VietNamNet Bridge - The sky-high prices of formula milk products for children aged under six have angered many consumers, who question why domestic prices remain high despite the sharp input material price drop of 20 percent.

The Voice of Vietnam (VOV) quoted a bulletin of the Industry and Trade Information Center as saying that skimmed and full-cream powder milk imports from Western Europe and Australia have decreased by 20 percent since April. 

Meanwhile, the prices of 700 dairy products in the Vietnamese market remain unchanged over the last six months, though 80 percent of input materials were satisfied with imports.

The Ministry of Finance (MOF) has confirmed that domestic prices have remained high and that current input costs prevent manufacturers and distributors from reducing the selling prices.

Formula milk products available in the market are from two main sources – domestically made and imported.

As for domestically made products, the ministry admitted that the input material price had decreased by 20 percent. 

However, these are the prices quoted by foreign suppliers. In fact, dairy producers could not buy input materials at such a price. The dairy products now available in the market were made of materials bought before at higher prices.

The ministry also said that input materials made up 20-25 percent to 40-45 percent of the selling prices. Meanwhile, the other factors do not support a price decrease.

According to the ministry, the minimum wage price increase has increased by 14 percent since the beginning of the year, the dong has lost 3 percent of its value and electricity has increased by 7.5 percent.

As for imports, the ministry cited the General Department of Customs (GDC) as saying that import prices have been stable since June 2014.

Thoi Bao Kinh Te Sai Gon quoted a dairy producer as confirming that while the input material price has decreased, the other input costs are on the rise, including labor costs and package prices.

EuroCham’s nutritious foods sub-committee has explained why the prices of dairy products for children under six have not fallen.

The sub-committee comprises six business members: Abbott; Danone, Fonterra, Nestlé, FrieslandCampina and Mead Johnson.

It said the input material price quoted by local newspapers was the price at the time of quotation, not the price at the time when materials were bought to make products now available in the market.

However, the explanations have not calmed the public down. VOV quoted some analysts who said enterprises could be conducting transfer pricing to avoid tax and keep selling prices high. 

CV