Shocked by the price of milk.

In the early months of 2014, a number of businesses announced significant price adjustments for dairy products. Notably, this adjustment was made just two months after these products were officially recognized as subject to price stabilization regulations.

People are shocked by the soaring price of milk.

People are surprised by the price of milk.

Mr. Nguyen Van Son, the owner of a milk shop on Tran Thai Tong Street, Cau Giay District, Hanoi, shared that since before Tet (Lunar New Year), many milk brands have announced price increases. For example, from January 1, 2014, some milk products from Mead Johnson and Abbott increased by 4-7%; from February 10, 2014, Vinamilk products increased by an average of about 6%... And from March 1, 2014, milk products from Similac, Enfa, Pedia Sure, etc., will also simultaneously increase prices by 7%, applicable to products for adults, children, yogurt, and liquid milk. Thus, the new prices for some products will increase significantly. For instance, Enfa Grow 3A+ milk in a 900g box will cost 880,000 VND/box instead of 835,000 VND/box as currently (an increase of 45,000 VND/box). Enfa Mama A+ Vanilla DHA power plus, 400g box, will cost 225,000 VND/box instead of the current 205,000 VND/box (an increase of 20,000 VND/box)...

The sharp increase in milk prices right at the beginning of the year has surprised many people. Ms. Nguyen Thi Thu Huong (De La Thanh Street, Hanoi) shared that she has two children, the older one four years old and the younger one two years old. Each month, her family uses about four 900g boxes of Enfa Grow A+ (two 3A+ boxes and two 4A+ boxes). Ms. Huong expressed her concern: “The current sharp increase in milk prices is really causing me difficulties. Every month, I have to spend nearly 200,000 VND more on milk for my children. In the future, my husband and I will have to save even more to afford milk for our children, because children can't go without milk.”

Nguyen Thi Hoa (Long Bien, Hanoi) expressed her surprise at the rising milk prices at the beginning of the year. She has a three-year-old child and previously spent over two million dong a month on imported milk. At the end of last year, she gradually switched to domestic milk to save on costs. However, at the beginning of the new year, she is facing another sharp price increase. “Last year, the continuous rise in milk prices forced me to switch from imported to domestic milk to save money. If prices continue to rise like this, I don’t know what I’ll do,” Hoa shared sadly.

This latest milk price increase has not only shocked people because of the high amount but also puzzled many because of the timing. Just about two months ago, milk was officially included in the price stabilization program. Ms. Nguyen Thi Hoa expressed her frustration: “If I remember correctly, the information about milk being included in the price stabilization program was only announced recently. So how can it be considered price stabilization when milk prices have increased so suddenly and sharply? I am truly shocked and cannot understand it.”

Dairy companies explain that the recent increase in milk prices is due to rising input costs. Specifically, at the beginning of 2014, the price of domestically sourced raw fresh milk increased by approximately 22% compared to the beginning of 2013. In addition, since the beginning of 2014, the prices of key ingredients (milk powder, butter oil) on the world market have also increased by 30-57% compared to the same period last year. Because domestic milk prices are largely dependent on imported raw materials, they have been significantly affected.

Where is the loophole?

As one of the essential commodities, the increase in milk prices will cause public outrage. However, what erodes consumer confidence even more is that milk prices are rising precisely at a time when it has just been included in the price stabilization program under Circular 30 of the Ministry of Health (effective from November 2013). Explaining this, economist Nguyen Minh Phong stated that Circular 30 only requires businesses to register prices with regulatory agencies, but does not mandate that businesses report the price formation mechanism, audit prices, and notify the State of the audited prices whenever they want to increase prices. Therefore, the State cannot accurately manage whether the price increases by businesses are reasonable or not.

Therefore, to ensure transparency in each price adjustment, according to Mr. Nguyen Minh Phong, several solutions must be implemented simultaneously. Firstly, if milk is included in the price stabilization program, then milk companies must be subject to price controls. This means that each time a company wants to adjust prices, it must fully disclose the audit results regarding the factors that determine and affect milk prices. Only then will a decision be made on whether or not to allow the price adjustment. Mr. Phong frankly stated: “Milk prices must be strictly controlled like gasoline prices. This means companies must be required to provide the factors that determine the price, thereby establishing a price ceiling, plus the company's profit margin, to provide a basis for comparison whenever there are influencing factors that necessitate price adjustments.”

Furthermore, if milk is already subject to price stabilization, then the role of state-owned dairy companies (in this case, Vinamilk) in regulating prices must be further enhanced. When there are excessive price fluctuations, these state-owned enterprises need to intervene to reduce profits, prevent excessively high price increases, and share some of the burden with the people. Mr. Phong further affirmed: "Otherwise, let milk prices operate according to market mechanisms, avoiding half-hearted stabilization that causes public dissatisfaction."

Secondly, competition among dairy businesses must be further enhanced by allowing more companies to participate in this market. At the same time, domestic milk prices must be compared with the prices of similar products abroad to ensure that consumers receive a fair price.

We will closely monitor developments in milk prices.

The sharp increase in milk prices in the early days of the year has also caused economic experts to worry that it may affect the consumer price index. Regarding this issue, on February 13th, the Price Management Department of the Ministry of Finance issued a notice on milk price management. Accordingly, from December 2013 to the present, 2 out of 6 companies required to register prices have submitted documents to the Ministry of Finance proposing price adjustments with increases ranging from 5-10%.

Specifically, Mead Johnson Nutrition (Vietnam) Co., Ltd. proposed adjusting the selling prices of 16 out of 28 product lines, with common increases ranging from 5 to 7%. Based on the company's contracts and customs declarations, the reason for the price increase was a 12.6-12.8% increase in import prices from August 1, 2013, and the company adjusted its selling prices to the market with a common increase of 5-7%. The Price Management Department noted that 3 out of 16 products had their prices adjusted for the second time in 2013 with a 10% increase, while the remaining 13 products had stable prices from mid-2012 until now, and the current price adjustments by the company are consistent with the fluctuations in input costs.

Mr. Nguyen Anh Tuan, Director of the Price Management Department - Ministry of Finance, added that the Department will closely monitor market developments. If the price increase has a negative impact on the market, solutions to stabilize it will be announced.

According to NDĐT