The All Island Dairy Association (AIDA) has voiced grave concerns regarding escalating prices of rising input costs such as feed ingredients and requests the government for assistance.
The cost of producing a litre of milk has surged by 174% between 2013 and 2022, primarily due to rising input costs such as feed ingredients. Retail prices have followed suit, increasing by 168% in the same period.
“Fresh milk production and fresh milk-based products were previously VAT exempt, providing essential support to around 300,000 small-scale farmers and over 2 million dependents directly or indirectly involved in the sector.”
The additional burden of increased VAT could further strain the affordability of dairy products, potentially leading to a decline in consumption. Anticipated price increases in dairy products, integral to the Sri Lankan diet, could result in a significant decline in consumption, estimated to be around 30-40%.
Such a downturn in dairy consumption has ripple effects across ancillary sectors, including packaging, transportation, and retail, potentially leading to job losses and decreased income for workers in these related fields.
Members of the All Island Dairy Association are key stakeholders in Sri Lanka’s dairy sector, contributing to the collection of nearly 60% of the nation’s daily milk produced by farmers and processing 200 to 250 million litres of fresh milk annually.
AIDA emphasizes the current challenges faced by producers and processors, highlighting the struggles in marketing local products.
To enhance productivity and reduce local production costs, AIDA proposes facilitating the import of feed ingredients.
Additionally, the association recommends providing the private sector with access to underutilized land resources on government schemes for large-scale intensive dairy farming, fodder cultivation, and silage production through reasonably agreed long-term leases.
AIDA also encourages the cultivation of fodder/maize on paddy fields during the Yala season, and between the Maha and Yala seasons to meet the requirements of small and medium-scale dairy farmers.
The Association urges the government to reconsider the proposed VAT increase, recognizing its far-reaching and detrimental consequences on the dairy sector, rural livelihoods, and the overall health and well-being of the Sri Lankan population.
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