LCQ18: Milk powder supply

     Following is a question by the Hon Chan Hak-kan and a written reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (February 16):


     It has been reported that many travellers and "couriers" from the Mainland buy milk powder in Hong Kong, causing a short supply of as well as a speculative surge in the prices of milk powder locally, and the North District in the New Territories, which is adjacent to the border, is most affected in that some pharmacies sold out all their milk powder in less than 10 minutes after replenishment.  Some parents have initiated a campaign on the Internet to urge the Government to levy a milk powder export tax as a means to combat the situation.  In this connection, will the Government inform this Council:

(a) given that the Secretary for Food and Health revealed on January 28 that the authorities had contacted the trade which supplied milk powder and it considered that there was sufficient supply on the market, of the details of the contact between both sides; whether the trade had provided any data or information to show that there was sufficient supply, and what concrete arrangements had been made to further increase the supply of milk powder on the market;

(b) whether it has assessed the shortage of milk powder at the retail level and whether there was stockpiling by retailers, if so, of the details, and the measures to be adopted to solve the problem; if not, whether it will consider conducting the aforesaid assessment;

(c) of the concrete measures to stabilise milk powder prices in Hong Kong and avoid speculative surge of prices;

(d) given that quite a number of travellers from the Mainland came to Hong Kong during the Chinese New Year, whether the Government has assessed if the problem of milk powder shortage has further been aggravated; and

(e) whether it will consider taking any measure, including studying the aforesaid proposal of the parents, to restrict bulk purchase of milk powder by any person; if it will, of the details; if not, the reasons for that?



     The Government cares about babies' health and pays particular attention to the safety and supply of milk powder.  Since the reports of possible shortage of infant formula, we have been proactively liaising closely with milk powder suppliers, the Hong Kong General Chamber of Pharmacy and major retailers.  We were assured by the suppliers that they had sufficient stock, and that they would increase supply to cope with the growing market demand.  Our reply to various parts of the question is as follows:

(a) The Food and Health Bureau and the Consumer Council have been keeping close liaison with major milk powder suppliers, which have responded positively by increasing the supply of infant formula in the market.  According to the trade, one of the major suppliers has been shipping in milk powder to Hong Kong by air since the last quarter, and its supply in February this year will be more than twice of that last year.  Another major supplier has made continuous effort to increase the supply in the Hong Kong market over the past four years and its supply in 2010 was more than doubled when compared with that in 2006.

     The major suppliers of milk powder have also set up free membership systems and they provide delivery service to Hong Kong customers.  They also make use of different channels to enhance communication with Hong Kong parents (e.g. short messaging service).  Their hotline service advises members of the retail outlets with stocks, and assists parents in placing orders for milk powder.  Voice mail service was also provided during the Lunar New Year holidays.

     Retailers have also been closely monitoring the sale situation, particularly those retail outlets in areas near the boundary and along the East Rail Line.  They have actively approached the suppliers to discuss arrangements for increasing supply and delivery to expedite replenishment, so as to meet the demand of the market.  Some retail outlets have set sale quota for certain brands of milk powder to cater for the demand of local citizens.

(b) According to our assessment and the information obtained from the trade, the overall supply of infant formula in the market is sufficient.  The shortage in the supply of particular brands at some retail outlets was mainly due to the great demand at these retail outlets at certain times.  It is basically an issue of demand and supply.

(c) We believe that the measures mentioned in our reply to part (a) will help stabilise the supply and price of milk powder.  We will continue to keep the market condition in view.

(d) The suppliers and retailers of milk powder have actively taken steps to meet the market demand.  During the Lunar New Year holidays, the supply of milk powder was stable without any report of serious shortage.

(e) Hong Kong has been pursuing a free trade policy and is well known for its simple tax system.  In considering whether a duty should be imposed on the export of a certain product (e.g. milk powder), we must consider thoroughly various factors, such as whether it is in line with our free trade policy, the implications on our tax system, and whether the imposition of such tax is the most effective way to stabilise the local supply.  Having taken into account various factors, we do not consider there is a need to impose a duty on milk powder when being taken outside Hong Kong.

Ends/Wednesday, February 16, 2011
Issued at HKT 13:01