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Following is a question by the Dr Hon Kwok Ka-ki and a written reply by the Secretary for Food and Health, Dr Ko Wing-man, in the Legislative Council today (February 26):
Question:
Since March 2013, the Government has implemented the requirement that no more than a total net weight of 1.8 kilograms of powdered formula for infants and young children under the age of 36 months (powdered formula) may be carried by each person aged 16 or above on his/her departure from Hong Kong within a 24-hour period (restriction on powdered formula). The Government commissioned a consultant last year to conduct stress tests on the supply of powered formula during and around the "National Day Golden Week", and subsequently decided to maintain the aforesaid requirement. Meanwhile, the survey results issued by the Government last month reveal that powdered formula is still in short supply in some districts, such as the Eastern District and Yuen Long. In this connection, will the Government inform this Council:
(1) whether it knows, since the launch of the "milk powder coupon scheme" (coupon scheme), the monthly (i) number of members of Parents' Clubs, (ii) quantity of powdered formula purchased via the hotlines set up by suppliers of powdered formula, (iii) number of persons receiving milk powder coupons, (iv) average number of milk powder coupons received by each person, and (v) percentage of coupons used for collecting powdered formula at designated pharmacies in the total number of coupons given, broken down by the major brand of powered formula as set out in the table below;
(Year/month)
Brand of powdered formula (i) (ii) (iii) (iv) (v)
Abbott
Cow & Gate
Friso
Mead Johnson
Nestle
Wyeth
Snow Brand
(2) whether it knows the following information in respect of each type of powdered formula of the major brands since the launch of the coupon scheme: (i) monthly rate of change in retail prices, (ii) the current highest retail price and the districts concerned, and (iii) the current lowest retail price and the districts concerned;
(3) whether it has any new measure to encourage the suppliers and retailers of powdered formula to further improve the supply chain for powdered formula, so as to ensure that local infants and young children can have an adequate supply of powdered formula at reasonable prices; if so, of the details; if not, the reasons for that; and
(4) whether it will consider reducing the maximum quantity of powdered formula that may be carried out of Hong Kong to 0.9 kilogram under the restriction on powdered formula, so as to ensure a sufficient supply of powdered formula in the local market?
Reply:
President,
The Government has accepted the stress test result and the assessment by the consultant commissioned earlier on the supply chain of powdered formula, and has listened to the views of the Committee on Supply Chain of Powdered Formula (the Committee) (Note 1). The Government considers that unless powdered formula suppliers substantially improve their supply chain, it is difficult to ensure stable and sufficient supply of powdered formula to meet local demand.
Based on the premise of ensuring stable and sufficient supply of powdered formula for meeting the needs of local infants and young children, the Government considers it premature to repeal the provisions introduced by the Import and Export (General) (Amendment) Regulation 2013 (Amendment Regulation) regulating the export of powdered formula at this stage.
In December 2013, the Food and Health Bureau (FHB) reported to the Legislative Council (LegCo) Panel on Food Safety and Environmental Hygiene on the above decision. FHB also suggested that the Committee should continue its operation to follow up on and monitor the improvements of powdered formula supply chain undertaken by the suppliers. To facilitate the work of the Committee, FHB has engaged a consultant to conduct regular surveys on the supply of major brands of powdered formula and any unusual fluctuation in prices. FHB has submitted the report of the surveys conducted in January 2014 to the Committee to seek members' views.
Looking ahead, FHB will listen to the views of both the Committee and LegCo, and decide on the Government's position in respect of the Amendment Regulation having regard to the progress on the improvements of powdered formula supply chain. It will continue to closely monitor the supply of powdered formula and maintain close liaison with the trade.
My reply to the various parts of the question is as follows:
(1) The seven major suppliers (Note 2) and the Hong Kong General Chamber of Pharmacy Limited (HKGCPL) announced in June 2013 the implementation of the Coupon Scheme. These suppliers have not provided FHB with the number of members of their Parents' Clubs. Nor have they consented to FHB for disclosing the sales figures of individual brands. As such, we can only provide the aggregate figures of the seven major suppliers as set in Annex 1.
(2) FHB does not have information on the rate of change in retail prices and the districts concerned in respect of each type of powdered formula of the major brands since the launch of the Coupon Scheme.
However, FHB commissioned a consultant in January 2014 to conduct surveys on the retail supply and prices of powdered formula. For focused resource deployment and better survey efficiency, the surveys covered two brands with more serious shortage as reported by the press recently and observed during the stress test conducted in 2013, i.e. Mead Johnson and Friso, and were carried out in five districts known to have experienced more serious shortage in 2013, i.e. North District, Yuen Long, Tuen Mun, Yau Tsim Mong and Eastern District.
The results of surveys on retail prices are set out at Annex 2.
(3) To urge and encourage the suppliers and retailers of powdered formula to further improve the supply chain, the Committee has held a number of meetings and provided its views on this issue.
