Sri Lanka says milk powder levy must to be absorbed by importers

Nov 11, 2008 (LBO) – The Sri Lankan government said it would not allow milk powder importers to raise retail prices despite an increase in import levy in the budget for 2009 presented last week, because world prices are falling. World market prices of milk are coming down while production in key producer countries is recovering, according to the Food and Agriculture Organisation (FAO).

Analysts have said dairy markets fell another 10 percent in October and a recovery is unlikely until the middle of next year.

The FAO said international dairy product markets had started to weaken by July 2008.

“This tendency accelerated as a result of increasing milk product availabilities on the international market, appreciation of the United States dollar and, in particular, the general downturn of the global economy,” it said in a recent forecast.

But it noted that dairy product prices still are some 20 percent above their trend average and production costs remain high.

“The important question is how much more they may fall from what has been, by far, the most significant price spike in the recent history of international dairy markets.” Stock market analysts said the impact of the price controls on companies like