Exposing the tricks of "price fixing" foreign milk

What are foreign milk companies spending on so that from the import stage to the consumer, the price of milk has increased 5-9 times?

Recently, a piece of information was released that shocked the public: the domestic retail price of milk is currently 5 times higher than the import price. A question was raised: Why has milk been at such an unreasonable price for so many years? Are the State management agencies not fulfilling their responsibilities or are they powerless?

Retail price is 5 times higher than import price

The price list of some imported powdered milk products provided by the General Department of Customs with the import price from 4-5 USD/box (about 80,000 - 100,000 VND), and the retail price on the market from 400,000 - 900,000 VND/box, 5-9 times higher than the import price, has once again heated up public opinion about milk prices.

Retail price of milk is 5 times higher than import price.

So after a series of problems that have upset milk users for many years, such as milk prices only increasing and not decreasing, increasing by several dozen percent each year; then in the first 8 months of 2013, milk prices increased 5 times; false milk advertisements; some types of milk suspected of lacking essential micronutrients (for example, imported milk from Japan does not list iodine content)..., this is like the "last straw" that broke the camel's back of public opinion.

The question is, what are foreign milk companies spending on so that from the import stage to the consumer, the price of milk has increased 5-9 times? The answer is: advertising costs, business costs...

According to current regulations, businesses can only spend up to 10% of their total deductible expenses on advertising and marketing. But in reality, many foreign milk companies have spent 4 times more on advertising than allowed. Why can businesses easily circumvent or ignore regulations? It is due to weaknesses and lack of consistency in the management of this product by state management agencies. Is it difficult for state management agencies to identify unreasonable costs in the factors that make up milk prices?

According to price market expert, Dr. Ngo Tri Long, the answer is no. "Authorities can completely analyze the factors that make up milk prices based on information from Vietnamese trade offices abroad, customs and other sources. In addition, they can clearly verify what percentage of the price factor advertising costs account for..." - Dr. Ngo Tri Long analyzed.

Magically remove milk from price control list

Up to this point, the Price Management Department, Ministry of Finance has not yet inspected milk prices because these products are not currently subject to the Department's price control. The reason stems from the name. While the previous Price Ordinance and the current Price Law both stipulate that "Milk for children under 6 years old" is on the list of State price control, at the beginning of this year all types of milk were renamed formula food, nutritional supplements... and thus, they are naturally no longer on the price control list. Explaining the reason for changing the milk name, Mr. Nguyen Hung Long, Deputy Director of the Department of Food Safety and Hygiene, Ministry of Health, said: according to Vietnam Standard No. 5-2:2010/BYT National technical regulations for powdered milk products, powdered milk products (called powdered milk) must have a protein content of 34% or more. Products that do not have enough protein content will have to change their names.

However, why was this Regulation issued and effective since 2010 but only recently mentioned by the Food Safety and Hygiene Department? Why did the name change process only take place before the Law on Prices took effect (from July 1, 2013)? This change causes difficulties for other agencies involved in managing the milk market. Mr. Nguyen Anh Tuan, Director of the Price Management Department, Ministry of Finance, said: "If the quality standards and names are changed, it will be very difficult for the price management agency to stabilize prices for products that were previously milk and are now nutritional products." Mr. Nguyen Tien Thoa - Vice President of the Vietnam Valuation Association - said: We have information from customs and from trade. It is important to clarify the factors that form prices... If necessary, the names of formula foods and food supplements must be included in the Price Law to ensure the declaration of milk prices.

Responsibility of the distribution enterprise

It is noteworthy that while the world price of milk materials has dropped by 10% due to the Fonterra milk incident, no company has made any move to reduce milk prices or at least publicly announce the source of imports, except for two domestic powdered milk companies, Vinamilk and Nutifood. According to Mr. Vu Vinh Phu, Chairman of the Hanoi Supermarket Association, in this story, there is a part of the responsibility of the State-owned enterprises in the distribution sector, when they have not participated in the import and distribution of powdered milk, an essential item for many customers.

Mr. Vu Vinh Phu proposed: “In my opinion, to manage milk prices, we must have a large amount of milk to overwhelm other goods, in which there must be the participation of trading corporations to play a leading role in the market. It is necessary to change the way the price stabilization program is implemented by focusing on a key product, not spreading it out. If we now focus all the price stabilization budget on milk products, it will bring very high efficiency.”

What the public is waiting for now is the intervention of State management agencies. Experience from China, Italy and some other countries shows that when there are management agencies to inspect milk prices and punish businesses that unreasonably increase prices, milk prices on the market immediately decrease. In some countries such as Sri Lanka, the Government even encourages people to boycott Fonterra products when this company has contaminated milk. The Price Management Department, Ministry of Finance said that the Department is working with the Food Safety and Hygiene Department, Ministry of Health to propose adding items such as food supplements and nutritional products to the list of price-stabilized goods. This move, although very slow, is still better than nothing./.

According to vov.vn - LT