Socialist messages and red flags are displayed prominently across the roadsides in cities and towns, while the country is woken up by daily announcements from the government blaring from speakers early each morning. There is no mistaking that Vietnam is a communist state.

However, in Ho Chi Minh City, Vietnam’s business capital, you can also see state propaganda and billboards for beauty products displayed side by side. Back in 2014, the city became home to the country’s first McDonald’s – the ultimate symbol of capitalism.

From the golden arches to the hammer and sickle, the juxtaposition between communism and commercialism is visible and also exists within its agricultural industry.

Vietnam is ruled by a single party communist government, though the ÐÔi mÓi reforms introduced in 1986 started the process of creating a “socialist orientated” economy.

Restrictions on the private sector were abolished and the process to decollectivise farming began, with subsequent land laws introducing long-term leases for agricultural land.

Farmers can lease land for up to 50 years and pass on rights to family members and sub-let to neighbours. However, the communal spirit still reigns, with the government ultimately still in control of Vietnam’s land resource.

Representation

Meanwhile, unlike its equivalent in Ireland, the Vietnamese Farmers Union (VNFU) is state owned – leaving farmers without an independent lobbying body. Unsurprisingly, the organisation supports the government line on land ownership.

“In Vietnam we have a different land policy than other countries because the land belongs to the people but is managed by government. The government gives the right of the land to the people, VNFU’s first vice chairman Leu Vu Dieu (pictured) told the Irish Farmers Journal.

“They have the right to transfer land to the next generation, they have the right of access and the people who have the land have transfer rights.”

At five times the size of Ireland, the average farm size in Vietnam remains small at just 3ha-6ha. Given the structure of farming in the country, it is impossible for the country’s agricultural sector to even begin to feed the country’s population of 95m.

Indeed, as part of the government’s dairy development plan, the country’s dairy herd saw decent growth over the years as farmers were encouraged to purchase cattle. However, lacking advisory services, the country is barely 30% self-sufficient in dairy, while farmers earn an average of just €900 per annum.

However, head of the Irish Business Association in Vietnam, John Marron, thinks Vietnam has the potential to become a net exporter if it was easier for farmers to expand their enterprises and access information.

“Compared to its neighbours Thailand, Cambodia, and the Philippines, Vietnam’s agricultural sector has the highest potential,” he said. “They have the potential to feed southeast Asia. The highlands are great dairy country. If you had efficient dairy farms there, you could export to all of Asia.

“The social system has handicapped agriculture in Vietnam. The central planning proponents will always promote the collective spirit of farming, but they do that to the detriment of the long-term sustainability. They support practices that don’t make sense,” he adds.

Marron draws parallels with Ireland and Vietnam.

“There is this transition from small farmers to economically viable farming units. The transition that Ireland went through 40 years ago, Vietnam now has to go through,” he said. “Getting the Irish dairy story through to Vietnam is important and some of the dairy companies are promoting that. They see that as a blueprint.”

These dairy companies, which operate their own large-scale farms and process milk from farmers, are leading change in agriculture and supporting smallholders. Despite this, Marron thinks that the private sector recognises that farmers need to expand.

“The dairy companies are regulating the market, but they can only do so much,” he says. “No matter what they do, industrial farms are a short-term fix.”

Dairy sector

Vinamilk is Vietnam’s largest dairy company, with 10 farms and 13 processing facilities throughout Vietnam.

This month, the company shipped 2,000 dairy cows from the US to its farm in the Tay Ninh Province, and it also recently opened an EU certified organic dairy farm with 500 cows imported from Australia. They also have contracts with approximately 8,000 farmers to supply milk – some of these farms will have 10-20 cows, others have a bigger capacity with 50 cows.

Between its own farms and suppliers, it has 120,000 cows providing a cumulative daily output of over 727,500 litres per day. Guaranteeing good standards across all farms is a priority and challenge for Vinamilk.

“First of all, we sign a contract to guarantee we will collect milk for the whole year as long as they follow all of our instructions and guidance for breeding and so on,” said Hanh Pham, a representative for Vinamilk.

Like farmers, Vinamilk also faces difficulties when it comes to expansion, especially given that some parts of Vietnam are not suitable for dairy farming due to inclement weather conditions.

“The most challenging thing is the access to land. The land has to be in an appropriate location and needs easy access to the traffic and the best weather,” she said.

“Whenever we want to expand, we always work with the government of a specific province to see if they have the land capacity so we can develop a farm. In return, we can create jobs for the local people there.”

DalatMilk

The majority of milk you see in supermarkets in Vietnam is UHT. DalatMilk differs as it is a premium brand of fresh, pasteurised milk.

The company has its own dairy farm with 500 cows in Da Lat, Lâm ÐÕng Province, which supplies 50% of the company’s milk pool. The rest comes from local suppliers, who are paid 49c/l. However, due to inefficient practices on farm, the cost of production is 45c/l.

Hãi Ngo Minh (pictured) is the CEO of DalatMilk and also serves as vice-president of TH Group, which is the second-largest dairy company in Vietnam. He is keen to see farmers improve and expand, and is looking closely at the co-operative model in Ireland, but cites lack of access to information and markets as an issue.

“The scale of farms is very small. But the farmer can develop to become more efficient and productive. They want to develop the farm but they don’t know where they can sell their milk and how they can improve their operation to become more productive,” he says.

“With local authorities...together we can support the farmer to develop.”

With growing demand for quality dairy, Hãi Ngo Minh is calling on the government to support the agricultural industry with subsidies for fresh milk and machinery grants.

“They have no support or subsidies for the local farmer. The government must do that.

“I think the important thing the government has to do is to support the dairy industry in Vietnam.”

Read more

Listen: dairy potential in Vietnam

This article has been supported by the Simon Cumbers Media Fund.