Wheat flour millers say that they do not intend to revise prices of flour despite the reduction in import tax on wheat flour.
Cess on a kilogram of imported flour has been reduced from Rs. 25 to Rs. 15. The import taxes on wheat grain has been reduced from Rs. 9 to Rs. 6. The tax reductions were made by the Finance Ministry in a bid to reduce the cost of living.
A spokesman for Serendib Flour Mills (SFML) said that the company does not plan to reduce the price on a kilogram of wheat flour since it did not increase it even though the tax on imported wheat flour was raised last year when the cess on a kilogram of imported wheat flour was raised from Rs. 6 to Rs. 9. SFML provides a wide variety of wheat flour products to bakers, eateries, hotels, households, industries and consumers.
“We have not given thought to slash the price of wheat flour in the domestic market,” the SFML spokesman said.
Officials of Prima Ceylon Ltd. were not available for comment. Bakery owners said that they cannot reduce the prices of bakery products as the flour companies have not slashed the price of flour.
“We are unable to pass the benefit of the tax reduction to consumers as there is no revision in the price of flour,” he said.
The imported flour industry is primarily dominated by two companies. Wheat is imported from USA, Canada, Australia, Russia, France and Ukraine.
Sri Lanka imports around 950,000 tons of wheat a year at a staggering cost to the economy.
Agriculture sector experts said despite moves to promote rice flour-based consumption in the country, the shift has been slow.
However, Sri Lanka’s per capita consumption of wheat flour dropped from around 35 kilos in 2004 to around 23 kilos in 2012.
A spokesman for the All Ceylon Bakery Owners Association said most of the bakery products are made of locally produced flour.
Essential Food Commodities Importers and Traders Association sources said that the Association has been lobbying for the removal of the cess on imported flour for local companies to pass on the benefit to consumers.
“There is a cushion given to multinationals companies even with the current tax reduction,” he said.