Baby formula prices escalating, state management agencies powerless

The baby formula prices have been decreasing significantly in the world market, but the prices are getting more and more expensive in the domestic market. State management agencies, which have been criticized for inability to control the domestic prices, now continue staying… powerless.

The bulletin released by the US Department of Agriculture on September 16 showed that the milk material price has decreased by 30 percent, or 1000 dollars per ton over the price seen at the beginning of March.

The full cream milk powder export price in the Western Europe on September 16 reportedly decreased to 3800-4000 dollars per ton. Meanwhile, on March 4, the prices were between 4750 and 5000 dollars per ton. As for skim milk powder, the prices have decreased from 3675-4300 dollars per ton to 3000-3300 dollars per ton. The decreases have been described by an agriculture expert as the “relatively sharp” in the context of profuse supply.

Meanwhile, the prices continue rising on the domestic market, which has raised big worries among housewives. In early February 2011, when the material price increased in the world market, suppliers immediately raised the retail prices in Vietnam. However, later, when the world’s prices decrease, they do not intend to ease the prices.

A salesman on Tay Son Street in Hanoi said that some suppliers announced the increase of the sale prices by 5000-50,000 dong per can for Dumex, Dutch Lady, Friso and Lactogen products.

Reasoning the changes in the designs, Dumex has announced the sale price increases of 10-13 percent. Previously, an 800 gram Dumex Dugrow Gold 3 can was priced at 292,000 dong, while it is selling at 337,000 dong. Since September 7, most of Dutch Lady-brand and Friso-brand products have seen the prices increase by 15 percent at maximum.

Nestle has also raised the sale price for Lactogen products by 3-10 percent.

Explaining the price increases, External Relation Director of Friesland Campina Vietnam, said on Tien phong that input production costs have increased continuously, thus forcing the company to raise sale prices. The Euro/dong exchange rate has increased by 9-11 percent, while Vietnamese importers have to pay in foreign currencies for the milk imports. Besides, the price of materials for packaging has also increased by 5-18 percent.

“About 2500 of households are providing milk materials to the company. However, the supply source just can satisfy 22-25 percent of the total demand for materials, while the remaining must be fed by imports. Therefore, the production costs bear big influences by the exchange rate fluctuations,” said Nguyen Ngoc Kinh Luan from Friesland Campina.

According to VnExpress, Vinamilk is one of the few milk producers who have not raised the sale prices. The representative from Vinamilk said that the company is implementing the program on stabilizing prices initiated by the Hanoi authorities, under which, the prices would not increase until the end of 2011. XO has also said that it still does not intend to adjust the sale prices.

The baby formula price increase has become the hot topic on online forums. “Milk products are always higher in Vietnam than other regional countries. And now suppliers have raised the prices once again, thus making the prices unbearably high. Let’s boycott the dairy products which have increased in prices,” a mother wrote.

Nguyen Thi Quynh Chi, Chair of the Women Club, said that it is necessary to have the intervention from state management agencies to stop the spontaneous price increases.

However, state management agencies remain powerless in controlling the domestic baby formula prices. In 2010, relevant ministries once took inspection tours to dairy producers and suppliers to learn about the pricing mechanism, and discovered unreasonable expenses of the producers and suppliers. However, nothing has been changed since then. – Vietnamnet

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