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MoIT to remove milk price cellings

Released at: 17:43, 08/03/2017

MoIT to remove milk price cellings

Illustrative image. Photo: medicalnewstoday.com

Ministry preparing draft circular with different price management method.

by Quynh Nguyen

The Ministry of Industry and Trade (MoIT) is planning to eliminate milk price ceilings to assist dairy companies.

Under a draft circular on dairy price management, the ministry will ask dairy companies producing products for children under six years of age to determine a price then register it with the ministry.

It will then consider the registered price and announce to all distributors if the price is reasonable.

The ministry believes that this management method would help monitor traceability, quality and price of goods. At the same time, it can determine the responsibility of enterprises if product quality is a problem.

The price ceilings have been controversial for dairy companies. “The unreasonable imposition of price ceilings in the past few years has had a significant impact on dairy companies,” Mr. Arnaud Renard, Chairman of the Nutritional Foods Group, wrote in the EuroCham Whitebook 2017. “The market declined both in sales volume and revenue. One company had to shut down and withdraw from the Vietnamese market.”

“We would recommend that, foremost, the State remove the price ceiling policy on milk products, while in the long run it considers and enforces policy measures that can help businesses lower unit costs (e.g. import duties, value-added tax, etc.) rather than focusing on policies that interfere directly on the market, as is currently done,” he added.  

Price ceilings were put in place in May 2014 by the Ministry of Finance (MoF). At the end of the second quarter of 2015, the ministry extended the price ceiling through to the end of last year.

MoF’s Pricing Management Department said that after stabilizing milk prices, prices fell by between 0.1 per cent and 34 per cent for milk products for under six-year-olds.

Last May, in a working meeting with US Trade Representative Michael Froman, Minister of Finance Dinh Tien Dung pledged to consider lifting the price cap last July, half a year earlier than planned.

Milk price control was one of the issues Mr. Froman raised at the meeting, which was among a series of events held during President Barack Obama’s three-day visit to Vietnam.

The price caps were then maintained, though an extension was always unlikely.

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