Competition Commission looks into rising cost of infant milk powder; MPs express concern

A report by The Straits Times found that the cost of a 900g tin of infant formula has increased by 120 per cent over the last decade.
A report by The Straits Times found that the cost of a 900g tin of infant formula has increased by 120 per cent over the last decade. PHOTO: ST FILE

SINGAPORE - The Competition Commission of Singapore (CCS) has looked into the rising cost of infant milk formula - an issue that several Members of Parliament have voiced concern about - and will share more in due course, it told The Straits Times on Friday (May 5).

While it is not known what CCS' findings will reveal, infant formula producers have been taken to task overseas for anti-competitive practices.

In 2013, China fined six companies a total of US$110 million (S$154 million) following an investigation into price-fixing and anti-competitive practices by foreign baby-formula makers.

The Straits Times reported in March that the average price of a 900g tin of formula has increased 120 per cent over the last decade to $56.06, outstripping the increases of other dairy products and household staples.

MP Chia Shi-Lu (Tanjong Pagar GRC) earlier this week noted that over the years, many families in Queenstown have asked for help with defraying the cost of infant milk formula.

"In families with several young children, especially those with special formula needs, this can come up to be quite a considerable monthly expense," he wrote in a Facebook post.

MP Tin Pei Ling (MacPherson SMC) plans to ask about the rising costs of infant milk powder when Parliament sits on Monday (May 8), while MP Sun Xueling (Pasir Ris-Punggol GRC) had hoped to speak on the matter too but was not able to secure a slot to deliver her speech.

Ms Sun, 37, said in an interview that the issue is of particular concern to her as Punggol Town has the highest number of births and young children in Singapore, with nine babies born every day to Punggol residents last year.

"While we promote breastfeeding, the fact of matter is that sometimes mothers have to supplement... Three years ago when I had my first daughter, the cost was about $44, now I buy the exact same one for about $55," said Ms Sun, who is a mother of two daughters - one is four years old and the other is five months old.

Ms Sun, who began looking into the issue in April, found that the price of infant milk powder has increased at nearly twice the pace of the nominal median income over the same approximate period.

She conducted an online survey on her Facebook page that drew over 2,500 responses over three days and found that parents with children under a year old spend an average of $191 a month on formula.

"The overall point is about the cost of bringing up a child, and infant milk formula is quite a significant portion of the cost," she said, noting that a similar tin of infant formula can cost more than twice as much in Singapore compared with Malaysia, Australia and Britain.

Milk powder companies have attributed the price hikes to research and development (R&D) to improve formulas and rising overhead costs, though economists say it boils down to suppliers having the upper hand as it is seen as a necessity and a short-term expense.

Ms Sun questioned whether R&D has resulted in consistently changing formulation, and whether it is specific to Singapore to warrant sustained price increases here.

Of her survey respondents, the top purchased formula brands belonged to major companies Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone respectively, accounting for 89 per cent.

According to market research provider Euromonitor International, these five companies made up more than 60 per cent of the fortified milk formula market share globally in 2016, and more than 99 per cent in Singapore, with Abbott making up nearly half of the local market.

As a concentrated market gives suppliers more pricing power, Ms Sun said that she is looking forward to the CCS' findings to understand pricing patterns and whether the increases are related to the large market share of the major suppliers here.

The market for milk formula in Singapore grew 17 per cent to $203.4 million over the last five years, and is projected to increase further to $209.2 million by 2021, according to Euromonitor.

On the issue of the marketing of infant formula, Ms Sun said of choosing a cheaper brand: "Price is one factor, (the) other is the perception of what that brand and what that milk powder can do for (the) child. Obviously parents want the best for their children, so they're willing to spend."

A trip to the supermarket found that some brands imply on their labels that their formula can make children smarter, she said, raising questions about the evidence for such claims and rules about the marketing of infant milk powder.

Given that infant formula is a necessity for many parents, the introduction of a $1.5 million milk scheme in February by all five community development councils and the NTUC FairPrice Foundation to give 7,500 low-income families vouchers to buy milk powder is timely, she said.

But more aid may be needed.

"If there are people who need infant milk formula for their child and the price is out of their reach, then we have to find a way of getting that help across to them," she said.