Confectionery manufacturers voice concerns over industry’s viability amid rising challenges

Monday, 4 December 2023 01:27 - - {{hitsCtrl.values.hits}}

LCMA President S.D. Suriyakumar says very act of surviving has become increasingly difficult now
Highlights dilemma faced by producers and consumers in market struggling with economic pressures
Asserts industry volumes have dropped by 25%

By Charumini de Silva

Lanka Confectionery Manufacturers Association President S.D. Suriyakumar

The Lanka Confectionery Manufacturers Association (LCMA) President S.D. Suriyakumar last week expressed grave concerns about the survival of its members in the face of mounting challenges, citing dilemma faced by both producers and consumers in a market struggling with economic pressures.

“We have been in survival mode, but the very act of surviving has become increasingly difficult now,” he told the Daily FT.

The industry exports $ 275 million worth of confectionery, but increase in utility prices, taxes have become major impediments to their sustainability.

On 2 November, the Government increased the Special Commodity Levy imposed in sugar taxes from a mere 25 cents to Rs. 50 per kilo overnight and the electricity tariff hike in October has disrupted growth plans and investments.

“The industry has already recorded a 25% drop in volume or consumption. This has adversely affected member companies to operate at a loss due to escalating operational costs,” Suriyakumar pointed out.

“In similar situations earlier our members have increased the confectionery prices. But seeing a drop in the consumption, the companies are hesitant to implement further hikes considering the strain on consumers grappling with the high cost of living as well,” he added.

He also said the LCMA anticipates additional hardships as the Value Added Tax (VAT) is set to increase from the current 15% to 18% starting in January.

“The impending tax hike is expected to place an additional burden on confectionery businesses already striving with financial constraints,” he added.

When questioned about the possibility of lobbying for concessions, Suriyakumar expressed doubt, pointing to the Government’s commitment to the International Monetary Fund (IMF) bailout program.