Government price cap helps keep milk prices affordable

Government price cap helps keep milk prices affordable

Milk prices have started to drop ahead of a looming deadline set by the Ministry of Finance to cap the price of milk products from June 20.

There has been a sharp drop in the retail price of milk products, to the tune of VND70,000-VND150,000 per box.

Nguyen Thanh Xuan, who owns a shop on Doi Can Street, said she received notice from a number of dairy companies planning to cut the retail price of certain milk products early, from June 1.

In an effort to help sales agents bear the cost of the change, some dairy producers have also announced they will subsidise unsold milk products up to tens of thousands of dong per box, up until June 21.

Earlier, the Ministry of Finance announced it would apply ceiling price to milk for children under 6 years old, starting from June 1. However, the decision will now be applied to wholesale prices on June 10 and retail prices from June 20.

The caps will be 10-15 per cent lower than current wholesale prices and , in some cases, 20 per cent lower than the market rate.

According to a survey in the capital city, proposed retail prices for a 1.8kg tin of Enfagrow A + 3 will be lowered by between VND180,000 to VND200,000 dong per unit, while a 900g tin of Enfamil A+1 will see a reduction of between VND70,000 to VND100,000. The price of a 400g box will also drop by VND35,000 to 45,000 each, while 900g tins of Enfamil A+2 will decrease by between VND75,000 to VND100,000.

Other products, such as Abbott Grow 3, G-Power Grow vanilla (900g), will see smaller reductions between VND20,000 and VND25,000 per box.

At Toan Thinh Shop in Hang Buom street, Abbott Grow 3 is currently fetching VND260,000 per box, while 900g and 1.8kg tins of Enfa Grow A+ are being sold for VND485,000-VND880,000.

Lien Dat Shop representative Nguyen Thi Huyen, said in spite of some early discounts being offered, the impending price ceiling had stifled sales, with most customers delaying purchases until after the deadline.

Meanwhile, consumers have welcomed the price ceiling, saying it will help lower the cost of living. Mother Le Mai Huong from Hao Nam told Viet Nam News she had spent at least VND2 million on milk to feed her baby, and expects to save about VND500,000 per month after the cap takes effect.

Vuong Ngoc Tuan, deputy chairman of the Viet Nam Standards and Consumer Protection Association said his association was working on applying new labels to milk products to prevent dairy companies avoiding the price caps.

Nguyen Trong Nghia , Director of Legal Affairs at the Finance Ministry said the ministry had received negative feedback from dairy producers alleging the ceiling was too low.

According to Nghia, dairy producers will have to lower their retail prices between 10 to 21 per cent against the current prices.

Nghia also said that in imposing a low price ceiling, the ministry had compelled dairy producers to cut excessive spending on marketing. Citing a recent study into the five largest formula milk producers, he said that the group had spent up to spent VND386 billion on marketing to hold on to its 90 per cent share of the market.

Nghia said that dairy producers needed to calculate the cost of adapting to the proposed price ceiling, adding that adjustments would be considered in the event of losses.

bizhub