What shapes the governance of the dairy value chain in Vietnam?
Insights from Ba-Vì milkshed (Hanoi)
are provided with intermediate goods
and technical assistance, in exchange of
commitments to deliver milk. This has
been evidenced in Brazil, Chile and Ar-
gentina (Reardon and Berdegué 2002);
Bulgaria, Romania and Slovakia (Dries
et al. 2009); India (Birthal et al. 2009).
The governance of chains through con-
tracts can be described as modular or
captive depending on the asymmetry
of power between suppliers and buyers
and the strictness of contracts. In India,
cooperatives facilitate farmers’ access
to services and markets, that some-
how balances the power of industrial
plants (Upadhyay and Ranjan 2007). In
the quoted studies, contracted farmers
benefit from higher profits and pric-
es thanks to quality premiums. Public
and private standards and services are
described as complementary. In the
paper, we consider if similar trends are
observed in Vietnam through variables
characterizing the governance (Table 1).
We also assess the main economic re-
sults of the chain and ongoing upgrad-
ing strategies. Finally, our discussion of
the role of public services contributes
to the debate on livestock development
policies.
sponse to market demand of arrange-
ments and connections among actors
engaged in the value chain (Moustier
2012). Recent literature highlights three
levels of proximity: physical proximity
(Gilly and Torre 2000), organizational
proximity (Torre 2000), and functional
proximity (Gereffi et al. 2005).
Governance arises when “some
firms in the chain work to parameters
set by others” (Humphrey 2005). A
lead producer or a lead buyer play an
important role in setting and enforcing
parameters (product, process, logistic
parameters) because they have a strong
position in “core nodes” of the chain
that allows them to extract different
types of rents (Gereffi 2001; Humphrey
and Schmitz 2002). The “captain” of
the chain can be identified by key in-
dicators: (i) share of chain sales, value
added, and profits; (ii) relative rate of
profit; (iii) share of chain buying pow-
er; (iv) control over key technology; (vi)
holder of distinctive competence; and
(vii) holder of chain “market identity”
(brand-name) (Kaplinsky and Morris
2012).
The GVC framework, which
has mostly been used for international
chains, puts forward that increasing de-
mand for quality and competition be-
tween firms translate into a shift from
market to captive governance, driven by
processing and retailing firms. From the
literature on milk chains in emerging
economies, it is hypothesized that milk
chains tend to be steered by processing
firms that place large-scale investments
in processing and quality control, and
develop contracts with farmers, those
Study zone
B
a-Vì district, located 60km from
Hanoi center, is the largest milk-
shed in the Red River Delta and
includes a cluster of small farms that
typically supply both regional and local
markets (Hostiou et al. 2012). The dairy
farms are mostly smallholding with
fewer than 10 cows fed with less than 1
hectare of elephant grass, corn, or other
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