In the meeting held in November 2013, the Committee accepted the recommendations set out in the Consultancy Report of the consultant commissioned by the Government, and considered that the suppliers and retailers can improve the supply chain in the following areas:
(a) actions would need to be taken by the trade to ensure that the Coupon Scheme as a safety net for supply meets the expectations of local parents and gains their confidence and acceptance. To this end, there should be an increase in the number of pharmacies participating in the scheme, wider distribution of these pharmacies and reduced redemption lead time under the scheme;
(b) the trade should step up publicity on the scheme for parents. Many parents at present are not familiar with the details of the scheme or the use of the coupons. Some are not even aware of the implementation of the scheme. As an on-going effort, suppliers should promote the scheme through simple and easy-to-understand messages so as to encourage local parents to enroll early;
(c) the number of participating retail outlets is grossly inadequate in certain districts (e.g. only four outlets in the North District where there was a serious shortage of powdered formula supply in early 2013). This has discouraged parents from participating in the scheme. A member suggested that the trade should explore the possibility of inviting major chain stores to join the scheme; and
(d) co-ordination and monitoring of the improvement measures would need to be enhanced. Since the three improvement measures other than the Coupon Scheme, namely, reservation of enough stock of powdered formula at the suppliers' level, increased delivery and boosted hotline service, are intertwined closely with the scheme, suppliers should introduce an effective co-ordination and monitoring mechanism to ensure the overall effectiveness and sustainability of these measures.
The suppliers and retailers are actively following up the above recommendations. In view of the peak period of demand for powdered formula in the run-up to Christmas and Lunar New Year, FHB has proactively met with representatives of the seven major suppliers, HKGCPL and major chain stores in December 2013 and January 2014. At the meetings, FHB urged the trade to be fully prepared in the run-up to Christmas and Lunar New Year to ensure sufficient supply of powdered formula, with priority accorded to meeting the demand of local infants and young children.
FHB also urged the trade to take the opportunity to strengthen significantly the promotion of various pre-order services.
The current pre-order services of powdered formula provided by the seven major suppliers include the Coupon Scheme and placing orders through suppliers' hotlines for home delivery or collection from chain stores. Through separating local demand from non-local demand, these services can act as a "dedicated supply chain" for local infants and young children. They can play an effective role in ensuring adequate supply for local infants and young children when powdered formula is in shortage. The Government considers that in the face of tight market situation, purchasing powdered formula through the pre-order services is a preferred approach.
During the peak demand period in the run-up to the Lunar New Year, FHB noted that the pressure on demand for powdered formula at the retail level could be reduced by encouraging parents to use various pre-order services. FHB therefore considers that the continuous promotion of these services can help to ensure stable and sufficient supply of powdered formula for local infants and young children.
(4) The Amendment Regulation (Note 3) has been very effective. Since the implementation of the Amendment Regulation, parallel trading activities related to powdered formula have dropped substantially, while the supply of powdered formula at retail outlets has become sufficient when compared with the situation in early 2013, though shortage of some popular brands of powdered formula is still observed at times. Since the Amendment Regulation came into effect, there has been a continued expansion in the volume of import, re-export and retained import of powdered formula. To a certain extent it has worked well in balancing the four areas relating to powdered formula, i.e. supply, retail, local demand and non-local demand. It has catered for the needs of local parents for powdered formula while safeguarding free trade and commerce. As such, we consider that the existing regulatory arrangement should be maintained.
Note 1: In July 2013, the Government appointed a Committee on Supply Chain of Powdered Formula to study and recommend to the Government improvement measures in the supply chain of powdered formula. The Committee comprises 14 non-official members, including major powdered formula suppliers, retailers, parents, representatives from the logistics sector, relevant academia and those representing consumer interests.
Note 2: The seven major suppliers include Abbott, Cow & Gate, Friso, Mead Johnson, Nestle, Snow Brand and Wyeth. They account for over 95% of the market share.
Note 3: The Government implemented the Amendment Regulation on March 1, 2013, prohibiting the export of powdered formula for infants and young children aged under 36 months from Hong Kong except with a licence issued by the Director-General of Trade and Industry. Having regard to the need of those leaving Hong Kong for powdered formula for personal use, there is an exemption provision under the Amendment Regulation, allowing not more than a total net weight of 1.8 kg of powdered formula to be carried by each person aged 16 or above leaving Hong Kong. For an infant under six months who has to rely on powdered formula as the sole source of food, 1.8 kilograms of powdered formula (equal to two cans) would normally be sufficient for a two-week period. To prevent parallel traders from abusing such exemption by making multiple journeys to Hong Kong within the same day to enjoy the exemption repeatedly, the Amendment Regulation stipulates that the exemption is only applicable to a person on his first departure from Hong Kong within a 24-hour period.
Ends/Wednesday, February 26, 2014
Issued at HKT 17:58
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