What shapes the governance of the dairy value chain in Vietnam?
Insights from Ba-Vì milkshed (Hanoi)
production and marketing. The collec-
tion of fresh milk anchors on annual
contracts or verbal agreements with
fixed prices, or spot market exchanges.
Out of 44 local collection points, IDP
has the largest network (32 stations)
and buy up 85% of total district out-
puts. Most collection stations belong
to private collectors who are supported
by the companies for credit access and
the provision of equipment and know-
how. All private collectors are part of
the IDP milk payment scheme, which
gives premium to high quality milk.
The companies grade the milk deliv-
ered by producers through monthly
quality analysis. The CFRC organizes
its own collection network involving
their contracted farmers 11 and then
sells the milk to IDP. Semi-industrial
processors also rely on collection points
where they buy 6% of all the fresh milk
produced locally. Business relations be-
tween producers and semi-industrial
processors stand on verbal agreements
through those collection points. Most
of the collection points are located
along main roads to reduce time spent
on transport from farms to the pro-
cessing plants.
rest is processed by small cottage pro-
cessors. The semi-industrial and small
processing units produce pasteurized
milk, milk cakes, caramel cream, and
yoghurts.
Marketing and distribution of
dairy products: Increasing income,
rapid urbanization, changing diet
habits have driven the increased milk
consumption in Vietnam. The strong
territorial identity of Ba-Vì (nature,
tradition, culture, know-how) and
quality label (certification trademark)
spur the preference of consumers for
Ba-Vì milk products. Industrialized
products are sold by modern distribu-
tion (supermarkets, convenient stores)
and shops mostly outside the district,
particularly in Hanoi, whereas the
semi-industrial and artisanal prod-
ucts are sold locally to tourists in small
shops located along highways connect-
ing Ba-Vì and Sơn-Tây town and to
Ba-Vì national park.
Family farming is still secure
thanks to major constraints on access
to land and capital, which precludes the
development of large industrial farms.
Landless and labor-intensive milk pro-
Processing: Eighteen registered duction have allowed smallholders to
milk processors operate in Ba-Vì. How-
stabilize their business and guarantee
ever, 93% of the milk is processed by two
economic returns to family labor. Writ-
industrial processors (IDP and BVM)
ten contracts with milk collectors are
who produce a wide range of industri-
underlined in controlling price fluctu-
al products. IDP is the only processor
to use the UHT technology. Around ations and enforcing contractual link-
6% of the milk is processed by semi-in- ages between producers and processing
dustrial processors (Ba-Vì Milk Cake companies.
- BVMC, Ất-Thảo, Xuân-Mai, etc.), the
11 CRFC’s contracted farmers are those perform dairy activities based on rental leasing contracts.
Some of their cows and all their land are leased from the CFRC.
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