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High price of milk sours consumers
"Milk prices may continue to rise." Just reading the headline of an online newspaper, Truong Hong Nhung, a young mother in Ha Noi, becomes upset. "My income may not be enough to buy milk for my children if the price keeps going up," Nhung says.
Nhung’s worry is shared by many parents in Viet Nam, concerns heightend by a domestic mass media that regularly reports that Viet Nam’s milk prices are the highest in the world.
And Viet Nam’s demand for milk has increased sharply in recent years. In 1995, the average consumption per person was 3.7kg per year. This rose to 6kg in 2000 and 12.3kg in 2007, and is estimated to reach 20kg by 2020.
Domestic supplies are only able to meet about 28 per cent of demand. Importers of milk products have responded by hiking milk prices multiple times since 2007, with prices for various products rising by 7-25 per cent during a period when the cost of milk on world markets was falling sharply.
The website www.dairyvietnam.org.vn has reported that, by the end of 2008, the cost of milk powder on world market had dropped to US$2,000 per tonne.
"The price of imported milk in Viet Nam is now higher than in other regional countries," Ho Tat Thang, vice chairman of the Viet Nam Standards and Consumers Association (VINASTAS), said at a conference in May. "It is three times higher than that in Thailand and twice as high as in Malaysia."
The prices seem all the more unreasonable in light of the fact that the Government has reduced import taxes on milk by 50 per cent.
"I don’t understand why consumers in a developing country like Viet Nam have to pay such a high price for milk," Nhung said. "Milk importers do not care about the lives or circumstances of their consumers."
The price-gouging becomes apparent when comparing the prices of imported products to domestic dairy products.
"A 900g can of domestically-produced milk costs only about VND150,000 [$8.30], but, with the same nutritional quality and ingredients, the same size can of imported milk costs VND350,000 [$19.50] to VND430,000 ([$23.80]," said a vendor on Son Tay Street in Ha Noi.
Milk importers try to explain the high prices by saying costs are based on multiple factors, not just the cost of raw materials. Packaging, taxes and fees, distribution and marketing costs were all high in Viet Nam, they said.
VINASTAS confirmed that milk importers spent $30 million on advertising last year but said it was unreasonable for all of these costs to be passed on to consumers.
Consumer attitudes were also a problem, admitted Thang, with many Vietnamese consumers driving up the price of imported milk by believing it is better than the domestic product. They are willing to pay more for imports.
"Thinking that imported milk is better than domestic milk has strongly affected the market," said Thang.
"Parents buy milk for the children using their hearts, not their heads and often believe that they will buy better milk if they pay more money," he said. They were also strongly affected by advertising.
A survey conducted by a newspaper of 300 families in Ha Noi and HCM City showed more than 80 per cent bought milk based on advertising.
"How can I stop buying imported milk when I hear a mother in an ad say her son is taller and smarter because he drinks imported milk? I want to bring the best product home to my children," said Ha Noi mother Thu Huong.
To try and counteract the influence of marketing, authorities have held a number of conferences on milk prices and quality. Nutrition experts at these conferences have affirmed that domestic milk is of equal quality to imported milk, but the message is little heard by the general public.
If the problem reaches a crisis level, Government price controls could be in the offing.
The Price Management Department of the Ministry of Finance has said that milk is one of the products the price of which needed to be stabilised. Price controls could be triggered if prices change abnormally, such as a spike of 20 per cent within a 15-day period.
Although such abnormal changes have not yet occurred with milk, the ministry has guided related departments, including provincial and municipal people’s committees, to keep an eye on the situation, said Vu Cong Chinh, deputy head of the department.
vietnamnews
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