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Dairy product prices still sky high   2008-11-03 - NLD

While material milk prices in the world’s market have decreased by 50%, domestic prices have unreasonably remained unchanged.

 

Dairy prices? They will increase only, not decrease

 

 
Milk material traders said that the price of whole milk has dropped to $3,400/tonne, while skim milk to $2,800-3,000/tonne, and milk with more fat and high protein content to $4,500-5,000/tonne, a decrease of 40%.

 

However, the prices of dairy products on the market have been staying firmly high. Huynh Dong Tuan, Manager of Citimart chain, said that to date, no dairy producer has announced price decreases.

 

Nguyen Muoi, the owner of a milk shop on Nguyen Thong street in District 3, HCM City, said that the prices of dairy products have reached the highest levels. Muoi said that powdered milk has increased by VND20,000/400 g box over the beginning of the year, and VND40-50,000/900g box.

 

Stories about melamine-infected products have led to the sharp decrease in sales of dairy products (decrease of 50% in the first two weeks after the information was released). However, dairy producers are still insisting on maintaining high sales prices.

 

Unsuitable explanations

 

Dairy producers have not given satisfactory explanations for the overly high dairy product prices. Tran Bao Minh, Deputy General Director of Vinamilk, said that material milk prices have decreased, but Vinamilk still cannot slash sale prices, because the tin can price has increased by 50%, the VND/US$ exchange rate has increased and workers’ wages have also increased.

 

A representative of Abbott said that sales have been going very slowly, therefore, the producer has no plan to slash sale prices yet.

 

Truong Van Toan, Head of the Legal and Foreign Affairs Department of Dutch Lady Vietnam, said that the company cannot adjust contracts and plans which were set before for the whole year. He added that Dutch Lady will not change its pricing policies before the end of the year at the earliest, and maybe not even early next year.

 

The explanation proves to be unreasonable: several months ago dairy producers raised sale prices, reasoning high material prices, i.e. they changed their plans.

 

Analysts say that dairy product prices are not likely to decrease as dairy products are essential products which Vietnamese families still have to purchase even when they are costly.

 

Many milk cow farms shut down

 

Cow farms in Cu Chi and Hoc Mon districts in HCM City said that dairy producers have been insisting on not raising fresh milk purchase prices as per request of the Ministry of Agriculture and Rural Development and HCM City People’s Committee. The purchase price is staying at VND5,400-7,300/kg. With the sale prices, cow farms have been incurring losses. A lot of farmers have sold milk cows at low prices, leaving farms idle to shift to other business.



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