Sri Lanka: Harsha’s formula on depoliticizing the pricing mechanism

"The price increase of milk powder despite the looming election is a testament to how the government has been able to depoliticize the pricing mechanism of full cream milk powder

The price of full cream milk powder was increased by Rs.20 per 400g pack, earlier this week. The price increase is in accordance with the scientific pricing formula agreed to by all stakeholders in July this year. It is rare for governments to increase essential commodity prices after an election has been called. Dr. Harsha de Silva, Minister of Economic Reforms and Public Distribution says that the recent price increase of milk powder is a testament to how the government has been able to depoliticize the pricing mechanism of full cream milk powder. The Minister further emphasized that this move from pricing decisions made at the discretion of politicians to a mechanism based on data is a real paradigm shift in government that will help depoliticize pricing and decisions in the future benefitting both the consumer and the industry.

Dr. Harsha de Silva 

“The Ministry of Economic Reforms and Public Distribution played a substantial role in devising this pricing formula to be beneficial for all parties, while the CAA always remain faithful to their mission which is to; Safeguard consumer rights and interests through consumer empowerment, regulation of trade and promotion of healthy competition, and in this instance, the CAA strived to produce the best possible price for the consumer, but not at the cost of businesses”(Mr. M.S.M Fowzer- DG-Consumer Affairs Authority shared.

The Economic Reforms Analytics Unit of the Ministry of Economic Reforms and Public Distribution conducted a thorough analysis of the global milk powder prices and the prices in Sri Lanka for the pricing formula committee, in order to formulate a distinct pricing formula for imported milk powder brands such as Maliban and Fonterra, that depend on imported milk powder inputs. After over a dozen negotiations, these key companies entered into a pricing formula basing the Global Dairy Trade index as a key variable

“At least 1500 person-hours were put into the making of this pricing formula and the Ministry of Economic Reforms and Public Distribution, under the guidance of Dr. Harsha De Silva, played a crucial role in bringing together all stakeholders into this transparent initiative.” Mr. Asoka Bandara of Maliban Milk Products (Pvt) Ltd stated.

It is expected that prices will remain fair for both the consumer and the industry, as the formula will be revised every quarter based on global price fluctuations. The Minister further added that the government has completed the development of a similarly transparent formula for LP gas which will be announced soon.