The retail price of milk continues to climb, according to reports from supermarkets and other retail and wholesale outlets in both Hanoi and HCM City, despite a reduction in import tariffs in line with the nation’s commitments to the WTO.
Under its road map to fulfill WTO commitments, Vietnam will cut import tariffs on imported processed dairy products to 5 per cent over the next five years.
Some Hanoi agents said producers and distributors have increased prices as a result of increasing international prices. Local milk processors are still highly dependent on imports, importing about 80 per cent of the milk powder they use.
The director of one milk processing plant said importers had been warned that the price of imported milk powder would start to rise by as much as 40 per cent beginning last month.
The price of milk powder rose strongly while import tariffs had not yet been reduced significantly, resulting in higher prices for consumers, the director said.
Mai Kieu Lien, general director of Vinamilk, the leading domestic dairy products producer, said the domestic dairy industry mainly relied on imported raw materials, with 80 per cent of powder and fresh milk imported from elsewhere.
The prices of imported raw materials have risen, putting pressure on the price of milk products sold domestically, Lien said.
Economists have observed that, even though the import tariff would continue to protect the domestic dairy industry over the next five years, dairy farmers were facing difficulties.
However, Nguyen Quoc Dat from the Southern Agricultural Science Institute said that the Vietnamese dairy industry would face hard times if farmers continued to maintain household dairy farms.
Most dairy farms in developed countries, Dat said, maintained dairy herds of a thousand or more milk cows in order to reach profitable production volumes. Large-scale dairy farms, he said, minimize production costs and also apply higher technology.
A dairy breeder said the breeding of dairy cattle in Vietnam had not yet recorded a profitable result due to small-scale operations, high production costs, unreasonably low market prices of dairy products, and subsidy policies protecting farmers in developed countries.
For instance, dairy farmers in the EU enjoy a subsidy of US$2.70 per cow per day not including other financial support for export activities.
From 1995 to 2004, dairy farmers in the US were provided with subsidies of more than $3.1 billion.
If the Doha round of global trade negotiations is successful, developed countries would cut or cancel these subsidies for their agricultural sectors, including dairy producers. Vietnamese dairy farmers would benefit from that move, said Lien. (VNS)
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