Dollar crisis sends imported food prices soaring for festive season

Imported essential food prices have soared due to delays in supplies reaching the markets, with more than 1000 containers held up at the Colombo Port for lack of dollars for clearance.

This is despite claims by Central Bank Governor Ajith Nivard Cabraal this week that sufficient US dollars had been released for clearance of imported goods.

Mr. Cabraal told journalists it was not an issue about lack of US dollars, but there might be other issues in clearing the goods.

Essential Food importers Association spokesman Nihal Senaviratne told the Sunday Times importers were unable to clear their consignments upon arrival and pay their suppliers on time as they were forced to wait in line to obtain dollars from banks.

He said importers had pointed out that due to a shortage of dollars in the country they faced immense difficulties in clearing their consignments from the port and were compelled to pay heavy demurrage and other charges to both the port and shipping lines.

Meanwhile, the foreign suppliers too have become hesitant to take more orders as payments are delayed due to the prevailing dollar issue, he said.

“We are unable to place more orders to our foreign suppliers as we cannot pay them in dollars and clear the previously ordered goods,” he said.

Mr. Senviratne said the demand for essential food items would  naturally increase during the festive season and, therefore, prices of imported essential commodities such as Masore dhal, onions, potatoes, sugar, chickpeas and sprats might soar, if there was a short supply in the market due to delays in clearing the goods.

He requested the Government and the Central Bank to release dollars to clear the essential food items.

“We also request the Government to consider waving off the port rent only for the essential food commodities. Otherwise such costs have to be added to the selling price and it would be a big burden to the consumer,” he said.

According to him, the importers had informed the trade minister of the situation 10 days ago and requested a long-lasting solution to get their imports cleared upon arrival. They had been highlighting the dollar issue for the past six months; yet there was no solution.

Meanwhile, a shortage of powdered milk has been reported in the markets.

A leading powdered milk importer said that even though they were capable of importing through an inter-company credit line of their multinational mother company, other importers were finding it difficult to import due to the shortage of dollars.

Trade Minister Bandula Gunawardena said that as a measure to provide relief to the people, the ministry would provide commodities such as sugar through Co-operative Wholesale Establishment outlets.

During his budget speech, the minister acknowledged that the country’s foreign exchange crisis had severely affected food importers.

(Source: The Sunday Times – By Kasun Warakapitiya)