What shapes the governance of the dairy value chain in Vietnam ? Insights from Ba-Vì milkshed ( Hanoi )
Economic performance of the value chain
Economic returns for chain stakeholders reflect chain operations and forms of governance . The unequal distribution of the profit and value added highlights the supremacy of processors , especially IDP , in the local dairy chain ( Figure 5 ). IDP takes the largest share ( 63.77 %) of the profit , whereas farmers receive less than one-third ( 26.01 %) of the total profit made in the chain , which is disproportionate with respect to their investment costs ( which account for up to 50 % expenses of the chain as a whole ). The dairy value chain is a typical chain in which the processors lead the chain forward , and the majority of added value of the chain is subsequently captured by processors like IDP . This asymmetric distribution has weakened the bargaining power of the dairy farmers . It is prevailing that all investments made by the processors ( even small ) are counted in their production costs and value addition . On the contrary , family labor , self-supply of grass for feed , and opportunity costs are neglected in earnings obtained by the farmers . If all costs were included , the added value gained by dairy farmers in the chain would be significantly lower . This unequal distribution proves the captive governance led by IDP , but raises concerns about the sustainable development of the dairy sector in general and of the dairy chain in Ba-Vì in particular .
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Enabling environment : the role of public services in value chain governance
Following the National Dairy Development Plan ( 2001 ), a number of research and scientific efforts were made in the dairy sector with the participation of international development actors . CFRC strengthened its research activities through government funds and international research and development ( R & D ) projects ( JICA-funded dairy projects , Vietnam-Belgium Dairy project , the establishment of Moncada frozen semen centre , etc .). The international R & D projects built capacity for the local farmers and collectors as well as empowered the CFRC and contributed to transform its role from production development to the scientific research and technical consulting .
The dairy production in Ba-Vì is high on the agenda of Hanoi ’ s rural and agricultural development strategy . Many actions have been done to support all the chain actors . CFRC land was allocated to former state farm workers to raise dairy cows . A long-term land lease was granted to IDP for its investment in the large-scale farm and processing plant . Technical assistance has been provided through extension programs delivered by CFRC , HNLDC , and IDP to farmers ( concerning farming practices such as animal care , feeding , heat-stress control , etc .). Around 100 training courses were provided to 7,000 farmers between 2000 and 2014 . Furthermore , the local government also cares genuinely for the territorial identity of Ba-Vì milk by