Are we paying the correct price for Milk Powder?
It has being observed there is a huge price imbalance between liquid Milk & Powdered Milk due to Price control of Powdered Milk. For Eg currently one liter of locay made liquid milk is around Rs.150/=, in equal terms to convert it need 8 Ltr of liquid milk to make 1Kg of Milk Powder. On the other hand to 1 ltr of liquid milk is equal to 125gms of Milk Powder, therefore its clear, price comparative of 125g Milk Powder is equal to 150/=. Hence 400g Milk powder pack should be 480/=. But the current control price is only 264/=. Despite of this huge disparity Milk Powder manufactures are asking only for reasonable price increase. It's quit surprising and unfortunate the relevant authorities are completely ignorant on this price principle.
Sri Lanka's milk food trade is heading towards a severe crisis as the sustainability of milk powder factories has been threatened following the - refusal by the Consumer Affairs Authority ( CAA) to the request of importers to increase the milk powder price by Rs. 15.
" Along with the devaluation of the rupee, the import price of milk powder has increased. " We have been asking the CAA to increase the price along with the devaluation of the rupee " we don't receive a profit and the loss we are incurring is great" said Chief Executive Officer of the Maliban Milk Powder Company, D. L. Weerasuriya . He said that the companies were selling milk food at a reasonable price .
He noted that the government had restricted the margin of profit from a 400 gram packet of milk powder to 4% and milk powder importers took a profit of 3.5% when the US dollar remained at Rs. 110.
" Our profit margin decreased to 1.% when the dollar rose to Rs. 115 and it has now risen to Rs. 130 and continues to rise further. When the US dollar was Rs. 110 the imported price of a Kilogram of milk powder rose to Us dollars 4.10 and the current price was US dollars 3.95. The import cost of a Kilogram of milk powder is now in the region of Rs. 520.The total cost with taxes packaging, transport charges and sales rebates etc is around Rs .650 he revealed. Earlier the companies have been making a profit margin of Rs. 10 to Rs. 12 per kilo. But it has come down to very low level at present, he said.
Therefore, milk powder importers have found it extremely difficult to remain in the milk powder trade unless the CAA permits us to increase the packet of 450 gram milk powder by a minimum Rs. 15" he added. "We can no longer continue to incur losses in selling our products", he said.
The only option is to reduce imports, which will result into a dearth of milk food in the country, he pointed out. "We are in a tight spot as we cannot take any more losses" he said. When prices of all essential items have gone up, including that of pot of curd from Rs. 120 to Rs. 150 and a cup of Yogurt from Rs. 18 to Rs.30 , there is no point in keeping milk powder prices unchanged," he said.
Eight litres of liquid milk is required to manufacture 1 kg of milk. To achieve the correct concentration only 87 per cent of water should be removed from liquid milk in the spray drying process.
Maliban Milk meets this concentration standard has been certified not only by the Government of Australia but also by the Sri Lanka Standards Institute through its SLS certification. He said that a kilogram of Milk powder contains 8 litres of liquid milk valued at Rs. 1200