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| Rising Milk Prices Show Pain of Liberalisation
By Renuka Senanayake COLOMBO, Jul 30 (IPS) - Yasawathie, a 34-four-year old single parent who lives in a slum here in the heart of Sri Lanka's capital, has to feed her four children daily, including an infant daughter who takes only milk as food. Weakened by lack of food, Yasawathie is unable to breastfeed her baby, so she needs at least 10 (400-gramme) packets of powdered milk as a substitute each month. But over the last six months, the price of milk in the open market has gone up from 100 to 119 rupees or 1.2 U.S. dollars, worsening not only the plight of Yasawathie but that of millions of Sri Lankans living on the edge of poverty. ''I don't know how I'm going to feed my baby and my family at the same time, when the price of milk and cost of living keeps on increasing like this,'' said a worried Yasawathie, whose family lives off a meagre dole provided by the state. The government's official poverty alleviation programme estimates that half of the 19 million people in this island nation receives less than 750 rupees (8 dollars) per month as family income. However, according to the World Bank, a person earning less than one dollar per day is in poverty. Civil rights groups such as the Movement of Mothers to Combat Malnutrition (MMCM) and the Movement for National Land and Agricultural Reform (MONLAR ) have criticised the government and the multinationals for selling milk powder at exorbitant prices and endangering the people's health. ''This trade is not only unfair, but is totally criminal in a situation of poverty, hunger, malnutrition and anemia suffered, particularly, by mothers and children in all parts of the country,'' said the MMCM. In 1994, the United Nations' Children's Education Fund (UNICEF) revealed that more than 60 percent of Sri Lankan children below the age of five years were suffering from malnutrition. The government promised to take measures to reduce it by 25 percent, but the levels remain the same. According to official figures, more than half of mothers in the country suffer from anaemia and give birth to low-weight children who may have underdeveloped brains. The MMCM and MONLAR are leading an islandwide people's protest campaign called 'Reduce Milk Prices'. More than 300 local and foreign groups have pledged their support and posters and leaflets demanding the immediate reduction of the prices of milk foods have been circulated in different parts of the country. MONLAR says that half of Sri Lankans would not be able to feed their children with essential milk requirements, even if they spend their entire family income on milk alone. A family with a child below five years needs at least 10 packets a month and that would cost them 1,190 rupees (about 13.2 dollars). Neither their income nor the state dole gives them enough money to buy milk powder. The rise in milk prices comes in the decades following Sri Lanka's liberalisation of the economy in the mid-70s. Implementing its privatisation policy in 1981, the government closed down the National Milk Board and signed an agreement with Nestle Corp to develop the dairy industry. Today, after two decades, the multinational monopoly is being accused of killing the industry. In 1970, the local dairy industry met 70 to 80 percent of the country's milk requirements. With privatisation, it fell to 33 percent in 1986. By 2001, the estimated contribution of the local dairy industry is less than 18 percent. Consequently, over the last six years, the price of milk powder has gone up by more than 100 percent. ''Sri Lanka, just two decades ago, was a country in which fresh milk was freely available and very cheap,'' said Sarath Fernando of MONLAR. '' Today, we do not have any local fresh milk available in the market and the entire milk foods sector is in the hands of just two or three big companies.'' Rights activists blame the price increase on heavy advertising expenditures by multinationals. ''They add the cost of advertising to the price of milk, if they reduce this cost, they could easily bring down the price by about 50 percent,'' said Fernando. But the multinationals say it is impossible to bring down the retail price of their products, due to heavy direct and indirect taxes imposed by the government and high cost of production due to the devaluation of the Sri Lankan rupee. Nestle Lanka Limited told local media recently that it was planning a further price increase due to the above reasons. Officials also said that although the firm buys a certain percentage of fresh milk from local farmers, it has to spend a lot of money to improve the quality of the milk collected. ''The government slaps a hefty 19.5 percent tax on the earnings from milk powder sales. The milk companies, in turn, increase the price of milk as they wish," said Fernando. Earlier the government raised its revenue by increasing taxes only on tobacco and alcohol but now it does the same thing with milk, including infant milk, a very different commodity. ''The money that is extracted from the starving mothers and hungry children is spent for the most criminal process, for the continuation of the war," said the MMCM, referring to the nearly two-decade old Tamil Tiger insurgency. Since it came to power in 1994, President Chandrika Bandaranaike Kumaratunga's coalition government has revived a military campaign against Tamil insurgents, who are fighting for a separate homeland for the minority Tamils. Annually, the government pours more than 50 billion rupees (561.2 million dollars) into the war, which has to an unhealthy budget deficit. The price of milk also impacts on those affected by the war. More than one million people have been displaced as a result of the conflict. Most of them have been living in government-run welfare centres or makeshift camps in rebel-held territory for six to 10 years. Having lost their livelihoods, they have no income. They rely on dry rations provided by the government and the World Food Programme. However, these rations do not include essential items such as meat, vegetables, fruits and milk. Milk is not supplied for expectant mothers or children either. As a result, hundreds of displaced children suffer from stunting, wasting malnutrition, underweight and delayed development, while morbidity of children under five are mainly related to the poor health of mothers. Apart from the war, the government channels the tax money to build more infrastructure to attract the richest foreign investors and offes them long-term tax holidays and interest-free loans. In April 2001, the government was given a standby loan of 253 million dollars by the International Monetary Fund (IMF) on condition that it increased taxes, deregulated the rupee, reduced government expenses and increased revenues. Critics say these reflect the government's mislaid prorities. ''We know very well, that the IMF is twisting the arm of the government to have these measures implemented, but the government pretends that this is their new approach to poverty alleviation,'' said the MMCM. How Sri Lanka addresses the issue of access to milk also relates to its commitments under the 1996 World Food Summit, where Sri Lankan officials joined other governments in promising to adopt economic and social policies in conformity with the principles and commitments of summit. Rights activists argue that if the government has the will, it could develop domestic fresh milk production at much low cost and with much more efficiency, to benefit the most needy. Milk production by small holders had been a success before liberalised market policies were introduced in 1977. "In Sri Lanka, milk from a cow grazing just in the next plot of land freely could be made available to all people in the country, just as fresh milk or pasteurised milk," said Fernando. They ask whether the type of efficiency that transnational companies and others claim to have in producing milk is not inefficient and foolish. The whole process begins in a far away western country to which cattle feed is shipped across the world, milk powdered, packeted, shipped across the world, advertised at great expense and retailed at large profit margins, they argue. ''Then it is purchased by the poor mothers and children in our villages, plantations and war-torn areas at impossible prices, to be re-dissolved in hot water to be converted to milk," right activists like the MMCM point out. ''We
feel that milk of same or better quality could be given much cheaper
if the government decides to compete," the group added. (END/IPS)
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