Milk prices increased 16 times in three years

Milk prices in Vietnam have been adjusted upward 16 times over the past three years, causing difficulties for a lot of consumers, news website VietNamNet reported Sunday.

It quoted the Vietnam Chamber of Commerce and Industry (VCCI) as saying dairy companies had hiked their prices by 3-10 percent every two to three months.

Regular reasons cited by dairy firms included new package designs, higher input costs and increases in foreign exchange rates.

Milk prices have been raised by 4-10 percent this year by major brands including Abbott, Mead Johnson, Friesland Campina Vietnam, XO, Dumex, Meiji, VCCI said.

According to a recent report by the Vietnam Competition Administration Department, up to 80 percent of milk powder products in Vietnam are imported.

This means the local milk market is closely connected to the world market, but the problem is that domestic prices have continued to surge irrespective of global price trends.

The department said although it could not find evidence showing that dairy firms in Vietnam colluded with each other to hike prices, there was still a chance that such a ploy was used.

While milk prices keep surging, dairy farmers are struggling nationwide.

Nguyen Dang Vang, vice chairman of the National Assembly’s Science, Technology and Environment Committee, told Thanh Nien that dairy firms only pay local farmers around VND7,000 per liter of milk.

At this price, farmers suffer losses and find it too difficult to expand production, he said, noting that the country’s dairy cow population only grew 4.9 percent in recent years.

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Milk prices increased 16 times in three years

Milk prices in Vietnam have been adjusted upward 16 times over the past three years, causing difficulties for a lot of consumers, news website VietNamNet reported Sunday.

It quoted the Vietnam Chamber of Commerce and Industry (VCCI) as saying dairy companies had hiked their prices by 3-10 percent every two to three months.

Regular reasons cited by dairy firms included new package designs, higher input costs and increases in foreign exchange rates.

Milk prices have been raised by 4-10 percent this year by major brands including Abbott, Mead Johnson, Friesland Campina Vietnam, XO, Dumex, Meiji, VCCI said.

According to a recent report by the Vietnam Competition Administration Department, up to 80 percent of milk powder products in Vietnam are imported.

This means the local milk market is closely connected to the world market, but the problem is that domestic prices have continued to surge irrespective of global price trends.

The department said although it could not find evidence showing that dairy firms in Vietnam colluded with each other to hike prices, there was still a chance that such a ploy was used.

While milk prices keep surging, dairy farmers are struggling nationwide.

Nguyen Dang Vang, vice chairman of the National Assembly’s Science, Technology and Environment Committee, told Thanh Nien that dairy firms only pay local farmers around VND7,000 per liter of milk.

At this price, farmers suffer losses and find it too difficult to expand production, he said, noting that the country’s dairy cow population only grew 4.9 percent in recent years.

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Dairy firms promise stable prices through year's end

Several dairy companies said they will keep their prices stable through the end of this year, following the introduction of a new rule aimed at tightening government control over baby formula prices.

US producer Mead Johnson was quoted in a report on news website VnExpress as saying that it wishes to “assist” Vietnamese consumers.

The company has also rolled out new packaging for its popular baby formula products which, it said, will help consumers save money.

The company increased its prices by around 5 percent in January.

Hanco, a local milk and beverage company, also promised to keep its prices unchanged.

Meanwhile, other companies told VnExpress that they would not raise prices unless input costs surge sharply in the remaining months.

Vietnam’s largest dairy firm, Vinamilk, said it would try to contain price increases in the face of a recent devaluation of the dong and sugar hikes.

Promises for stable milk prices came after the Ministry of Finance's decision last week to force importers of powdered milk products for children under six to register their prices and production costs with the authorities.

The new rule, which will take effect in October, is aimed at exerting some control over milk prices in Vietnam, which have increased steadily in recent years.

VnExpress cited a retailer in Ho Chi Minh City as saying milk prices have become a huge burden for many families. A lot of parents have switched to local, cheaper milk brands for their children, causing sales of foreign milk to drop.

Further price hikes would be too much for consumers, the retailer said.

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Dairy firms promise stable prices through year's end

Several dairy companies said they will keep their prices stable through the end of this year, following the introduction of a new rule aimed at tightening government control over baby formula prices.

US producer Mead Johnson was quoted in a report on news website VnExpress as saying that it wishes to “assist” Vietnamese consumers.

The company has also rolled out new packaging for its popular baby formula products which, it said, will help consumers save money.

The company increased its prices by around 5 percent in January.

Hanco, a local milk and beverage company, also promised to keep its prices unchanged.

Meanwhile, other companies told VnExpress that they would not raise prices unless input costs surge sharply in the remaining months.

Vietnam’s largest dairy firm, Vinamilk, said it would try to contain price increases in the face of a recent devaluation of the dong and sugar hikes.

Promises for stable milk prices came after the Ministry of Finance's decision last week to force importers of powdered milk products for children under six to register their prices and production costs with the authorities.

The new rule, which will take effect in October, is aimed at exerting some control over milk prices in Vietnam, which have increased steadily in recent years.

VnExpress cited a retailer in Ho Chi Minh City as saying milk prices have become a huge burden for many families. A lot of parents have switched to local, cheaper milk brands for their children, causing sales of foreign milk to drop.

Further price hikes would be too much for consumers, the retailer said.

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Dairy firms to register prices in October

Businesses which trade in powdered children’s formula must register their sales prices to the authorities starting this October, according to a new guideline issued by the Ministry of Finance.

Nguyen Anh Tuan, deputy head of the ministry’s Price Management Department, said the move was aimed at stabilizing prices on dehydrated children’s milk and to curb unreasonable price hikes in this market.

