A victory for consumers | Daily News

A victory for consumers

The recent decision by all major biscuit and confectionery manufacturers to bring down the prices of their products with immediate effect is a step in the right direction. There has been an exorbitant and somewhat unfair hike in the prices of all popular varieties of biscuits and a number of other confectionery items in recent weeks.

For example, a 500 gram pack of Cream Crackers biscuits, earlier priced at Rs.180-200, went up to almost Rs.600 in just a matter of weeks. This biscuit, being unsweetened, is popular among diabetics, gastritis sufferers and heart patients, among others. Suddenly, most people could not afford this staple biscuit, often served with tea in even the humblest of homes. A similar trajectory was witnessed in the prices of other, sweetened biscuits which are popular among families with children.

This led to a social media campaign spearheaded by consumer associations against the biscuit and candy manufacturers, that basically urged consumers to boycott their products. While many heeded this call, those without access to social media also stopped buying biscuits and other high-priced confectionary items simply because they could not afford to buy them. In fact, this boycott on two fronts was so effective that the biscuit manufacturers convened a special press conference and urged the public to buy their products, explaining that the high prices reflected higher import costs for wheat flour, sugar, vegetable oils, margarine etc. used in the manufacture of biscuits, cake and several other items. They even warned that thousands of jobs in the sector were at stake if buyers kept away from biscuits and similar products.

While there is a kernel of truth in their explanation, there was a general sentiment among consumers that the prices were way too high, even allowing for the higher import costs. For most consumers, biscuits (except perhaps for Cream Crackers) are not an essential item and that money can instead be used to buy bread, rice, vegetables or another essential item. Biscuits are more of an impulse buy that people add to their shopping carts.

Now that the biscuit manufacturers have realised the folly of trying to take the consumers for an (expensive) ride, they have decided to bring down the prices, apparently due to "the availability of raw materials/ingredients at cheaper rates". Several biscuit manufacturers are already airing TV ads explaining that they have reduced the prices across their product ranges. This shows the immense power wielded by consumers in the modern, social media savvy society.

We are used to hearing the term “rice mafia”, but such cartels exist in many other sectors. They decide on the prices and try to stifle any newcomers. When a famous Indian manufacturer introduced their biscuits to the Sri Lankan market a decade ago at very attractive prices, an unseen hand worked overtime to see an end to its operations here in the name of “protecting the local industry”, the standard phrase used by many local manufacturers who often cannot match the quality of imported products. They do not however see the virtue of trying to improve the quality of their products to match the foreign competitor’s quality.

In any case, all this has been made possible by the sheer ineffectiveness of the Consumer Affairs Authority (CAA) which seems to have given up its duties altogether in recent times. We do agree that the concept of price controls may not be compatible with the open economy, but the CAA should have a mechanism to protect the consumers from attempts by companies, manufacturers and traders to fleece them. In the absence of any meaningful action by the CAA, now there is a “free-for-all” in the market with vendors and even individual shopkeepers deciding on the Maximum Retail Prices (MRPs) of most essential items. This should be stopped somehow.

Unlike biscuits, soap and personal hygiene products are essential, especially in an environment where the threat of COVID still remains, albeit in low numbers. But soap (including baby soap) too has seen a stratospheric price increase that has hit the consumer hard. The higher cost of imported raw materials has again been cited as the reason.

The Government as well as the industry must seriously ponder whether it could be cheaper in the long run to import the finished products in the FMCG (Fast Moving Consumer Goods) sector instead of manufacturing them here using imported raw materials, given the economies of scale of foreign manufacturers. Granted, our foreign exchange equilibrium and the Dollar conversion rate have to be taken into account in arriving at such a decision. But any manufacturer that produces FMCG items using completely locally sourced raw materials should be encouraged and given concessions.

The consumers are a harried, oppressed lot, with the prices of almost every item from fuel to bread, as well as those of utilities, soaring to unbearable levels in just a few months. They need a respite from the escalating Cost of Living (CoL) and even a minor price reduction, as seen in the LP Gas sector, is a big relief. They do need a little joy in their lives and a cheaper biscuit at tea time will be a real treat too.

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