Rip-off milk prices need better policing
by Hong Minh
While the fears earlier this month over milk contaminated with toxic bacteria have yet to be resolved, after tainted whey protein from New Zealand was detected, many parents across the country feel that they are being robbed as the price of their children's milk has increased once again.
From August 1, several foreign milk powder companies raised their prices from 5-10 per cent, the fifth rise since the beginning of the year.
While parents once again have to adapt to the higher prices and put more effort into maintaining their children's level of nutrition, all that management agencies do is sit and watch the price increases without being able to do anything about it.
A recent meeting to discuss the pricing of milk products noted that the cost of milk powder in Viet Nam had grown almost 30 times over the last six years, while the price of liquid milk products have also increased by up to 185 per cent.
Statistics from the Viet Nam Chamber of Commerce and Industry show that on average, there are about 2 – 3 waves of price hikes on milk every year and between 2007-10, there were 16 increases alone.
The reasons given every time were very similar, including the higher costs of materials, changes in models, increased fuel prices, rising salaries or management expenses.
All these reasons were used again and again as excuses - taking more money from the parents' pockets. But no one could prove the reasons why.
After each price rise, the management agencies concerned failed to explain the reasons behind why prices has risen.
During the rise in milk prices, many economists pointed out that contrary to normal practice, with a market involving over 200 companies importing milk materials and products, it must have been a very competitive market with competitive prices.
However, prices have constantly increased since 2007, despite no signs of a decrease in milk supplies worldwide.
Many were shocked by a statement released at a conference held by the Viet Nam Standards and Consumers Protection Association, that reported Vietnamese milk prices to be the highest in the world.
The average retail price for a litre of milk in Viet Nam is US$1.4 while in China it is only $1.1, with prices in India, Europe and the US ranging from only $0.5 to $0.9. Within ASEAN, the price in Viet Nam is twice that of Malaysia and 1.5 times higher than in Thailand.
To confuse consumers even more, the conference stated that many milk companies are selling their products at prices four to five times higher than a price that they would already benefit from. This is the case at many milk powder companies.
On a recent trip to neighbouring China, where there is an enormous market for baby formula milk ,worth an estimated $12.7 billion last year, I had the opportunity to see an example of how the Chinese Government controls the price of milk powder.
Just last week, the Chinese government fined six companies a total of $109 million for selling baby milk powder using uncompetitive practices as well as price fixing.
The six companies, five foreign and one based in Hong Kong, include many household names of baby milk powder manufacturers, familiar with Vietnamese parents.
The recent fines, which have been described as the largest ever imposed under China's anti-monopoly laws, were the outcome of a four month long Government investigation into the baby milk formula industry. It was carried out by China's National Development and Reform Commission, the country's top economic planner, which is also responsible for enforcing China's anti-trust rules on pricing.
As soon as the investigation had got underway in March, at least three foreign companies, including Mead Johnson, Dumex and Nestle, reportedly slashed their prices immediately, from 12 to 20 per cent across the Chinese market.
I would imagine that millions of parents across Viet Nam, who spend a small fortune on milk, under the illusion that their children will be healthier, taller and smarter in the future, long for such an investigation into the prices of the milk they are currently buying for their children.
An organisation or agency to conduct thorough and serious inspections into milk pricing would also be good for Viet Nam. Here, sadly, there are too many agencies that are responsible for the management of milk products.
I could name them as the Health Ministry's Department of Food Hygiene and Safety, the Ministry of Science and Technology, in charge of quality, the Ministry of Finance's Department for Price Management in charge of pricing and the Ministry of Industry and Trade's Department of Market Management in charge of the post-inspection of milk products on the market.
And in most of the price rises that I was aware of, none of the above agencies could actually show they had taken any action to really protect the consumers' rights.
The Government has approved a detailed plan that is supposed to increase the height of Vietnamese people, so that by 2020, an 18-year-old male will reach a height of 1.67 metres, while a female of the same age will be 1.56 metres. (Presently male are about 1.64 metres and females 1.53 metres.)
As nutrition is said to account for 31 per cent of the development of a person's height, I also doubt that the Government will fail to realise its ambition for people to grow bigger. The current unreasonable pricing of milk maybe partly what is slowing the progress down.
It's time for Government agencies to take serious action to control milk prices, to uphold the consumers' rights and to win back trust from the parents. — VNS