Vietnam gov't set to stop formula makers from milking market for profits

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Since the Advertisement Law and Price Law regulating formula prices took effect this year, dairy firms have been giving formulas fancy descriptions to circumvent the laws

Customers buy milk at a supermarket in Ho Chi Minh City. The finance ministry is set to crack down on companies arbitrarily hiking prices of milk products for children under 6. Photo by Dao Ngoc Thach

Nguyen Suong Mai plans to take a can of Enfa milk to the hospital for her baby when she delivers her second son next April.

"I think I will give it to him if my breastmilk is insufficient," the 30-year-old teacher from Dak Lak Province said.

She has been feeding her 18-month-old son the same brand of milk since birth.

"A doctor in Dak Lak advised me to use this milk."

She wants her kid to be smart and thinks expensive imported milks have supplements that are good for her son's brain. Other products, whether expensive or not, are not easy to digest like Enfa, she said. She has also seen the brand frequently advertised on television.

But the financial burden is crippling: Though her family is in a difficult situation, she spends half of her VND6 million (US$284) on formula. She realizes what a second child means.

But mothers like Mai are hopeful that the burden will soon reduce, with the government seeking to bring under control prices of milk products for children under six, including newborns.

The move follows arbitrary hikes in the prices of milk in recent years and the relabeling of products to circumvent the restrictions the Price Law places on pricing children's milk.

Under the law, "milk for children under six years" is among products whose prices can be regulated by the government.

The government usually invokes the law when there is an "abnormal fluctuation" in prices or "changes that lead to socioeconomic threats."

On October 1 the Food Safety Department solicited opinions on a draft circular expected to be issued next month which will define "milk for children under six years old."

It will be defined as formula for children under 36 months and milk and nutrition products containing milk regardless of whether or not it contains supplements.

Many officials said these products should retail at 20-30 percent above import prices.

The World Health Organization (WHO) recommends that infants should be exclusively breastfed for the first six months for optimal growth and health, and mothers should continue to breastfeed their children until two years or older.

Milk or food

According to the Price Law, which took effect on January 1, "enterprises" referring to producers, importers, and distributors - are required to report any proposed hike in prices of milk for children under six to the Ministry of Finance's Price Management Department.

Companies struck upon the idea of relabeling their products to claim they were not baby milk though they very much are.

For instance, Anfalac A+ for babies under six months, Friso Gold for those between one and three years, and Anfakid A+ for those above three years now have labels that read "supplementary food."

The Lactogen Gold 2 can claims it is a "nutritional formula for babies between six and 12 months old."

Some customers notice the label changes but are assured by sellers that the products have not changed, Tuoi Tre (Youth) newspaper reported.

Friesland Campina Vietnam labels Friso Gold as "supplementary food."

The Price Management Department said it is aware that companies do not report their price hikes.

"The producers say they do not have to report the hikes since the products are not formula.

"[We] are thus unable to monitor their price increases to see if they are reasonable," a department official said.

Hiking prices

It was not until the Price Law took effect this year that milk companies found ways to hike prices and hit up customers, including through political channels and by approaching mothers though advertisement of formulas for children under two is prohibited.

Foreign dairy companies have increased retail prices five times this year for a total of 30 times in the past three years. At least two firms plan to increase prices by 10 percent this month.

The firms have blamed the hikes on increasing costs, but the Price Management Department rejected this saying global milk prices have significantly reduced this year.

According to WHO, the average retail price per liter of milk is $1.4 in Vietnam, $1.1 in China, $0.5 in India and $0.5-0.9 in Europe and America.

In June last year the National Assembly, Vietnam's legislature, resisted pressure from the US embassy in Hanoi and American formula companies and amended a law to prohibit the advertising of formula products for children under two. The law had earlier set the age limit at one year.

In a letter to lawmakers that was leaked to the media, the embassy had said: "Several US companies have contacted the US Embassy regarding their serious concerns about this proposed prohibition on advertising of formula milk products, which could have a significant negative impact on their business in Vietnam.

"We ask that the National Assembly fully consider the implications of any changes to the draft [law] and engage in a full decision with affected stakeholders before making any such changes."

Concerns

A Hanoi conference to discuss formula prices came a few days after WHO, UNICEF, and NGO Alive & Thrive released a statement expressing concern about the labeling and marketing of milk products for infants and young children.

"Not only are they being sold at vastly inflated prices, but the health of Vietnamese children is potentially at risk," their release on September 27 said.

Ornella Lincetto, maternal and child health medical officer of WHO Vietnam, said because breastmilk substitutes marketed in Vietnam are incorrectly classified and labeled as "complementary food" or as "nutrition products" they are not subject to price control by the Ministry of Finance and marketing restrictions imposed by the Advertisement Law and the International Code on Marketing Breast milk Substitutes, putting Vietnamese children's health at risk. 

"The current debate on labeling indicates that at the moment there are challenges to effective implementation of the law in Vietnam," Lincetto told Vietweek.

The real aim of formula companies is to make profits and they need to advertise their products to sell more, she said.

"Companies use misleading claims and promotional messages to encourage parents to believe that their products are essential, that they have a health advantage, will improve children's vision, reduce allergies, make children more intelligent, and gain weight."

Lotta Sylwander, UNICEF representative in Vietnam, said price controls alone cannot resolve the problem thoroughly.

"The issues are interrelated - we cannot address the aggressive marketing tactics unless the relevant products are classified as breastmilk substitutes, and thus fall under the scope of the advertising law," Sylwander told Vietweek.

She said the government demonstrated its commitment to promote the very best infant and young child feeding practices in Vietnam by banning the marketing of breastmilk substitutes for children under 24 months in the Law on Advertisement.

"We hope that the government will now follow through on this commitment by bringing the legislation into full effect."

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