Report says importers collude to control the price of dairy products

There have been signs indicating that some dairy importers collude with each other to keep the price of foreign-made dairy products high. Domestic products are cheaper, but some products have been found to not meet quality requirements or to violate labeling regulations.

The Industry and Trade Information Center (ITIC), an arm of the Ministry of Industry and Trade, has completed a report on dairy market performance in the first seven months of 2010, which highlights many problems in the market.

According to the information center, the market has witnessed three waves of dairy price increases so far this year. Suppliers announced price increases of 4-9 percent for imported dairy products in January 2010. In March 2010, the price of imported powdered milk increased by 4-5 percent. The move was explained by the fact that the import tariff on fresh milk was raised to fifteen percent in order to protect local production. The noteworthy thing was that the price increase took place at a time when the price of powdered milk in the world decreased by half in comparison to July 2008, when prices reached their highest peak.

The third price increase took place between late July and early August, when dairy products became seven percent more expensive.

According to the Industry and Trade Information Center, there have been signs showing that importers have been colluding with each other to control the dairy market. That explains why domestic prices still increased even though world prices decreased.

The report said the market of domestic dairy products was less “hot” than the market for imported products. Prices only increased once at the end of the first quarter of the year. In fact, prices increased once more during the second quarter, but the price increase was not considerable. Meanwhile, domestic producers only raised their prices when global prices for powdered milk increased. While suppliers of imported products have just announced new price increases, domestic producers have not yet made any decision on price increases. The prices for some Vinamilk products have even decreased slightly.

However, problems still persist with domestic products. Many products have failed to meet quality requirements or to violate labeling regulations.

Recent inspection tours to nineteen establishments that produce and trade dairy products in eight provinces and cities conducted in the first seven months of the year showed that 26 percent of establishments committed product labeling violations. The labels had information that was not found in the companies’ official declaration of product standards, or the labels provided incorrect information about the contents of products. Six out of 84 samples tested were found to have DHA and calcium content lower than declared indexes.

Controlling dairy prices and forcing prices down from their current highs have been a headache for state management agencies for the last few years. The Ministry of Finance has recently released a circular that stipulates that producers and suppliers of formula products for children less than six years old will have to register sales prices to state management agencies.

The circular will take effect on October 1, 2010. Meanwhile, suppliers have hurriedly announced new price increases for some products, a move believed to have been made before October 1, 2010 in order to avoid the new regulations.

Meanwhile, Nguyen Anh Tuan, Deputy Director of the Price Control Agency, an arm of the Ministry of Finance, said that so far no company has registered sales prices to state management agencies. He declined to comment on the latest wave of price increases triggered by suppliers of import products.

According to ITIC, although the Government has put dairy products onto the list of “sensitive products” that need state price management and has been applying various measures to control prices, dairy prices have still been increasing steadily.

Domestic products are still considered inferior in the market and only hold 22 percent of market share, while imported products hold the remaining market share.

The Ministry of Finance said it is now compiling a list of dairy companies that must register sales prices that will be made public through the media. The companies will have to explain their pricing policies, including expenses and other factors that go into the overall price.- Nguoi lao dong

Tags: Vietnam milk, Vietnam milk prices