57-pct of Sri Lankans unwilling to pay higher food bill to protect local industry – Advocata Survey

food

A survey commissioned by the Advocata Institute in April 2019 revealed that 57% of Sri Lankans were unwilling to pay extra for food, even if it meant that the local agricultural industry would be protected.

This survey covered 855 respondents in 18 districts within 8 provinces in Sri Lanka. The demographic variables considered were age, gender, educational qualification, socio-economic class, and monthly household income.

The survey also revealed that the lower the Socio-Economic Category (SEC), the less willing respondents were to pay extra for their food, to protect the local industry. SEC is the category an individual falls into based on their education and occupation. It was only in the highest SEC where 51% answered ‘yes’, agreeing to incur a higher cost of living at the cost of protectionist taxes. SECs following it were increasingly reluctant to pay more for food, even if it meant that local businesses were protected.

Lower-income households spend most of their income on food according to the Household Income and Expenditure (HISE) Survey.  The lower the income level higher the proportion of their expenditure on food-related items.

Decile group Expenditure decile Median household expenditure (Rs.) Mean household expenditure (Rs.) Mean food expenditure (Rs.) Mean non food expenditure (Rs.) Mean household income (Rs.)
Sri Lanka 40,186 54,999 19,114 35,885 62,237
1 Less than or equal 15,321 16,678 19,561 10,754 8,807 9,916
2 15,322 – 23,518 24,191 27,010 14,206 12,804 19,766
3 23,519 – 30,003 28,586 31,387 15,566 15,820 26,774
4 30,004 – 36,445 33,200 35,749 17,056 18,693 33,243
5 36,446 – 43,511 37,523 40,880 18,281 22,599 39,890

Source: Household Income and Expenditure Survey (2016), Table 3.13, Pg 31

The survey also noted differences across provinces. Respondents from the North Central and Sabaragamuwa provinces were more willing to incur higher food costs, with 64% from the North Central Province and 61% from the Sabaragamuwa Province answering ‘yes’. In contrast, only 22% of respondents from the Southern Province and 24% from the North Western Province answered ‘yes’.

Interestingly, 72% of males were unwilling to bear the burden of a higher cost for food according to the survey. To put this into perspective, Sri Lanka has 4 million male-headed households (Household Income and Expenditure Survey, 2016).

Below is a breakdown of tariffs on ingredients used everyday by Sri Lankans:

Item HS code General Duty VAT PAL CESS
Kekulu white 1006.30.10 30% or Rs. 55/= per kg 8% 10%  
Kekulu samba white 1006.30.10 30% or Rs. 55/= per kg 8% 10%  
Kekulu red 1006.30.10 30% or Rs. 55/= per kg 8% 10%  
Kekulu samba red 1006.30.10 30% or Rs. 55/= per kg 8% 10%  
Samba 1006.30.30 30% or Rs. 55/= per kg 8% 10%  
Nadu red 1006.30.20 30% or Rs. 55/= per kg 8% 10%  
Nadu white 1006.30.20 30% or Rs. 55/= per kg 8% 10%  
Wheat flour 1101.00.10 15% or Rs. 16/= per kg Ex 10% Rs. 15/= per kg
Bread 1905.90.10 30% 8% 10% 35% or Rs. 100/= per kg
Dhal – Mysoor (Whole) 0713.40.11 Free 8% 10%  
Frozen whole chicken 0207.12.00 Rs. 220/= per kg Ex 10%  
Balaya 0303.43.00 15% 8% 10%  
Kelawalla 0303.42.00 15% 8% 10%  
Coconut (endocarp) 0801.12.00 30% 8% 10% 30% or Rs. 110/= per kg
Bombay onions 0703.10.20 30% or Rs. 20/= per kg 8% 10%  
Concentrated milk and cream, unsweetened (excl. in solid form) 0402.10.00 20% or Rs. 225/= per kg 8% 10%  

Source: Compilation from the Customs Tariff Guide as at 18th Dec 2019

Key Points:

  • 57% of people were not willing to pay more for their food, even if it meant that the local industry is protected.
  • Socioeconomic classes B,C,D and E were less willing to incur higher costs for food, resulting from exorbitant tariffs.

“Sri Lanka has a high cost of living compared to its peers in the region. Tariffs and protectionist taxes on food items, some close to 100% mean that consumers will continue to suffer at the expense of ill-framed policy” – Dhananath Fernando, Chief Operating Officer, Advocata Institute. 

The complete survey can be accessed on our website.

Advocata is an independent policy think tank based in Colombo, Sri Lanka. We conduct research, provide commentary and hold events to promote sound policy ideas compatible with a free society in Sri Lanka. Visit advocata.org for more information.