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Milk prices to increase?
The Ministry of Agriculture and Rural Development (MARD) has proposed raising the import taxes on milk materials to rates much higher than the currently applied ones. What will happen if the proposal is accepted by the government?
Director of the Animal Husbandry Department under MARD Hoang Kim Giao said on February 9 that the proposal by the ministry had been transferred to the Ministry of Finance for consideration as announced by the Government Office.
Imported milk materials cheaper than domestic
Giao said that local dairy producers do not want to purchase milk materials from domestic farmers, because they prefer importing powder for domestic processing as the world’s prices are on the decrease. Therefore, his ministry believes that if the import taxes on milk materials increase, local producers will have to use domestic materials.
Under MARD’s proposal, 15 imported milk material items would bear tax rates much higher than the currently applied rates.
For example, uncondensed milk and cream, which do not have sugar, would have the tax rate of 18% instead of 5% as currently applied. As for condensed milk and cream which have sugar or other sweetening substances, the ministry’s suggested tax rates are between 10% and 34% instead of 3-7%.
Giao believes that the import tax increases are necessary to help the domestic livestock-husbandry industry.
According to Giao, in 2008, the average price at which enterprises purchased milk materials from farmers was VND7-7,500/litre. Sometimes, enterprises bought at VND8,000/litre. However, domestic dairy producers have recently become ‘indifferent’ to local sources of materials as they can import materials at low prices for domestic processing.
That explains why the price at which enterprises purchase domestic fresh milk from farmers has been decreasing, now at VND6-6,500/litre only. Dairy producers can import materials at just VND4,200/litre.
Giao asserted that the higher import tax rates, if approved, would not greatly affect dairy producers. Meanwhile, if Vietnam does not raise import taxes on milk materials, Vietnam will never see its milk cow husbandry industry develop.
Together with the suggestion on import tax increases, MARD has also suggested launching the programme ‘milk at schools’, which would, in the immediate time, focus on kindergarten and primary school students. The programme would need support from the government, estimated at 20-30%.
Consumers will be the sufferers
According to domestic dairy producers, consumers will be the biggest sufferers if the proposal on raising the import taxes is approved. Currently, domestic sources just can meet 28% of the demand for milk materials, while the other 72% still needs to be fed by imports.
While discussing measures to improve domestic husbandry, Tran Bao Minh, Deputy General Director of Vinamilk, said that instead of raising import taxes, the government should think of helping farmers make good-quality and competitive products. Farmers need to be given support in input materials, like animal feed, experience and techniques.
Minh said that this is the only correct way to help make domestic milk competitive with imports.
Nguyen Thi Lan Huong, Director of Nutifood, said that with the suggested 10-34% tax rates, sale price increases would be unavoidable, even though enterprises are trying to cut expenses and production costs.
VietNamNet, Tuoi tre
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