Structural transformation and the livestock revolution in Vietnam: current situation and future scenarios for the dairy sector

In Vietnam, the dairy sector has emerged since the 2000s, in response to the rapid growth of the demand for dairy products. After having supported small-scale dairy production farms, the national policies since 2008 (the “2020 Livestock Development Strategy” in 2008, and the “Livestock sector Restructuring Action Plan towards greater Added Value and Sustainable Development” in 2014) highlighted the government's priorities for large-scale and industrial farms. Those recent programs focused on reducing the import dependency to meet the increasing domestic demand and improving price competitiveness vis-à-vis imported dairy products. However, in the context of a rapid transition of the economy and of the ecosystems, smallholder and family farms are still the mainstay of the agricultural sector and continue to play an important role in sustainable development. The present study raises the question of the viability, sustainability and inclusiveness of different dairy farming models, taking into account the land constraint (farmland availability: 0.8 ha per farm, 0.12 ha per capita), labor abundance, especially in agriculture (50% of the total active population) as well as the environmental challenges related to animal products value chains. This thesis aims to contribute to the current policy debates in Vietnam in order to know whether the future dairy sector should be based on family farming or on large-scale production. The first section is dedicated to the analysis of the structural and agrarian transformation in relation to the ongoing dynamics of the livestock and dairy sector more weighted on the larger commercial farms. To better understand the market dynamics, the second section characterizes the governance of the dairy value chain in the largest milk-shed in the Red River Delta (Ba Vi district, Ha Noi). Based on interviews with 70 actors involved in local dairy value chain, the thesis underlines factors shaping a mixed relational-captive governance and the close connection between the local authorities and firms that might threaten the inclusion of smallholder dairy farmers in the chain. In the third section, we report on a participatory scenario planning exercise conducted with stakeholders of the dairy sector (one scenario planning seminar at district level, two seminars at the national level) to discuss about future policy orientations. In support to this participatory scenario planning, a quantitative simulation was done. 4 potential plausible scenarios for the Vietnamese dairy sector until 2030 were drawn up. In all scenarios, Vietnam still has to import large quantities of milk products and animal feed raw materials from abroad, but the 4 proposed scenarios differ on policy implications upon labor absorption, land availability and efficiency, and environmental impact. In particular, a “Dual System” scenario is discussed to accommodate different farm models (private mega-farms, specialized family farms and mixed crops-livestock farms) in view of balancing supply and demand as well as adapting to the puzzles of local land, labor and environment. Taking into account the co-existence and cohabitation of the different farms, appropriate policy actions are needed to ensure the sustainable and inclusive development of the dairy sector.