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Milk consumption is still below pre-crisis levels

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The milk powder market has seen dramatic changes over the past few years with consumption dropping sharply says Maliban Group Chief Executive Officer Ravi Jayawardena, Pre-crisis, Sri Lanka consumed about 7,000 metric tons of milk powder per month. This figure plummeted to 3,000 tons amid the crisis, signalling a stark reduction in consumer demand due to skyrocketing prices and reduced purchasing power.

“The key reason for the drastic drop is the combination of currency depreciation, global market price increases, and additional taxation, which significantly raised the cost of milk powder,” explained Jayawardena. For instance, a 400g pack of milk, essential in many households, tripled in price from 375 to 1,100 LKR. This price hike forced nearly 1/3 of Sri Lankan households to cut down or eliminate milk consumption.

Jayawardena was speaking to Capital Alliance on the panel discussion ‘Consumer spending and the outlook for the consumer sector in Sri Lanka’ held on March 28. However, recent months have shown signs of recovery, with approximately 1 million households resuming milk consumption, although the overall numbers remain well below pre-crisis levels. “It may take at least two more years for consumption to return to those levels,” Jayawardena added, indicating a slow but steady path to normalization.

The panel discussion also touched on liquid milk production and consumption in Sri Lanka, with the current output standing at approximately 450 million litres per year. Despite efforts to boost local production, growth remains slow, hindered by price sensitivity and convenience factors. This situation underscores the broader challenges faced by the dairy sector and the need for targeted interventions to support both producers and consumers.

Amid these challenges, there’s a glimmer of hope. Industry experts express cautious optimism, pointing to macroeconomic improvements and a better agricultural season as potential catalysts for recovery. Furthermore, consumer confidence, a critical indicator of market health, has shown the first signs of improvement in over a year. As Sri Lanka navigates its way through economic stabilization, the dairy sector’s resilience and adaptability emerge as a testament to the broader consumer sector’s potential for recovery. Stakeholders across the board—from policymakers to industry leaders and consumers—are keenly watching the evolving dynamics, hoping for sustained improvements that could herald a new era of growth and stability in the essential goods market.

The country continues its delicate balancing act, aiming to rebuild consumer confidence, stabilize prices, and restore consumption patterns to pre-crisis levels, marking a crucial phase in Sri Lanka’s economic recovery journey. TP

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