Abstract
Vietnam lies in the area of highest economic and milk consumption growth in the world. Vietnam also increased milk yield reached the second highest in Asia with output milk consumption is increasing rapidly. However, the dairy industry in the country only satisfies more than 20% of the domestic consumption, the rest is imported from foreign. The retail milk price in Vietnam is very high; however, the raw milk prices relatively low. One explanation is the monopoly of the dairy processor in Vietnam. Three largest processors own 75% of the dairy market. They take advantage in the negotiation with farmers and actively increase the retiling price. Recently, such investigations on the processor by government officers do not take any effect in the dairy market. There is no rule controlling the increase in price yet the own suffer a lot is the final consumer. The main objective of this paper is providing a close look to value chain and its application in the dairy industry in Vietnam. The authors would offer some solutions to increase the value added in the dairy value chain and improvement in the income distribution in this value chain.
Highlights
Vietnam lies in the area of highest economic and milk consumption growth in the world
According to Chinh (2012), most of the milk consumption in Vietnam is imported from foreign countries and the domestic producer only satisfy more than 20% of the domestic consumption
The above parts have shown the fact happening in the dairy industry in Vietnam, the value chain, the inequality in income distribution, and supportive policies of the authorities
Summary
Nguyen Viet Khoi (2013) provided a value chain approach to the dairy industry. According to Khoi, there are five main actors taking part in the process of dairy products: Input ingredient, production activities, processing, distribution and consumption. The value chain has 4 main actors: Inputs, Production, Process and Distribution, Marketing. The research shows that there are 4 main factors in the fresh milk value chain: The farmer- Collector- Processing Firms- Distribution. In this value chain, the processing firms hold the decision and become the main actor, which receives most of the profit. This paper provides a deeper vision on what is going on in the fresh milk production and distribution in Viet Nam. Truong Minh Huy (2009) overviewed the whole Vietnamese dairy industry using value chain approach. According to Huy, each year, the dairy farmers gained 8 million VDN per cow on average; this income depends on such condition: Price of feed, price of raw milk, diseases and market trend. One limitation of this research is the value chain is simple, not mentioning other activities especially supportive activities
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