ECONOMYNEXT – Sri Lanka’s Trade Minister Nalin Fernando has opted for drastic changes in the Consumers Affairs Authority (CAA) after repeated failure of the state-owned firm to protect the customers from higher prices and ensuring fair market competition in the island nation.
The CAA fixed prices as a knee jerk reaction to price fluctuations under the direction of ministers in successive governments, but the moves only resulted in black market and exorbitant profits for sellers, economists and analysts have said.
Minister Fernando admitted that the objectives of the CAA, which comes under the purview of his ministry, has not been met.
“There are a lot of female graduates appointed to CAA and they are unable to do the raids to control the market manipulation,” including hoarding, selling at higher prices, and healthy competition, Fernando told EconomyNext.
“So, we are in the process of restructuring the CAA. We cannot go ahead with the current staff. We cannot run a police force with 65 percent women. Likewise, we can’t do the raids with the existing staff that includes 65 percent of the women officers.”
The CAA has been under criticism over its decisions that led to price spikes in eggs, sugar, wheat flour, and cooking gas among many others. The price controls led to no supply of goods before, forcing consumers to buy them at any costs.
Though CAA has been raiding sellers who sell at higher prices and lower quality goods. The interventions have been ineffective as the same malpractices continue with less resistance, analysts say.
They say CAA’s interventions have been disruptive and worse for consumers.
Last year, soon after the CAA slammed price controls on eggs, farmers slaughtered layer chicken for meat as egg prices were not high enough to cover feed.
With a collapse in demand for day-old layer chicks, hatcheries then slaughtered parent stock, leading to a shortfall of eggs in the market for a long period. Separately the CAA also banned the use of rice for chicken feed.
Recently, Cabinet Spokesman Minister Gunawardana has said the CAA made gas companies sell at below the cost when they were importing at high prices and leading the gas companies to suffer bankruptcy.
In times of crisis when supplies fall, prices can go higher than costs, if there is demand, expanding margins and incentivizing producers, like farmers to grow more chicken, eventually driving prices down.
Chicken meat prices which went up to around 1600 to 1700 rupees a kilo came down as the CAA did not disrupt price signals and farmers expanded production. (Colombo/Jan 31/2024)
