, following a meeting between Trade Ministry officials and local milk importers, Minister Bandula Gunawardena said that the milk food companies had agreed to reduce their prices in December.
Trade and Consumer Affairs Ministry Secretary Dr. R.M.K. Ratnayake told The Sunday Times that despite the increase in import taxes there has been a great drop in international prices and shipping costs.
“Shipping costs have reduced by almost a third and so too have insurance costs so we need to make sure that the consumers get the benefit of these reductions,” he said.
He said there had also been a slight decrease in the demand for some brands of imported milk powder in the market, especially due to speculation that some brands contained melamine.
“International prices of milk powder have also decreased greatly so we have to make sure that the private milk food companies are not enjoying large profit margins without giving relief to consumers,” he said.
He said that there would be a slight reduction in domestic milk powder prices after December 15 when prices are up for revision.
Meanwhile, Fonterra Brands Lanka (FBL) Corporate Affairs Director Roshan Kulasuriya said FBL agreed with the statement made by Minister Gunawardena following the official meeting between the two parties last week.
Lanka Milk Foods (LMF) Marketing Director Lal Saranapala said it was still too early to know what effect the current situation would have on domestic prices or import prices.
He said that LMF would have to wait to until its next shipment arrives in December to know how fluctuations in the world market and import taxes would affect prices..