Tuan said that, under the new law, businesses must register production and material costs with government regulators to ensure fair market values.

The information would be kept secret by the authorities, he said.

Tuan told Thanh Nien Weekly that businesses which fail to register this information could face penalties. Their trading licenses could be revoked if they do not provide the necessary information to government regulators or are found to increase prices by unreasonable levels.

The registration would provide a basic means for government oversight bodies to determine whether or not sales hikes are reasonable, said Tuan.

Bui Thi Huong, director of Vinamilk’s Public Relation Department, said the country’s biggest dairy firm had no response to the new move and would respect the ministry’s ruling.

Increases in milk prices, especially imported ones, have sparked public outrage. Many feel the milk prices are exorbitant, especially considering Vietnam’s low import taxes.

Dairy firms blamed the price increases on high production costs brought on by material hikes while experts argue that the firms spent too much on advertising and sales commissions to remain competitive, and then passed the burden to the end users.

Current regulations require only companies who generate 50 percent of their budgets from state capital to register their prices with the authorities. Under current law, regulators are only permitted to intervene in instances where firms raise prices by 20 percent or more.

Authorities charge that these regulations failed to control increases in milk prices; many of these companies simply raise their prices in increments of less than 20 percent.

Nguyen Van Toan, legal director of FrieslandCampina Vietnam, said the Dutch firm supplied enthusiastic feedback to a draft of the regulation. They consider the law to be in full compliance with WTO regulations.

“Businesses are free to justify their prices under the new rule,” he said.

However, Rashid Qureshi Aleem, CEO of Nestle Vietnam, said the rule may place significant administrative burdens on every aspect of the production chain for an extensive list of products.

Aleem said the proposed data and information requirements in the rule were highly proprietary and confidential in nature yet would be required from thousands of distribution points throughout Vietnam.

The CEO argued that competition was the best stabilizer for the market and the government should maintain a competitive and fair market for all players. Aleem asserted that competitive solutions function better in the market than these sorts of sweeping administrative gestures.

If a government imposes a mandatory price ceiling that is too low, the suppliers of that product could withhold the goods from the market, or sell them to customers outside of the country, Aleem said. This game could lead to dairy shortages and black-market sales of the goods at a higher price.

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Dairy firms to register prices in October

Businesses which trade in powdered children’s formula must register their sales prices to the authorities starting this October, according to a new guideline issued by the Ministry of Finance.

Nguyen Anh Tuan, deputy head of the ministry’s Price Management Department, said the move was aimed at stabilizing prices on dehydrated children’s milk and to curb unreasonable price hikes in this market.

Tuan said that, under the new law, businesses must register production and material costs with government regulators to ensure fair market values.

The information would be kept secret by the authorities, he said.

Tuan told Thanh Nien Weekly that businesses which fail to register this information could face penalties. Their trading licenses could be revoked if they do not provide the necessary information to government regulators or are found to increase prices by unreasonable levels.

The registration would provide a basic means for government oversight bodies to determine whether or not sales hikes are reasonable, said Tuan.

Bui Thi Huong, director of Vinamilk’s Public Relation Department, said the country’s biggest dairy firm had no response to the new move and would respect the ministry’s ruling.

Increases in milk prices, especially imported ones, have sparked public outrage. Many feel the milk prices are exorbitant, especially considering Vietnam’s low import taxes.

Dairy firms blamed the price increases on high production costs brought on by material hikes while experts argue that the firms spent too much on advertising and sales commissions to remain competitive, and then passed the burden to the end users.

Current regulations require only companies who generate 50 percent of their budgets from state capital to register their prices with the authorities. Under current law, regulators are only permitted to intervene in instances where firms raise prices by 20 percent or more.

Authorities charge that these regulations failed to control increases in milk prices; many of these companies simply raise their prices in increments of less than 20 percent.

Nguyen Van Toan, legal director of FrieslandCampina Vietnam, said the Dutch firm supplied enthusiastic feedback to a draft of the regulation. They consider the law to be in full compliance with WTO regulations.

“Businesses are free to justify their prices under the new rule,” he said.

However, Rashid Qureshi Aleem, CEO of Nestle Vietnam, said the rule may place significant administrative burdens on every aspect of the production chain for an extensive list of products.

Aleem said the proposed data and information requirements in the rule were highly proprietary and confidential in nature yet would be required from thousands of distribution points throughout Vietnam.

The CEO argued that competition was the best stabilizer for the market and the government should maintain a competitive and fair market for all players. Aleem asserted that competitive solutions function better in the market than these sorts of sweeping administrative gestures.

If a government imposes a mandatory price ceiling that is too low, the suppliers of that product could withhold the goods from the market, or sell them to customers outside of the country, Aleem said. This game could lead to dairy shortages and black-market sales of the goods at a higher price.

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New rule requires prior registration of milk prices

Vietnam's Finance Ministry has issued a new regulation that, for the first time, requires all imported milk powder products for children under six to have their prices registered with the authorities.

The move aims to exert some control over milk prices in Vietnam, which have increased steadily in recent years to an unreasonable level, news website VnExpress reported Sunday.

Under the new regulation, which takes effect on October 1, dairy firms have to register their prices before launching new products or adjusting prices.

Current regulations require only companies with 50 percent state capital to register their prices with the authorities.

As most of the dairy firms in Vietnam are private and foreign-invested companies, they could not be forced to list their prices until now.

Experts and consumers alike have complained that milk prices in Vietnam are too high despite low tax rates.

They said dairy firms spent too much on advertising and sales commissions to compete with each other, and then passed on the burden to end users.

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