Short supply prompts local dairy investment

Local dairy giants such as TH Milk and Vinamilk have unveiled huge investment plans on pastures and dairy cow stock to cope with increasing dependence on imports and price hike of milk products.

TH Milk said it would invest $1.2 billion in raising 137,000 dairy cows by 2017, with 70 per cent in lactation to produce 500 million of litres of quality milk annually.

The Ministry of Agriculture and Rural Development estimated that the national dairy cow stock would reach 155,000 cows by the end of this year and produce 330,000 tonnes of milk. The figures are expected to increase to 263,000 and 653,000, respectively, by 2015.

Such huge investment plans aim to narrow the enlarging gap between supply and demand that forces the over 85 million-strong nation to import some 1.2 million tonnes of milk every year.

Dr Peter Lentes from the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) said Vietnam was in the world top-20 milk importers’ group.

The Ministry of Agriculture and Rural Development (MARD) reported that domestic demand rose, from 8.09 litres per capita per year in 2000 to 17 litres. As local production filled just between 22 and 25 per cent of demand, international giants have cashed in to take up to 72 per cent of the milk powder market share.

A recent survey conducted by the Ministry of Industry and Trade showed that four international companies – Abbott, Dutch Lady, Dumex and Nestle – garner 32 per cent, 16 per cent, eight per cent and 4.2 per cent, respectively, of the milk powder market.

These four milk giants, therefore, have the power to set market prices, said Light Industry Department head Phan Chi Dung from the Ministry of Industry and Trade.

Some foreign products had sometimes had their prices increased between 15 and 20 per cent.

The general secretary of the Vietnam Milk Association, Trinh Quy Pho, raised concern that, “We are losing the game right on our own playground”.

The government has since issued numerous stimuli for the domestic dairy industry, such as reductions in land lease for animal husbandry, as well as in import tariffs for milk cow breeds and feeds. – VIR

Tags: Vietnam Dairy sector, Vietnam milk prices