Countries No. 8. Sri Lanka - dairy products
Consumption of dairy products in Sri Lanka has increased over the last two decades. However, the growth in demand has been largely met by imports, particularly of milk powder.
Since the mid-1980s Sri Lanka's imports of milk powder have exceeded a three-year moving average by 25 percent several times. Possible causal factors for these surges include economic and trade liberalization with particularly low tariffs being applied to milk powder, surplus conditions in world dairy markets and the provision of subsidies by exporting countries. These factors resulted in relatively low prices and made imports more attractive. Other factors were also at play to encourage the growth of imports, including domestic production and marketing constraints, civil strife in some producing areas, declining profit margins due partly to increased feed prices and inadequate consumer information regarding the attributes of fresh milk. Indicators of injury to the domestic industry are difficult to define because of insufficient data, but possible indicators include the sharply shrinking market share of domestic dairy products, the slow-down in the rate of growth of domestic production and the falling real price of fresh milk in the local market. Opportunities might exist for the implementation of a dairy development strategy in Sri Lanka that would create a framework of economic incentives for dairy producers while balancing the interests of producers and consumers.
