No milk food price hike for now despite extra levy

By Malik Gunatilleke

Prices of imported milk foods will not be increased at least until the end of April despite the Government more than doubling the special commodity levy on a kilo of milk powder.

The Government claimed that the special levy on imported milk powder which was increased from Rs. 15 to Rs. 35 per kilo was implemented to help and protect the local dairy farmers and secure a competitive price for them.

Ministry of Trade and Consumer Affairs Secretary Lalith Silva told The Sunday Times that following a meeting with the milk food companies, Ministry officials and Treasury officials it was decided that the levy would be increased as part of an agreement which is valid until April 30.

The special commodity levy on milk foods was tripled from Rs. 5 to Rs. 15 per kg following the Budget proposals of 2009 last November designed to improve the local dairy industry and encourage local farmers.Finance Director of Fonterra Brands Lanka Ltd (FBL), Viren Wijesinghe said that the increase on the special commodity levy was only felt by FBL last week when a new stock was imported.

Despite describing the situation at FBL as difficult, Mr. Wijesinghe said that there will be no change in retail prices until the agreement between FBL and the Government expires at the end of April.

He also said that the Government had met with the milk importers to discuss the probability of world market prices of milk foods dropping in the next few months.

“We expect world market prices to drop during the months of April and May and because of this the special levy has been increased on imported milk foods. It will be difficult to maintain the current prices but we will not increase our prices until the end of April,” he said.The situation will once again be reviewed after the agreement expires in May while prices will only be affected depending on world market prices at the time.

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