Dairy product prices under microscope

Nguyen Anh Tuan, director of the Price Management Department under the Ministry of Finance (MoF), revealed the information following a March 4 meeting between the MoF, the Ministry of Industry and Trade (MoIT) and other relevant ministries, aiming to stabilise the local milk market.

Tuan said the delegations are to inspect factors affecting the selling prices of dairy products of the five companies and determine whether the companies have violated the Law on Competition and the Law on Price, and to present recommendations to the two ministries.

The companies include Mead Johnson, Nestle Vietnam, Vinamilk, and 3A Nutrition STC, which distributes Abbot dairy products, and Friesland Campina.

Consumers have raised concern about high dairy product prices

The ministries will then issue a public report on the inspection results and whether there have been violations of existing legal regulations, and if there is, they will respond to such violations.

If dairy prices keep rising, the relevant offices could apply ceiling price mechanism on such dairy selling prices in the local market under the Law on Price.

The Price Management Department reported the dairy production and trading companies increased prices by 5 to 10% in December 2013

They have continued registering increases in prices since early this year, though the ministries have offered many solutions to ease the pressure on the local market.

The department said it has asked dairy production and trading companies to list prices of their products, since December 2013 for Mead Johnson, since January for Nestle Vietnam, February for Vinamilk and Friesland Campina, and March for 3A Nutrition JSC distributing Abbot dairy products. The companies must also explain the reasons for increasing their selling prices.

“Recently, prices of input materials throughout the world have increased by 5 to 48%. And those prices are expected to continue increasing. Additionally, the cost of direct and indirect labour of the Friesland Campina rose 15% on average since April 2013. But the company had not changed prices,” said Truong Van Toan, External and Legal Director of Friesland Campina.

“The company has proposed increasing selling prices for 16 out of its total 47 products to obtain investment for research and development of products and to assure the use of good quality materials. It has planned to hike those prices since February 25 but in fact the prices for the 16 products have remained unchanged.”

According to Nestle Vietnam, the increase was due to high import prices and labour and transport costs, the department said.

But the department asked Nestle Vietnam to provide more details in its explanation and said the company must leave prices unchanged until it offers more information about its reasons behind price hike.