Importers lament maximum price controls on essentials

Saturday, 2 April 2016 00:04 - - {{hitsCtrl.values.hits}}

By Charumini de Silva

The Essential Food Commodities Importers and Traders Association expressed disappointment over the Government's decision to retain price controls on imported essential food commodities, noting that fixed maximum retail price (MRP) was an archaic and dysfunctional mechanismwhich hurts the industry as well as consumers.

The stakeholders urged the Government to do away with the restrictions or imposition of MRP for imported essential food commodities insisting it is “very unreasonable” to have controlled prices in an open economy, which hinders market growth.

“Despite having a MRP, there is no implementation taking place simply because you cannot do business at this level. At the moment the MRP is not effective. No raids are taking place. The market is selling at a higher price,” they noted.

The association said immediate attention was on sugar, dhal, dried sprats, chickpeas and black gram imports. However they assured there is no scarcity in the market except for sugar as importers missed the chance of placing their orders at a lower rate.

In terms of sugar, prices are increasing due to a global shortage.

“The general public will think importers are trying to jack up prices during the Sinhala New Year, without having a clear picture. When the cost is at Rs.98, what is the logic behind having a MRP for retail sugar at Rs.87? If the Government wants to sell at a reasonable price, they could execute it via State-owned cooperatives and Lak Sathosa outlets, which will create space for competition among all players in the market,” they pointed out.

Importers insist the best option is to remove MRPs and allow market forces to determine prices without hampering the market.

Noting that the rupee has devalued by about 14% in a year, they pointed out that this also means every item hadincreased in price by the same percentage without the consumers’ knowledge.

“World market prices are subject to fluctuation, but authorities must also understand that importers have to make advance bookings based on forward price to ensure food security by continuity of supply and at the time of clearance the import tariff applicable on rate of exchange is also a significant factor,” they stressed.

The stakeholders asserted that theyhad proposed to the Government to remove the MRPs since October last year, but they were yet to receive a positive response.