Dairy producers and distributors raise prices

Domestic dairy producers have raised prices in response to higher material prices. Foreign dairy products are expected to follow the move soon.

Mai Ly from HCM City said that she immediately used her November salary to buy four Gain brand milk powder boxes, because she heard that dairy prices would increase.

Domestic dairy producers have raised prices already. Vinamilk, for example, increased the prices of powder milk and condensed milk by six percent from August to early December 2009. The dairy producer cited the sugar price increase of two-fold over the beginning of the year and its 17 percent rise in October.

Only liquid milk products maintain the same rates, but many retail shops have already increased prices by 1,000 dong per one litre carton. Hoa, the owner of a min-mart said that wholesale prices have increased, forcing retailers to raise prices accordingly.

Hancofood will increase prices by 10-15 percent. General Director Pham Ngoc Chau estimated that input materials increased in price by 50 percent over August 2009. In addition, both the dollar and fuel prices have increased, factors that will force the dairy producer to incur heavy losses if prices are not elevated.

Only Nutifood still maintains its original prices. According to Tran Huu Duc, the public relations manager for Nutifood, domestic producers are at a disadvantage if they jack up prices before foreign companies do.

The foreign companies are indeed planning price increases. A marketing director for one foreign company allowed that foreign companies are “looking to each other” to hike up prices.

“The 5-15 percent price increase plan has been drawn up already,” the marketing director declared. “The only thing that needs to be considered now is to decide when to announce the price increases, so that the increases are accepted by customers and retailers.”

Domestic analysts argue that foreign dairy products have not increased in  cost because the prices were too high already.

Abbott, which holds the largest market share in Vietnam, stated that it will maintain current price levels until the end of 2009. Mead Johnson Vietnam has announced that it will not raise the prices of Enfa A+ family products in 2009.

Over the last two years, milk material costs have dropped from $5,400 per ton to $2,144 per ton on the world market. Dairy product prices, however, have not decreased domestically.  In fact, producers and distributors have actually pushed up prices one or two times a year, blaming higher exchange rates and alterations in products’ content.

The Ministry of Finance, while trying to stabilize the market, has not located a solution. At first, the ministry threatened to set ceiling prices, but the idea was dismissed as infeasible. Since then, the ministry said that it may ask producers and distributors to register prices with management agencies, but no final decision has been issued.

VietNamNet/SGTT

Tags: Vietnam Dairy sector