July 18, 2009 (LBO) – Sri Lanka which taxes imported milk powder at very high levels, has asked importers to bring the price of a one kilogram pack to fall by 37 rupees and 400 gram pack by 15 rupees, official reports said. According to official data a kilogram of imported milk powders was taxed at the rate of 125 per kilogram from March 2009 as global milk prices fell.
Permanent Food crisis
But rising trade barriers in Sri Lanka has kept food prices in Sri Lanka at virtually 2008 ‘food crisis’ levels while citizens in more open countries have seen falling prices.
Even at the height of the food bubble in April 2008 Sri Lanka had to import rice to keep domestic prices down, because local agricultural policy failed produce rice at the price of other countries, despite 26 billion in fertilizer subsidies being thrown at the sector.
Unlike in other countries, where prices of many goods came down after a global commodity bubble burst Sri Lanka is now shows signs of being permanently in the grip of a ‘food crisis’.
Sri Lanka has more than 100 ministers and a few more were appointed recently, while government revenues are falling, requiring new taxes to keep an expanding government going.