The Cabinet Committee on Cost of Living (CCCL) will meet on Tuesday (23) to discuss the recent wheat flour increase. This follows a decision made by wheat flour companies, Prima Ceylon and Serendib Flour Mills (Pvt) Ltd. to suspend the Rs. 8 price increase on wheat flour they announced on July 16. Industry & Commerce [...]


CoL committee to review bid to render dough dearer

Acting minister slams flour companies' decision as illegal; CAA continues to raid outlets selling flour at higher prices

The Cabinet Committee on Cost of Living (CCCL) will meet on Tuesday (23) to discuss the recent wheat flour increase.

Pic by Indika Handuwala

This follows a decision made by wheat flour companies, Prima Ceylon and Serendib Flour Mills (Pvt) Ltd. to suspend the Rs. 8 price increase on wheat flour they announced on July 16.

Industry & Commerce Acting Minister Buddhika Pathirana met with representatives of the flour companies on Thursday (18), while they also met with Economic Reforms & Public Distribution (non-cabinet) Minister Harsha de Silva separately, in his capacity as CCCL Convenor.

The Consumer Affairs Authority (CAA) will submit data on the issue and its recommendation to the CCCL, and the minutes from the CCCL’s meeting will then be submitted to Cabinet for approval.

Ministry sources told the Sunday Times that, during the meeting held on Thursday, Acting Minister Pathirana had emphasised to the flour companies that the price increase announced by them was “illegal.” He had also warned that that CAA would continue conducting raids and taking legal action against those found selling wheat flour at increased prices.

The CAA, meanwhile, said it had carried out 51 raids on July 17 and 70 raids on July 18, targeting establishments selling wheat flour at “illegally increased prices.”

CAA Director General M.S.M. Fouzer said the raids were mainly focused on distributors, agents and wholesalers. “Flour is an essential item and, as such, no one can increase the price without the written approval of the CAA,” Mr Fouzer pointed out.

He acknowledged that the WFCs had made representations to the CAA, asking for a price increase, but said any increase done arbitrarily, without the CAA’s approval, was illegal. “The matter will be taken up next week by the CCCL. It is up to the Government to make a decision on a price increase.”

President of the National Movement for Consumer Rights Protection Ranjith Withanage said they had no objection to a price increase done “legally and following proper procedure.”

“Gazette No: 1978/68 dated July 14, 2016, has prescribed a maximum retail price of Rs. 87 for wheat flour. Any increase beyond that is illegal without CAA approval and would require the issuance of a new gazette notification,” he emphasised.

Meanwhile, All Ceylon Bakery Owners’ Association President N.K. Jayawardena said they had reversed the decision taken earlier to increase the price of a 450 gm loaf of bread by Rs. 5, after being informed that the 2 WFCs had agreed to reduce the price of wheat flour to the previous price.

“However, we understand that the WFCs have done this only as a temporary measure. We will keep the price of bread as it is for now, but will be compelled to increase again, if there is an upward revision in wheat flour prices,” he remarked.

He also said that, prices of other bakery products may increase too, if wheat flour price is increased, though they would leave that decision to individual bakery owners.

Mr Jayawardena was skeptical over attempts to initiate legal action against the WFCs, over increasing flour prices. “We have seen this pattern time and again. The WFCs increase prices. The authorities and consumer rights groups kick up a big fuss. Yet, nothing happens. Show me one instance where a court case was filed and concluded against these WFCs?”

Prima Ceylon and Serendib Flour Mills (Pvt) Ltd. declined to comment.

Decision on pricing should not be made by politicians: Dr Harsha De Silva

A decision on pricing should not be made by politicians, stated Non-Cabinet Minister of Economic Reforms & Public Distribution, Dr Harsha De Silva.

Dr De Silva, who is also Convenor of the Cabinet Committee on Cost of Living (CCCL), opined that introducing a pricing formula for items such as wheat flour, was the best way to ensure that retail prices are kept stable.

“What generally happens, whether it is with wheat flour, milk powder, gas or others, is that, when global prices fall, companies reap the benefits, but when they rise, the same companies come asking for an increase. Then some Authority has to recommend an increase and the subject minister has to approve it,” he observed.

He pointed out that, if the Government is to regulate the prices of certain essential commodities, a pricing formula agreed upon by all stakeholders, which will trigger on a given date, will provide certainty in the market.

“When global prices fall, the benefits should transfer to the consumer. Likewise, when they rise, the industry should be able to survive. All sides should feel there is some benefit to them. This is a market economy.”

He revealed that the CCCL had been engaged in discussions with the wheat flour companies (WFC) on working out a stable pricing mechanism, when the companies arbitrarily increased prices this week.

Dr De Silva said he was fully in agreement with Acting Minister of Industry & Commerce, Buddhika Pathirana’s stance that the price increase was illegal. “When the WFCs came to see me, I told them we are partners and partners don’t do such things, and we will not accept this.”

With the WFCs now agreeing to reduce the price to what it was before, the Minister said the matter will now be taken up for discussion at the next CCCL meeting on Tuesday (23) and a decision taken after analysis of CAA data.

“Ideally, however, we should move away from politicians deciding on prices. We are moving away from that through the fuel pricing formula, for example. Those are the elements of a progressive economy,” the Minister stressed.

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