Milk Powder shortage hit the market again with 17 containers lying idle
Sri Lanka is facing a milk powder shortage once again owing to the complex procedure in the clearance of containers, dollar shortage, difficulty in opening the Letters of Credit (LCs) and import policy inconsistency, several high officials of leading milk powder companies, complained.
Several brands of milk powder were not available in retail outlets and even most of the supermarkets as many local firms had to face different bureaucratic red tape and the present complex approval procedure for the importation of the product several top officials of milk powder companies disclosed.
A CEO of a leading milk powder company who wished to remain anonymous told the Business Times that different companies are used to import this essential commodity following different methods such as Open Account, Credit Lines, Documents against Acceptance, and Documents against Payment terms.
The complexity in the government approval process for importation of essential commodities including milk powder, SL Custom’s clearance of containers and the scarcity of dollars has compelled most of the companies to restrict their imports creating a shortage in the market.
Under this set up the clearance of 17 containers containing 400000 Kgs of milk powder stocks piled up at Colombo port for over 25 days, a leading importer disclosed.
Former President of Milk Food Importers Association (MIA) and Chairman of Anods Cocoa (Pvt) Ltd, Lakshman Weerasuriya said his company has to pay demurrage of over Rs 4 million for the stocks of milk powder imported under the Pure Dale company brand.
These containers are stuck at the port as a result of the delay in approving documents by the Department of Exports and Imports Control as his company imported milk powder under the terms of Open Account using his business relations of over 20 years with foreign suppliers, he revealed.
He noted that his company had to get approval from the ministries of trade, industries, Banks, Department of Exports and Imports Control for documents of importation causing unnecessary delay in the clearance of 17 containers stuck at the Colombo Port.
This procedure has affected several milk powder importing companies, high officials of several leading milk powder companies confirmed.
Exports and Imports Controller General Upulmalee Premathilaka there was no delay in scrutinizing and approving import documents if those were in proper order.
The change in import policy without prior notice has affected the importers who have placed orders with foreign suppliers before and after arrival of the shipment he said adding that they are to face repercussions of the different stance adopted by the ministry of trade and the central bank relating to the importation of commodities on open account terms.
The government has permitted milk powder importers to use open account to bring in the essential commodity with an aim to ease shortages of milk powder. But the move comes despite the central bank’s concerns over open accounts.
Central Bank banned open accounts in May this year in an attempt to reduce Unidyal and Hawala net settlements being made for non-essential’ imports.
However the ban on open account trade also hit food imports, which are usually imported long term relationships on supplier’s credit.
The open account method payments are estimated between US$150 to 250 million a month for food imports, according to industry officials.