Troubled by high inflation & rising food prices, Sri Lankan govt. has decided to cut duty on imported potatoes & onions.
Sri Lankan Ministry of Finance said on December 5 2006 that it would cut taxes on imported onions & potatoes in its bid to maintain increasing food prices, as inflation touches 19.8 % in November.
Ministry said that to prevent high prices of food in festive season, this step would control price of big onions & potatoes. Since the season isn't a harvesting season, it will not affect local producers.
Sri Lanka had kept prices high in order to protect domestic farmers. The duty would be re-imposed at January-end, the ministry said.
Food prices have been on an upswing in past few years in this island. Worst affected commodities have been rice, fish, bread & vegetables. Rising food prices have reduced purchasing power of the consumer, especially low-income groups as majority of spending is made on food. Moreover, high vegetable costs are seriously affecting nutrition as vegetables are considered as cheapest & best source of nutrition.
"Govt. has been playing blame game for years now regarding high food prices but in the end, it is the consumer who continues to pay higher for less quantity of food. This indicates that key reasons for high food costs are not being properly addressed. For instance, in case of glut, when farmers sometimes commit suicide due to their inability to market produce, vegetable prices are still high in cities," said an analyst at RNCOS.
Govt. has been promising to offer storage, transport & marketing services to farmers but not much has been so far to address their problems. Unrestricted imports have also been a major problem with onion & potato growers being the key victims.
Imports are required to control prices in case, local food costs increase but this exercise needs extreme caution. Flooding market with low-cost imported products can ruin production. Sri Lanka needs to learn from its neighbor India where domestic producers are encouraged & protected by state, maintaining food security.
New technologies, grower-friendly price fueled with improved marketing, storage & crop enhancement services at affordable prices are desperately needed by Sri Lankan food industry for survival. Governments import food to address high price issues but this process needs extreme care. Therefore, a balance is essential for proper growth of the industry.
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