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High prices keeping liquid milk out of reach of Sri Lanka masses

ECONOMYNEXT – Sri Lanka’s state mandated farmgate milk prices were pushing up costs and making a nutritional food less affordable to the less affluent, Cargills (Ceylon) PLC, a large Sri Lankan dairy player, has said.

The company said it is the second largest private-sector milk collector in the country with an average daily collection of about 90,000 litres.

Milk powder is an essential nutrition component in the diet of a majority of Sri Lankans, Cargills (Ceylon) chairman Louis Page said.

The company "appreciates the necessity to maintain lower prices in view of health and nutrition-intake concerns," Page said.

But successive increases in farmgate prices by the state have pushed up liquid prices. Imported powdered milk made out of milk by farmers who are more productive was more affordable to the poor, despite taxes.

Sri Lanka’s government has guaranteed a floor price for milk to encourage production and in June decided to implement a budget proposal to increase the purchasing price of a litre of liquid milk to 70 rupees from 60 rupees.

Page said high domestic milk prices were “counterproductive to the effective expansion of local dairy production due to the prohibitive pricing that stems from the high raw material and processing costs.”

Heat-treated packaged fresh milk remains a product “catering to the middle to upper income segment of consumers,” he told shareholders in the company’s annual report.

"Your company is focused on driving the value-added range while developing medium to long term strategies to make fresh milk consumption affordable for the masses."

Cargills (Ceylon) plans further investments in enhancing its cheese product portfolio while strengthening the smallholder dairy farmer value chain and storage capacities to build a more sustainable supply chain, Page said.





A cursory check on online prices show that Sri Lanka has some of the highest prices in the world for milk and dairy products.

In the UK, the Tesco supermarket sells its budget 2-litre whole milk pack for 75 pence and the 4-litre pack for 1 pound or 44 pence a litre. In Sri Lanka rupees it is about 92 rupees per litre after processing, packaging and put on the shelf.

Tesco Everyday Value White Full Flavor Cheese or Milk White Cheddar is 3.08 pounds per 600 gram pack or 5.13 per kilo or about 1065 rupees a kilo. A 1.1 kilo pack is 4.85 pounds or 4.41 a kilo, which translates to about 915 rupees a kilo.

In India a 1.0 kilo pack of Amul cheese is about 340 rupees or about 718 Sri Lanka rupees . In Sri Lanka 1 kilo packs of chees are hardly seen. State-run Highland 100 gram process cheese pack is 230 rupees of 2,300 rupees a kilogram.

Ambewela edam cheese is priced at 750 rupees 400 gram ball, or 1,812 rupees a kilo. A Kothmale 600 gram ball is 600 rupees for a 325 gram ball or about 1,846.

Cheese prices in Sri Lanka are so high that cheese is considered a super-luxury product, while it "bread and cheese" is far from a luxury food in a free country.  Cheese is so expensive in Sri Lanka that some shops even put cheese packs under lock and key to prevent pilfering.

Critics have warned that a vicious nationalist East European style drive to achieve food self-sufficiency or ‘Nahrungsfreiheit’ will always push food prices up and boost malnutrition further especially among the children of poor people.

With no pressure to improve productivity, the dairy farmers will also remain at subsistence levels.



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