Powder Keg

March 20, 2007 (LBO) – Sri Lanka is bracing for a steep rise in milk powder prices, with a drought in Australia pushing international dairy product prices to unprecedented highs. Meanwhile Kotmale says it expects to keep prices below multinational brands by running a lean operation, while prices of its other dairy products made with local milk would also be held steady.

The Colombo Stock Exchange has several listed firms which are large player in the country's milk powder business, including Lanka Milk Foods and Nestle.

Updated Sri Lanka's top producers have already sought permission for an immediate price increase of about 10 percent, with further price increases on the cards.

"Severe drought in Australia, coupled with the removal of subsidies for milk in Europe have made prices in the world market go up," Chetiya Sri-Nammuni, Director Corporate Affairs, Fonterra told LBO.

Fonterra is estimated to hold 60 percent volume-based market share in Sri Lanka. In addition to its flagship Anchor brand, it also supplies milk powder to a number of other packers.

First Round

A 400 gram pack of milk powder is now retailed in Sri Lanka at prices r