How to manage milk price?

The Ministry of Finance has issued the Circular 122, to be effective from October 1, to hold better sway over milk prices. However, it remains a hard job to curb excessive increase in milk price.

Mr Nguyen Tien Thoa, Director of Price Management under the Ministry of Finance, said the Circular 122 provides that all imported powdered milk for children aged under six must register prices with price management agencies.

The Circular 122, which replaces the Circulars 104/2008, aims at having a tighter hold over milk prices and putting a ceiling on continuous gains in milk prices. All milk companies will be subjected to this ruling. They must submit selling price registration applications which must provide clear interpretations for price-constituting components. Marketing and advertisement costs are not allowed to exceed 10 % of revenues. “The mandatory selling price registration aims to provide the foundation for state management bodies from central to local levels to take quick action on milk prices, thus avoiding unexpected price increases in the past years,” Thoa said.

However, according to experts, the new ruling can superintend domestic companies, not foreign ones, because of difficulties to know their true costs. Besides, domestic companies can deliberately join hands with foreign partners to change input costs in the way they benefit most. As a result, the spirit of the circular does not come true.

In addition, the Circular 122 only covers milk for children under six years old, not products for pregnant women, elderly people and sick people who consume a large volume of milk.

Before the Circular 122 comes into effect, many foreign firms have quickly raised their selling prices. Many companies explained that milk prices had to be hiked to compensate cost rise after the State Bank of Vietnam depreciated the Vietnamese dong against the US dollar by 2 %. Hence, according to experts, only the price management authorities are not enough to deal with milk prices as this business is related with many other fields like customs, market management and banking.

Tags: Vietnam milk, Vietnam milk prices