For Sustainable Development of Milk Industry

According to the Ministry of Industry and Trade, a Vietnamese person consumes 14.81 litres of milk in 2008 (almost doubling the volume in 2000). In addition, with an annual population growth rate of 1.2 %, an annual GDP growth of 6-8 %, and a rising per capita income, the Vietnamese milk industry has a wide room for development. Per capita milk consumption in Vietnam is estimated to reach 20 kilos by 2015 and 25 kilos in 2020. The country’s dairy production is projected to meet 34 % of domestic consumption in 2015 and 38 % in 2020. In couple with the potential market, the international economic integration brings in opportunities for the Vietnamese dairy industry.

 

Besides, many modern farms with thousands of milk cows are being built across the nation. These pioneering models are certainly the underpinning for the rapid development of dairy industry. Remarkably, on March 25, 2010, the Vietnam Dairy Association (VDA) was launched with initial 68 official members and six associated units. The association is a meeting place for devoted collectives and individuals of the milk industry to work together to address weaknesses and seek sustainable development measures for this important sector. With the high demand for close cooperation and coordination of milk companies in the global integration process, the Vietnam Dairy Association is the bridge for its help members to strengthen relations to scale up production capacity to create premium dairy products for domestic consumption and export. Trinh Quy Pho, General Secretary of the Vietnam Dairy Association, said, in the coming time, the association will cooperate with the International Dairy Federation (IDF) and the International Farm Comparison Network (IFCN) to discuss the Vietnamese dairy industry development strategies.

 

However, beside these advantages and cosmic opportunities accruing from in the deep international integration process, the Vietnamese dairy industry also faces numerous challenges like milk safety and quality. Vietnamese dairy products are manufactured by more than 10 large factories equipped modern quality controllers; thus, the quality of milk is much better than before. However, there are hundreds of small production and processing facilities where the quality is uninsured and uncontrollable. Milk is popularly available in the forms of fresh and formula milk but the quality of formula milk is not reliably high, worsening the consumer confidence.

Other drawbacks of the Vietnamese dairy sector include insufficient management experience, small-scale farms, high cow disease infection rate, weak milk collecting system, inadequate maintaining and cooling equipment, and inconsistent policies and mechanisms. Besides, prices of imported feeds for dairy cows are increasing, giving rise to higher input costs. Domestic dairy firms are still under heavy competing pressures from imported milk as import tariffs have been lowered in accordance with commitments to the Agreement on the Common Effective Preferential Tariff in ASEAN Free Trade Area (CEPT/ASEAN) and the World Trade Organisation (WTO).

 

Mr Nguyen Nam Hai, Deputy Minister of Industry and Trade, said: although the dairy industry has not held a high position in the food industry structure, it brings in high nutritional value for health. Thus, it needs to be placed on proportional position while food safety and hygiene regulations needed to be tightened to boost competitiveness. As a result, establishing a dairy industry development strategy for the upcoming future is essential.

 

Mr Phan Chi Dung, Director of the Light Industries Department under the Ministry of Industry and Trade, said market and price management by State agencies is relatively lax in the intervening time. The enforcement of the Law on Competition against unhealthy competing behaviours on the milk market is really ineffective while tax authorities, customs authorities and market watchdogs lack cooperation and coordination in inspecting, testing and controlling milk prices. For that reason, in the international economic integration process, to create a healthy competitive market for the dairy sector in Vietnam, the best solution to sustain the dairy industry development, enhance healthy competition and put an end to monopoly is to complete milk development policies.

 

Also according to Mr Dung, apart from efforts of relevant authorities to stabilise the dairy industry, domestic dairy producers have gradually restore the consumer trust. And, aside from improving production machinery and professional skills of workers, they must pay attention to developing dairy cows and creating stable raw material sources. Accordingly, planning dairies needs associating with raw material zone development to ensure that milk produced by farmers will be purchased by dairies, thus motivating them to produce better milk.

 

Another equally important issue to the development of the dairy sector is the product distribution system. According to the Vietnam Retailers Association, a product retailing system is extremely important to modern business as it not only supplies products to consumers but also transmits consumers’ needs to producers. Therefore, it is essential to develop and improve the dairy distribution system in Vietnam to boost competitiveness and increase revenues for businesses in the industry.

 

Last but not least, the dairy industry brings in high economic value, thus it practically needs a master development plan. According to experts, to successfully build a good dairy industry development strategy through 2020, Vietnam needs to outline specific dairy development plans for provinces and cities. At the same time, all economic sectors should be are encouraged to invest in building modern, advanced facilities for testing milk quality to heighten product quality and raise the position of the dairy industry in the integration period.