Competition watchdog looks into infant milk formula prices

CCS says it will reveal more in due course; move comes as several MPs express concern about spike in prices

Milk powder companies have told ST the price hikes are due to research and development and rising overhead costs. ST PHOTO: ARIFFIN JAMAR

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 concerns about, and will reveal more in due course, it told The Straits Times yesterday.

In March, ST reported that the average price of a 900g tin of formula milk had increased 120 per cent over the last decade to $56.06, outstripping the increases for other dairy products and household staples.

Tanjong Pagar GRC MP Chia Shi-Lu said in a Facebook post earlier this week that many families in Queenstown on assistance have asked for help with the cost of formula powder over the years.

"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.

MacPherson MP Tin Pei Ling plans to ask about the rising cost of infant milk powder when Parliament sits on Monday.

MP Sun Xueling (Pasir Ris-Punggol GRC) was not able to secure a slot to deliver her speech but 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 residents last year.

"While we promote breastfeeding, the fact of the matter is that sometimes mothers have to supplement," said Ms Sun, 37, who has two daughters aged four years old and five months. "When I had my first daughter, the cost was about $44, and now I buy the exact same one for about $55."

Infant formula suppliers have been taken to task elsewhere. In 2013, China fined six companies a total of US$110 million (S$155 million) following an investigation into price-fixing and anti-competitive practices by foreign producers.

The price of infant milk powder here has increased at nearly twice the pace of the nominal median monthly income of residents over the last decade, said Ms Sun.

Conducting an online survey on her Facebook page that drew over 2,500 responses over three days, she 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," she said, noting that a similar tin of infant milk formula can cost up to more than twice as much in Singapore than in Malaysia, Australia and Britain.

Milk powder companies have told ST the price hikes are due to research and development 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.

According to market research provider Euromonitor International, Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone made up more than 60 per cent of the fortified milk formula market share globally last year, and more than 99 per cent in Singapore, with Abbott making up nearly half of the local market.

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.

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

She found on a trip to the supermarket that some brands imply on their labels that consuming their product may make children smarter, she said, raising questions about the evidence for such claims and rules around the marketing of infant milk powder.

Given that infant milk formula is a necessity for many parents, the introduction of a $1.5 million milk scheme in February 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.

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A version of this article appeared in the print edition of The Straits Times on May 06, 2017, with the headline Competition watchdog looks into infant milk formula prices. Subscribe