The Dairy Industry in Viet Nam: A Value Chain Approach

Abstract

Vietnam lies in the area of highest economic and milk consumption growth in the world. Vietnam also increased milk yield reached the second highest in Asia with output milk consumption is increasing rapidly. However, the dairy industry in the country only satisfies more than 20% of the domestic consumption, the rest is imported from foreign. The retail milk price in Vietnam is very high; however, the raw milk prices relatively low. One explanation is the monopoly of the dairy processor in Vietnam. Three largest processors own 75% of the dairy market. They take advantage in the negotiation with farmers and actively increase the retiling price. Recently, such investigations on the processor by government officers do not take any effect in the dairy market. There is no rule controlling the increase in price yet the own suffer a lot is the final consumer. The main objective of this paper is providing a close look to value chain and its application in the dairy industry in Vietnam. The authors would offer some solutions to increase the value added in the dairy value chain and improvement in the income distribution in this value chain. (2013) provided a value chain approach to the dairy industry. According to Khoi, there are five main actors taking part in the process of dairy products: Input ingredient, production activities, processing, distribution and consumption. The researcher points out that there is a "potential controversy" in the assessment of the milk between producer and the processing firm which lead to lowering the standard of raw milk and harm the milk producer and the paper also provide that most of the profit lie in the processing firm, which might result from the monopoly in the market. Marcy Lowe and Gary Giraffe (2009) showed us a good view on the dairy value chain in the US-An advanced country in milk production. The value chain has 4 main actors: Inputs, Production, Process and Distribution, Marketing. In the US high technology is applied in most parts. There are concentrated steps in nurturing, harvesting, collecting and processing milk. Every step is carefully controlled and managed. One specific point in the US dairy industry lies in the veterinary system. Although there are many veterinarians (estimated 87.946), there is no large company or agency specialized in providing this service. The result of the paper is that the companies downstream from the dairy producer category, Milk and Dairy Processors, include large, diversified companies that, despite being diversified well beyond milk and dairy products, nonetheless include companies that have higher shares of the dairy market than the largest producer cooperative. Stefano Gerosa and Jakob Skoet (2012) reviewed trends