Business
All Island Dairy Association raises growing concerns for Sri Lanka’s dairy industry while supply chains continue to dwindle
The prevailing forex crisis in Sri Lanka has severely impacted many industries in the country’s economy, including the dairy industry. As an industry with endless potential to help the economy, the dairy industry is one of the most important industries in the country. However, rising costs, scarcity of feed, vitamins, fuel and fertilizer, and the difficulty in importation of maize has greatly impacted the industry’s survival. The All Island Dairy Association (AIDA) calls for immediate action to prioritize the importation of raw materials to help sustain the future of the industry.
Binesh Pananwala, President of AIDA, commented on the crisis. “Proper micronutrients and vitamins from quality feed is an essential part in our industry as the animals play an integral role in the supply chain. It is imperative that feed such as maize and silage is readily available as it would greatly assist in sustaining the industry. However, the dependency on importing these commodities, and the restrictions placed on imports due to the forex crisis is crippling the industry.”
The lack of quality animal feed has largely disrupted the dairy industry’s supply chain. If the livestock does not receive essential micronutrients and vitamins from maize and silage, the physical wellbeing of the animal is affected, which thereby affects milk production. Veterinary professionals have continuously expressed their growing concern for the wellbeing of these animals due to the shortage of feed and medicines such as antibiotics and anaesthetics required for operations.
A.C.H Munaweera, Consultant and General Manager of AIDA, shared his thoughts. “The impact of the forex crisis is felt in multiple facets of our industry. The industry is already struggling to sustain itself and due to the lack of fuel, storage facilities, fertilizer, and feed, we are unable to meet the demand for fresh milk and powdered milk. Our production has reduced a great deal already and if not rectified, will spell disaster going forward.”
The Government of Sri Lanka has provided permits for the importation of maize on a case-by-case basis; however, fodder importers and dairy companies have struggled to sustain imports due to the forex shortage. The shortage of foreign exchange makes it difficult for banks to honour Letters of Credit (LCs) for importers to bring in the necessary raw materials needed to sustain the industry.
Nishantha Jayasooriya, immediate Past President of AIDA, also shared his thoughts on the crisis. “The entire industry has felt the tremendous impact of the forex crisis. The livestock farmers, producers, input suppliers and distributors alike have all been affected by rising costs and lack of resources. If conscious decisions and changes to fiscal and monitory policy are not made, the industry will suffer even further as it will be unable to meet the demand for both fresh milk and milk powder.”
The local production of milk is drastically falling due to the lack of quality feed, and the supply of imported milk is reducing due to the rising prices. Currently, locally manufactured feed is used to maintain the livestock, however, due to the lack of fertilizers and various other concerns, the supply of feed is diminishing. As a result of this, the dairy industry will struggle further to meet the demand for both powdered and fresh milk going forward. If the feed does not meet the required nutritional standard, the consequences would be severe as it would affect the health of approximately 900,000 animals.
Gamini Rajapaksha, Treasurer of AIDA, also commented. “Processing and value addition are integral and vital parts of the dairy industry. Dearth of foreign exchange and consequential scarcity of fuel, electricity etc. have adversely affected the processors. Some of the leading dairies are unable to operate their plants due to the lack of power, which forces them to reject the milk from the farmers. This has directly affected the livelihood of rural dairy farmer. Chilling tanks at milk collection centres cannot be operated, causing large volumes of milk to be discarded. Another aspect is the importation of equipment and spare parts for the dairy processing plants. Many dairy plants will be compelled to stop production altogether unless they are able to import spare parts within the next few weeks. If urgent steps are not taken to remedy the situation, the entire dairy industry will come to a halt.”
Asoka Bandara, Vice President of AIDA, also shared his thoughts. “In order for Sri Lanka’s dairy industry to develop and be self-sufficient once again, we need to establish protocols that ensure the availability of raw materials such as fertilizer, fuel, and feed for the animals. However, we are a long way from being able to do that. The result of a complete destabilization of the industry would not only mean a diminished supply of milk but mass unemployment as well. So, it is imperative to have integrated strategies to revitalize our dairy industry. The AIDA, after extensive deliberations and inputs from key industry stakeholders, is now ready to engage the Government on a cohesive and sustainable Dairy Development Plan for Sri Lanka.
The dairy industry is in dire need of revival, as its deterioration will have a great impact on a plethora of industries and consumers alike. It is imperative that those measures are put in place to prioritize imports of raw materials for feed, which would lead to high levels of production and sustainability.
An International Monetary Fund (IMF) team led by Evan Papageorgiou visited Colombo from April 3 to 11, 2025. After constructive discussions in Colombo, Mr. Papageorgiou issued the following statement:
“Sri Lanka’s ambitious reform agenda supported by the IMF Extended Fund Facility (EFF) continues to deliver commendable outcomes. The post-crisis growth rebound of 5 percent in 2024 is impressive. Inflation declined considerably in recent quarters and has fallen to ‑2.6 percent at end-March 2025. Gross official reserves increased to US$6.5 billion at end-March 2025 with sizeable foreign exchange purchases by the central bank. Substantial fiscal reforms have strengthened public finances.
