Impact of Milk Powder Imports on Local Milk Industry and Consumers’ Welfare in Sri Lanka

Abstract

This paper examines the economic effects of milk powder imports on domestic milk industry and consumers' welfare. Domestic milk production fullfilled around 40% of the demand in 2016. The generalized inverse demand system model was employed. The result shows that a 10% increase in milk powder imports increases consumers' welfare by USD 20 million and fresh milk and local milk powder industry will suffer economic losses. Therefore, until domestic producers develop the capacity to compete with international competitors, government should provide subsidies, credit facilities and technical assistance to all dairy farmers, middlemen, milk collecting centers, dairy farmers associations and cooperatives involved in domestic dairy industry. Government should provide assistance and facilities to domestic fresh milk processors to promote fresh milk consumption by non-price competition strategy. Importers of milk products and local milk processors could use this finding to develop their business strategy.

Changes in Food Consumption Patterns in Sri Lanka: Food Security and Sustainability: A Review of Literature

“…The annual milk consumption in Sri Lanka is about 700 million liters and the annual per capita milk consumption is about 35 liters. Accordingly, the consumption of milk and milk products in Sri Lanka is low compared to other South Asian countries (Krishnapillai et al, 2020). In addition, the import of milk powder from Sri Lanka has increased over the years (Nanayakkara, 2013).…”

How Brand Preference Shapes Brand Loyalty of Milk Powder Through Young Consumers’ Eyes: The Moderating Role of Health Consciousness

“…Due to self-insufficiency in milk production, Sri Lanka depends to a large extent on imported milk powder from countries such as Australia and New Zealand (Gunarathne et al, 2015;Krishnapillai et al, 2020;Wijesinghe et al, 2021). Owing to that, the annual importation of milk powder to Sri Lanka amounts hundred thousand metric tons in order to meet the consumption requirement of the country (Ranasinghe and Shamil, 2021).…”