Milk powder price increase testimony to de-politicisation of pricing mechanisms: Harsha

The price increase of Rs.20 per 400g pack of full cream milk powder earlier this week has been done in accordance with the scientific pricing formula agreed to by all stakeholders in July this year, and is therefore a testimony to the de-politicisation of pricing mechanisms by the Government, an official said yesterday.   

Minister of Economic Reforms and Public Distribution  Dr. Harsha de Silva

Non-Cabinet Minister of Economic Reforms and Public Distribution Dr. Harsha de Silva, releasing a statement, said it is rare for governments to increase essential commodity prices after an election has been called. 

Dr. de Silva believes the recent price increase of milk powder is a testament to how the Government has been able to depoliticise the pricing mechanism of full cream milk powder. The Minister further emphasised that this move from pricing decisions made at the discretion of politicians, to a mechanism based on data, is a real paradigm shift in government, that will help depoliticise pricing and decisions in the future, benefitting both the consumer and the industry.

“The Ministry of Economic Reforms and Public Distribution played a substantial role in devising this pricing formula to be beneficial for all parties, while the Consumer Affairs Authority (CAA) always remains faithful to their mission, which is to safeguard consumer rights and interests through consumer empowerment, regulation of trade and promotion of healthy competition. And in this instance, the CAA strived to produce the best possible price for the consumer, but not at the cost of businesses,” said CAA Consumer Affairs Director General M.S.M. Fowzer. 

The Economic Reforms Analytics Unit of the Ministry of Economic Reforms and Public Distribution conducted a thorough analysis of the global milk powder prices and the prices in Sri Lanka for the pricing formula committee, in order to formulate a distinct pricing formula for imported milk powder brands such as Maliban and Fonterra, which depend on imported milk powder inputs. After over a dozen negotiations, these key companies entered into a pricing formula, based on the Global Dairy Trade index as a key variable.

“At least 1500 person-hours were put into the making of this pricing formula and the Ministry of Economic Reforms and Public Distribution, under the guidance of Dr. Harsha De Silva, played a crucial role in bringing together all stakeholders into this transparent initiative,” Asoka Bandara of Maliban Milk Products Ltd. stated. 

It is expected that prices will remain fair for both the consumer and the industry, as the formula will be revised every quarter based on global price fluctuations. The Minister further added that the Government has completed the development of a similarly transparent formula for LP gas which will be announced soon.