“The recent external shock and evolving developments are creating uncertainty for the Sri Lankan economy, which is still recovering from its own economic crisis. More time is needed to assess the impact of the global shock and how its implications for Sri Lanka can be addressed within the contours of its IMF-supported program.
“The government’s sustained commitment to program objectives is ensuring policy continuity and program implementation remains strong. Going forward, sustaining the reform momentum is critical to safeguard the hard-won gains of the program and put the economy on a path toward lasting macroeconomic stability and higher inclusive growth.
“Against increased global uncertainty, sustained revenue mobilization efforts and prudent budget execution in line with Budget 2025 are critical to preserve the limited fiscal space. Boosting tax compliance, including by reinstating an efficient and timely VAT refund mechanism, will help contribute to revenue gains without resorting to additional tax policy measures. Avoiding new tax exemptions will help reduce fiscal revenue leakages, corruption risks and build much needed fiscal buffers, including for social spending to support Sri Lanka’s most vulnerable. Restoring cost recovery in electricity pricing will help minimize fiscal risks arising from the electricity state-owned enterprise.
“The government has an important responsibility to protect the poor and vulnerable at this uncertain time. It is important to redouble efforts to improve targeting, adequacy, and coverage of social safety nets. Fiscal support needs to be well-targeted, time-bound, and within the existing budget envelope.
“While inflation remains low, continued monitoring is warranted to ensure sustained price stability and support macroeconomic stability. Against ongoing global uncertainty, it remains important to continue rebuilding external buffers through reserves accumulation.
“Discussions are ongoing, and the authorities are encouraged to continue to make progress on restoring cost-recovery electricity pricing, strengthening the tax exemptions framework, and other important structural reforms.
“The IMF team held meetings with His Excellency President and Finance Minister Anura Kumara Dissanayake, Honorable Prime Minister Dr. Harini Amarasuriya ; Honorable Labor Minister and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, Honorable Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Mr. K M Mahinda Siriwardana, Senior Economic Advisor to the President Duminda Hulangamuwa, and other senior government and CBSL officials. The team also met with parliamentarians, representatives from the private sector, civil society organizations, and development partners.
“We would like to thank the authorities for the excellent collaboration during the mission. Discussions are continuing with the goal of reaching staff-level agreement in the near term to pave the way for the timely completion of the fourth review. We reaffirm our commitment to support Sri Lanka at this uncertain time.”
The Commercial Bank of Ceylon has transformed its iconic ‘Foreign Branch’ into the ‘Corporate Branch,’ reaffirming its commitment to delivering dedicated, comprehensive financial solutions to corporate and trade customers.
The Bank said this transformation represents a new milestone in its illustrious journey, and resonates with the rich commercial heritage of Colombo, a city that has long served as a vital trading hub in the region.
Strategically located at the Bank’s Head Office at Commercial House, 21, Sir Razeek Fareed Mawatha (Bristol Street), Colombo 1, this rebranded Corporate Branch stands as a first of its kind in Sri Lanka —a premier financial hub tailored exclusively to the needs of corporate customers, the Bank said. The transformation aligns with the Bank’s vision of providing unparalleled service excellence, bespoke financial solutions, and fostering long-term business partnerships.
Commenting on this strategic initiative, Commercial Bank’s Managing Director/CEO Sanath Manatunge stated: “It is our aspiration that just as the historic Delft Gateway, at which our Head Office is located, once opened the path to the Dutch Fort, our Corporate Branch will chart a new era of enduring and prosperous business collaborations, that will extend beyond Sri Lanka’s shores.”
Fits Retail has partnered with retail giant Abans PLC to showcase the iconic DeLonghi coffee machines at two of Colombo’s most prestigious locations: Abans Elite Colombo 3 and Abans Havelock City Mall showrooms.
At these dedicated demonstration zones, visitors can discover the unparalleled precision engineering and user-friendly technology that have made DeLonghi machines the preferred choice for discerning coffee lovers in more than 46 countries worldwide. Renowned for consistently delivering café-quality espresso, cappuccino, and even specialty cold brews, DeLonghi machines exemplify Italian innovation at its finest.
Yasas Kodituwakku, CEO of Fits Retail, expressed excitement about the collaboration: “This partnership represents our unwavering commitment to bringing global coffee excellence to Sri Lankan connoisseurs. With Abans PLC, we’re creating more than just demonstration spaces; we’re curating premium destinations for an authentic coffee experience.”
“As pioneers of premium lifestyle experiences in Sri Lanka, our collaboration with Fits Retail aligns seamlessly with our vision of elevating everyday moments into exceptional experiences,” said Tanaz Pestonjee, Director Business Development at Abans PLC.
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