Milk powder shortage unavoidable: Prof. Samarajiva

13 August 2013 04:00 am Views - 4468

The withdrawal of imported milk powder from the market under the direction issued by the Sri Lankan authorities could trigger a milk powder shortage in the market in the short term and could also lead to the making of a milk powder black market.

According to Professor Rohan Samarajiva, there is no way local dairy producers could match this supply shortage in the short to medium term at a time when more than 65 percent of the milk powder and liquid market is dominated by the local unit of the New Zealandbased dairy giant Fonterra.

 “So, if the prices are prevented from going up by the country’s consumer protection authority, we will see a huge shortage in the milk powder market in the short term.

In that case, the government will either have to resort to ration milk powder distribution or it will create a black market,” said Professor Samarajiva.

According to the Consumer Affairs Authority (CAA), all milk powder prices are controlled by the Sri Lankan government.

When queried as to what remedies available in case of a possible shortage, CAA Chairman Rumy Marzook said that it was beyond his control.

“That is something I can’t answer and I can’t do anything about. I think the local manufacturers can meet the shortfall in the demand.”

Professor Samarajiva, who is also the founding Chair of LIRNEasia, an ICT policy and regulation think tank active across 12 emerging Asian economies, said that the government’s order to withdraw products was an “overreaction”.

“Just because one agency said imported milk powder contains the toxic agricultural chemical dicyandiamide (DCD), I don’t think it was right to order withdrawal of these products,” he remarked.

Speaking further on the repercussions of the move he said the situation would also create a strong incentive to import non-prohibitive milk powder from other countries not designated as risky.

“In the longer term of course the local producers will have to ramp up the production to meet the demand. If not, we will have to find alternative suppliers,” Professor Samarajiva opined.

The government last week ordered the withdrawal of two batches of milk powder of Fonterra Brands Lanka (Pvt.) Ltd (Anchor 1+ & Anchor Full Cream Milk Powder) and one batch each of Maliban Milk Products (Pvt.) Ltd (Maliban Non-Fat Milk) and P.M. Mohamed Ali & Company (Diamond Milk Powder) when the Industrial Technology Institute (ITI) of Sri Lanka found traces of DCD, a claim which is repeatedly denied by Fonterra.