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Sunday Nov 24, 2024
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By Charumini de Silva
Shortage of essential food items is being forecast by the private sector due to multiple issues, including the foreign exchange crisis and the Government’s mismanagement.
They said the buffer stocks of sugar, milk powder, tinned fish, dhal and flour that are remaining will be only sufficient for another month.
The matter was also taken up at the Cost-of-Living (CoL) Sub-Committee meeting held yesterday chaired by Trade Minister Bandula Gunawardena along with Consumer Protection State Minister Lasantha Alagiyawanna and other top-level officials.
According to the importers, too much intervention, shortage of US dollars, the rupee depreciation and insufficient buffer stocks were the key reasons for the price hike that the consumers are experiencing in the market at present.
“The Government had been controlling everything – imposing price ceilings, import restrictions and allocation of resources, leading to this distortion in the market now,” Essential Food Importers Association of Sri Lanka Spokesperson told the Daily FT.
He said importers had been warning the Government on the repercussions of such extreme measures at each sitting of the CoL meetings, but they turned a deaf ear to their pleas.
It was also pointed out that since the Government stopped importation of sugar from May, authorities have not taken any steps to bring down new quantities required for consumption.
Amidst these allegations, the Cabinet of Ministers has approved importation of rice, sugar and dhal.
Last month, the Government decided to import 2500 MT sugar and dhal on a monthly basis. These stocks of sugar will be imported from India, whilst dhal will be imported from Australia through the reserves of the Co-operative Development Fund.
In June, the Cabinet of Ministers decided to use the government-to-government (G2G) import scheme to purchase 100,000 tons of samba rice. Last week too, they decided to import 6,000 tons of rice immediately, as per the provisions of the Sri Lanka – Pakistan Free Trade Agreement (FTA).
The Government justified that these importation steps were taken to secure sufficient stocks of essential goods whilst stabilising prices in the local market.
The importers said Sri Lanka requires about 50 tons of sugar per month and currently it only has about 25 tons — which are stuck in the Colombo port at present.
During the past six months, the country has imported 600,000 tons of sugar and the quantity is sufficient for the consumption for one year. As a result, the country now has an excess 120,000 tons of sugar stocks. Sri Lanka’s average sugar consumption per year is 350,000-400,000 tons.
The members of the Association said even if the Government permits imports, the banks are not supportive due to the scarcity of foreign exchange.
“We are not allowed to do forward exchange contracts. There are bills worth around $ 10 to $15 million waiting to be settled. The Government has to relax certain controls and let the supply and demand determine the prices. Inaction to take quick measures will lead the country towards a massive economic crisis,” they cautioned.
National Movement for Consumer Rights Protection (NMCRP) President Ranjith Vithanage claimed the Consumer Affairs Authority’s (CAA) enforcement of price control mechanism was not effective, as traders are selling goods at exorbitant prices ignoring the Gazette notifications.
“The price of sugar kilogram is now over Rs. 200, rice kilogram is now around Rs. 230 to Rs. 240, dhal kilogram is around Rs. 250. The price of vegetables is no longer affordable for the general public. The traders are selling these vegetables 10-fold more than what it is quoted at the economic centres. Even when the Government has imposed a Maximum Retail Price (MRP), they have failed to execute an effective mechanism to regulate the prices in the market,” he charged.
Vithanage said the prices of all essential commodities are likely to skyrocket in the next couple of weeks. The allegations poured in following the Cabinet of Ministers approving an increase in the fines against traders selling essential consumer goods beyond the maximum retail price (MRP) from a minimum fine from Rs. 2,500 to Rs. 10,000.
“The CAA, which is the apex body to protect the rights of the consumers, have failed to fulfil their duty and allowed the importers to sell essential food items keeping a profit margin, to wholesale dealers, where they in turn sell it to retail traders at a high price. In the end, the consumers buy essential commodities from them for more than the controlled price,” he said.
The NMCRP President called on both Ministers and the CAA Chairman to resign from their positions, as importers and intermediary agents have figured out that the authorities cannot take any action against them.
