VietNamNet Bridge – Housewives are worried that their pocketbooks will undergo some losses as dairy producers are threatening to raise the selling prices, once again.
Soon after dairy producers announced to raise the selling prices of a series of dairy products by 5-10% in June, they are attempting to increase the prices once again in July. The price hike wave, if occurring, will not only affect families’ budgets, but also influence the food processing industry.
How far will dairy prices escalate?
Dairy products of all kinds, especially powder milk, have been witnessing sharp increases recently. Nutifood powder milk, for example, increased by VND5-10,000/can in prices, while Dutch Lady increased by VND6-14,000/tin can or paper box. Vinamilk has also announced to raise the selling prices of condensed milk and fresh milk by VND24-30,000/package.
Tran Quoc Huan, Marketing Director of Dutch Lady Vietnam, said that the prices of electricity, water, labour force, transport fee all increased recently. However, this was not the main reason behind the dairy product price increases, it was mainly because of the increased material price.
“Dairy prices will see unpredictable fluctuations as local production depends heavily on the world’s material prices. The demand for dairy products is increasing sharply in both the domestic and world’s markets. I think the increases will mainly occur in power milk products,” Mr Huan said.
Other dairy producers also said that the prices would further escalate as the input material price still keeps rising. Representative from Vinamilk said that material price amounts to 50-60% of the production cost, while it has to purchase the material at $5,500-6,000/tonne, double the price of earlier this year. Vinamilk plans to raise the selling price by 10% at maximum.
Most recently, Hancofood has announced to raise the retail prices by another 5%, commencing from July 2007, representing an increase of 10% in general compared to previous months.
Le Viet Ha, Chairman of Hancofood, said that the imported material price has increased by 2.5 times over the beginning of the year, and it is expected to see the price increase by three fold in some days.
Localy sourced material just meets a part of demand
Dairy producers said that the shortage of material is being seen in all the markets, not only in Vietnam. Two biggest material producers in the world, including New Zealand and Australia, are having bad weather. While the supply is limited, the demand is increasing rapidly: the imports by China have increased by 60%, while demand in India has increased by 30%.
As the imports become more expensive, dairy producers begin paying special attention to local sources. They have been trying to collect more materials from local dairy farms by raising the material purchasing prices.
Mr Huan said that his company has decided to raise the purchasing prices in order to encourage farmers to breed cows and expand their herds of cows. He said that the current productivity just can meet a small part of the demand for material.
As local sources cannot satisfy the demand of dairy plants, Vietnam still depends heavily on material imports.
The dairy price increase is threatening to make the production cost of the food processing industry higher. Dang Ba Tung, Director General of Vinabico, a confectionary company, said that the power milk price hike has put a burden on his business.
“Though the dairy price increases, we still cannot raise the selling prices at once, thus suffering the loss,” Mr Tung said.
Viet Nam Net
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