Bakers slash bread prices after Govt.’s call for support

Industry and Commerce Minister Rishad Bathiudeen greets All Ceylon Bakery Owners’ Association President N K Jayawardena (far right) and his baker team on 19 September at CWE offices of the Ministry.   

Sri Lanka’ largest association of bakers announced on 19 September that they are ready to slash bread prices back to previous levels, in support of the Government’s efforts to help consumers. The bakers, after in-depth discussions, also called for liberalisation of the domestic flour market, so that even bigger gains could be passed down to the market. The bulk of annual flour imports to Sri Lanka - more than 70% - are absorbed by the bakery sector, of which a considerable amount is used for making bread loaves.

“We too like to give a lower price to our consumers, so that it will help our sales. We will reduce bread prices by Rs 5 island-wide, as soon as flour producers and millers slash their supply price by Rs 5,” assured All Ceylon Bakery Owners’ Association President N K Jayawardena on 19 September. Jayawardena, who led a team of leading bakers, made these comments after an hour-long discussion with Industry and Commerce Minister Rishad Bathiudeen in Colombo. Minister Bathiudeen, joined by his top officials and CAA officials, met ACBOA’s Jayawardena and his representatives at CWE Premises to discuss the escalating prices of flour and bread, and to resolve it immediately. Two weeks ago, CAA began receiving reports of bread prices being increased by Rs 5 per loaf. Thereafter, wheat flour milling firms too, arbitrarily and unilaterally and without the permission of CAA, increased their supply price by Rs 5 per kilo. On 18 September, Minister Bathiudeen issued strict directions to CAA to take immediate legal measures and proceed with court filings against all flour millers and suppliers who hiked their wheat flour price by Rs 5, as it was done without any due authorisations. Minister Bathiudeen has urgently called for a report from CAA on the latest developments on wheat flour, and instructed the officials to clarify if any urgent amendments to the CAA Act is required to proceed. He has called on CAA to commence legal action by 20 September latest.

“We too like to give bread at a lower price of Rs. 60 per loaf to our consumers so that it will help our sales. We are compelled to increase prices mainly due to the flour price hike. We will reduce bread prices by Rs. 5 island-wide, as soon as flour producers and millers slash their supply price by Rs 5,” said ACBOA’s Jayawardena, and added: “We also request the Government and the Ministry to allow us to import flour on our own, preferably without the prohibitive import taxes. If we can import flour on our own with low taxes, we can supply bread to the market at a price even lower – well below Rs 60, perhaps at Rs 40. Many people have confused us with All Island Canteen Owners Association (AICOA), and have a wrong impression about us.”

ACBOA has 900 registered member bakeries, and is Sri Lanka’s pioneering bakery association, dating from the early ‘90s.

Minister Bathiudeen welcomed ACBOA’s support to consumers. “The Government and CAA wants to safeguard the consumer. We request ACBOA to reverse the price increase as a supportive measure, so that consumers are not burdened. We have not allowed flour millers to increase prices. CAA has in fact requested the millers and suppliers to reduce their supply price, and not to be monopolistic. I will immediately discuss with our higher levels on your demand to liberalise the local flour market, so that the consumers have a choice on flour. I have also called for a report from CAA on the latest developments on flour, and we are ready to commence legal action by 20 September latest on errant parties. The CAA will start raiding any retail or wholesale seller who violates the pre-determined flour sale price in the domestic market.”

CAA’s Gazette (1975/68) published on 14 July 2016 specifies a controlled (market) price for wheat flour at Rs 87 per kilo. Any flour producer, supplier, distributer, trader, or seller cannot exceed this price when selling to the final consumer. Even though producers and suppliers do not directly sell to the consumer, they are required to work backward from this final determined price of Rs. 87 to structure and adjust their supply price point.