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Friday, October 7, 2022

All milk powders to go off shelves soon – The Morning

Must read

  • Importers release final consignments to market
  • Difficulty in placing new orders due to forex liquidity crisis
  • Local manufacturing also affected due to fuel shortages

By Imsha Iqbal and Shenal Fernando

The milk powder shortage in the country is expected to get further aggravated in the near term as the limited stocks of milk powder imported recently have been almost completely released to the market, leading to a greater reliance on locally-manufactured milk powder, which is also facing manufacturing issues due to fuel shortages.

Speaking to The Sunday Morning Business on Thursday (2), a source from the milk importing industry stated: “We were able to import only a very small quantity, but that is also now finished.”

They stated that securing further stocks would be difficult due to the prevailing foreign exchange liquidity crisis.

Currently, the price of a 400 g packet of imported milk powder is around Rs. 1,020 and the price of a 1 kg packet is Rs. 2,545. In comparison, industry sources stated that local milk powder was priced at Rs. 625 for a 400g milk powder packet and Rs. 1,560 for a 1 kg milk powder packet.

Speaking to The Sunday Morning Business, MILCO General Manager Sudath Munasinghe stated that local milk powder manufacturers could not fill the supply gap created by disruption in the importation of milk powder.

Responding to a query on MILCO’s daily milk powder supply quantity, he stated that he was not able to quote an exact figure since the milk powder quantities supplied to the market varied due to disruptions faced in manufacturing as a result of the fuel shortage and different milk collection levels. 

“We are currently supplying limited quantities of milk powder to the market. We have entered into an agreement with Sathosa to supply 400 g milk powder packets for its budget packs and we are also supplying limited quantities of 1 kg milk powder packets to other supermarkets,” Munasinghe stated.

Commenting on the possibility of a further price hike of imported milk powder, the source stated that a price hike could not be predicted at the moment, but acknowledged that there was a  possibility depending on the further depreciation of the Sri Lankan Rupee.

Over the past three months, the prices of imported milk powder have surged by around 100% following the over 75% depreciation of the Sri Lankan Rupee in the aftermath of the 7 March 2022 decision by the Central Bank of Sri Lanka (CBSL) to float the exchange rate.

The depreciation of the rupee is considered to be the primary factor for this surge in imported milk prices. Global milk powder prices have been on a downward trend since March 2022, reflected by the Whole Milk Powder (WMP) index published by Global Dairy Trade, which as of 17 May 2022 was down 17.3% compared to the recent high in early March.  

It was previously reported that despite the fixed prices for imported milk powder, it may be sold at higher prices as a result of unforeseeable costs being incurred during importation.

As a consequence of the depreciation of the rupee, milk powder importers are forced to bear an increased cost for imported packaging materials, which need to be considered in finalising the selling price along with soaring expenses for fuel and energy. 

 

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