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Dairy Asia – Towards Sustainability The case of Vietnam 21 May 2014 Johan van den Ban – Project & Business Development Manager

Agenda

Agenda

1. Introduction

2. Vietnam at a glance

3. Dairy farming in Vietnam

4. Opportunities

5. Challenges

6. Dairy 4Growth project

Introduction

Introduction De Heus

Production

Participation

Exports

Established in 1911

Family-owned, independent animal feed production company

Since 2009 in Vietnam, now in Top 10, by 2015 6 factories operational

Vietnam at a glance Population: 90 million

Southeastern Asia, bordering the Gulf of

Thailand, Gulf of Tonkin and South China Sea.

Alongside China, Laos and Cambodia

Area: 329.560 km2 (514.00 km2)

Coast line: 3.444 km

Climate: tropical in south; monsoonal in north

with hot and rainy season (mid-May to mid-

Sep) and warm, dry season (mid-Oct to mid-

Mar)

GDP: agriculture occupied 17.8%

Labor force working in agriculture: 53.3%

Vietnam

Trend in total population and production

Item/Year 2000 2005 2010 2013

2020

(exp)

Total cattle population (1000s) 4127.9 5540.7 5808.3 5141.6 12000

Dairy cattle (1000s) 35.0 104.1 128.6 186.4 500.0

Total milk produced (1000 tons) 52.2 197.7 306.7 456.4 1050

Population

Main dairy areas in Vietnam

Moc Chau dairy company: 12,800 cows

HCM city and Mekong

Delta: 110,000 cows

TH True Milk: 31,000; Vinamilk: 2000 cows

Dairy Areas

Dairy farm scale

19000

384 Farms

Les than 20 cattle

More than 20 cattle

6.3

3.7

Farm size

South (12,626 households)

North (7,013 households)

31,000 9,000

13,900

1,000

Main large farms

TH true Milk

Vinamilk

Moc Chau milk

Future milk

Farms

Pictures

Breeds

• Pure Holstein Friesian

• Mature weight: 500-600

kg.

• Milk yield: 6,000-8,000

kg/lact.

• Milk fat: 3.3 – 3.8%.

• Need well management

Main dairy breeds

Pure HF

• 50% HF (HF crossbred)

• Mature weight: 400-500

kg.

• Milk yield: 3.000-4.500

kg/lact.

• Milk fat: 3.6 – 4.2%.

• Well adapted

Breeds

Main dairy breeds

• 75%HF

• Mature weight: 450-

550 kg. • Milk yield 4.000 –

5.500 kg.

• Milk fat: 3.2 - 3.8%;

• Less adapted than F1

Breeds

Main dairy breeds

• 87.5 % HF

• Mature weight: 450-

600 kg.

• Milk yield 4.000 –

5.500 kg.

• Milk fat: 3.2 - 3.8%; • Not adapted to hot

weather

Main dairy breeds

Breeds

Dairy crossbreds

Crossbred HF: 84.1%

Pure HF: 15.6%

Jersey: 0.3%

75%HF

87.5%HF

Less than 87.5%HF

Holstein Friesian

50%HF

Red Sindhi x Local

Breeds

Milk collection systems

In the North: Vinamilk, IDP and

Friesland Campina collecting points.

In HCM city and surrounding areas:

100 cooling tanks installed. 90% milk

produced bought by Vinamilk

Farm gate price Vietnam: 0.60 USD/kg

Collection

Opportunities

1. Big market for milk

Increasing demand for milk consumption with increase in income. specially in towns, cities

and industrial zones

Milk produced locally met only 18% of total demand for consumption. In 2013, dairy products

import valued at 1.033 billion USD

2. Government supports dairy development

Issue favorable policy for dairy investor (land use, loan access, equipment support etc…)

3. Good infrastructure for milk processing

Milk processors invested in processing plants: TH milk, Vinamilk, IDP, FC

Milk collection systems are well established

Opportunities

Difficulties and challenges

1. Lack of land for forage production

No land areas for grazing: very limited

Land for corn silage production: very limited

Land for grass production: meet approx. 30% demand for good quality grass production

Main grass variety: Elephant grass, Guinea grass, Mulato grass.

Industrial by-products: important sources of supplementation for dairy cattle

2. Lack of suitable quality breeding stock supply

No regulation on quality of breeding stock

Expensive imported pure HF

Challenges

3. Inadequate financial support

No long term and low interest rate credit

programs issued by banks

Complicated procedure for a loan

4. Lack of “good” technical training to

farmers

Small farms are poor in feeding and

management skills

Poor quality extension service by

governmental agencies

Difficulties and challenges

Challenges

5. Unfavorable climate condition for high yield

cows

Hot and humid climate (North 8 months, South

12 months)

Lack of appropriate technology for heat stress

reduction

Challenges

Difficulties and challenges

Dairy4Growth – Public Private Partnership

Multi-disciplinary project from 2014-2019, involving FCV, De Heus, Fresh Studio, Wageningen

University, The Friesian

3 dairy zones: 150 farms, 80 heads/farm

Socio-economic impact – family farms

National and provincial government Vietnam involved LAND (rice vs. corn/grass)

Infrastructure investments

Access to finance

Innovative feed supply system (corn silage on farm, fresh grass)

Context-dependent

Hands on

Profitable

Nutrition, husbandry and veterinary extensionists

Train the trainer, training and demonstration!

2 demonstration farms / zone

1 R&D corn and grass facility / zone

D4G

De Heus

Powering Progress!

Thank you for your attention