More rooms for dairy industry development

Vietnam’s dairy industry has a strategic role to play: driving sustainable agriculture, powering modern food processing, and boosting the global competitiveness of local products. According to data released by the Ministry of Industry and Trade at the “Development of Vietnam’s Dairy Industry to 2030, Vision to 2045” seminar, held on August 5 in Hanoi and August 12 in Ho Chi Minh City, the country’s dairy sector has made significant strides forward over the past decade, with industry revenue rising from around $4.4 billion in 2017 to $5 billion in 2022 and then more than $5.03 billion in 2023.

Potential remains but also concerns

The country’s dairy cattle herd has grown at an average of some 4.6 per cent each year in recent times, from 228,000 heads in 2014 to approximately 335,000 in 2024. Raw fresh milk output has also increased, by nearly 8.4 per cent annually, from 550,000 tons in 2014 to over 1.2 million tons in 2024, with the country meeting about 40 per cent of its fresh milk needs.

The industry has also seen a marked shift in product structure, particularly in liquid milk. The share of reconstituted milk powder has fallen sharply, from 92 per cent in 2008 to 48.6 per cent in 2020 and then to 32.3 per cent in 2023.

Forecasts from statistics portal Statista show that Vietnam’s dairy market will be worth around $4.59 billion this year and post a compound annual growth rate (CAGR) of 8.2 per cent between 2025 and 2030, indicating strong potential for stable and sustainable growth if market opportunities and government support policies are fully used.

One key issue raised at the seminar was the dairy industry’s heavy dependence on imported raw materials. According to Mr. Nguyen Xuan Duong, Chairman of the Vietnam Livestock Association, domestic fresh milk production currently meets only about 38 to 40 per cent of consumer demand, with the rest imported, mainly in the form of milk powder.

This situation means that many domestic consumers do not have access to the nutritional benefits of fresh milk. At the same time, importing milk powder and reconstituting it into liquid dairy products reduces the incentives for domestic dairy farming to grow, leaving Vietnamese farmers excluded from the industry’s value chain in their own country.

“We have only 3.3 dairy cows per 1,000 people; far lower than Thailand, Japan, and South Korea and not commensurate with our natural and workforce potential,” Mr. Duong said. “By 2030, without timely and decisive policies, Vietnam’s dairy industry will struggle to reach its target of 60 per cent self-sufficiency in raw milk.”

Domestic fresh milk output meeting just 40 per cent of production needs pushed import costs for milk and dairy products to over $1.1 billion in 2024. This reality affects not only the economy but also consumers and national nutrition goals. Achieving self-sufficiency in fresh milk supply would yield dual benefits: giving consumers access to high-quality, traceable fresh milk products that improve health and nutrition, especially for children, while easing the import burden, creating hundreds of thousands of jobs, increasing the value per hectare of farmland, boosting export earnings, and enabling farmers to join high-tech production chains, thereby reducing poverty and fostering sustainable prosperity.

According to Mr. Ngo Minh Hai, Chairman of the TH Group, the goal of self-sufficiency in fresh milk from domestic dairy cattle is not only feasible but should be considered a national priority. With a clear national strategy, Vietnam could raise its domestic supply from the 40 per cent today to 70 per cent by 2035, with milk consumption per capita reaching some 54 liters a year.

To achieve this, TH has proposed two scenarios. In the first, if dairy cattle were raised in concentrated, high-tech farms like TH’s, with productivity of 35 liters per head per day, Vietnam would need to expand its herd to 700,000 heads. In the second, under smallholder farming models, herd growth would need to accelerate much faster. Since productivity is lower, the total herd would have to nearly double, by about 1.7 times, reaching an estimated 1.2 million heads. “Expanding the dairy cattle herd is the key condition for a breakthrough in the dairy industry’s development strategy, moving towards self-sufficiency in domestic fresh milk,” he said.

Mr. Duong emphasized that Vietnam’s dairy cattle heads remain far below potential. Given the country’s natural and socio-economic conditions, it actually has more available space for dairy farming than Japan or Israel. “We could expand our dairy cattle heads to four or five-times the current level by the 2030s, which would mean 1.3 to 1.5 million heads and fresh milk output of 4.3 to 5 million tonnes,” he added.

Winning hearts one glass at a time

Reducing dependence on imports is not the only challenge facing Vietnam’s dairy industry, as it also continues to struggle to win over consumers. Associate Professor Tran Quang Trung, Chairman of the Vietnam Dairy Association, said Vietnamese people consume about 26 to 28 liters of milk per person per year; a level much lower than many countries in the region and the world, such as Thailand, with 35 liters, Singapore with 45 liters, and Europe with up to 100 liters. “Domestic raw milk meets only about 40 per cent of demand, with the rest still imported,” he noted. “Our system of standards and regulations has not been updated for 15 years, and testing methods lag behind new technologies.”

Beyond supply and demand, the industry also faces barriers rooted in consumer perceptions. Mr. Duong said many Vietnamese still view milk as a drink for children, the elderly, or the sick, whereas it is actually a source of nutrition for all ages. He added that purchasing power has fallen since the Covid-19 pandemic, while the market has overheated and has hundreds of products. At the same time, counterfeit and poor-quality milk have eroded consumer trust.

From a business perspective, Mr. Nguyen Quang Tri, Executive Director - Production at Vinamilk, said another factor is that a relatively high proportion of Vietnamese people are lactose intolerant. Lactose is a natural sugar in milk that can cause bloating, indigestion, or diarrhea in some people. This condition is common in communities without a long tradition of consuming animal milk, leading part of the younger generation to gradually shy away from such products.

To retain consumers, many companies have shifted to developing lactose-free milk, plant-based milk, and fermented yogurt products that ensure nutrition while reducing digestive discomfort. According to Mr. Tri, this strategy helps expand the domestic market and creates export opportunities to regions with similar consumption patterns.

Another pressing concern is product quality and traceability. Mr. Duong emphasized that without clear, enforceable standards, particularly for powdered milk aimed at pregnant women and the elderly - where no specific regulations exist - counterfeit products will continue to slip through. He called on authorities to take a hard look at shrinking dairy cattle herds and sluggish growth, warning that inaction could undermine the industry’s future.

To move forward, he suggested a blended approach: combining high-intensity farming with smallholder operations of 20 to 50 heads, following successful models in South Korea and Taiwan. He also called for a unified management system, coordinated from the central government down to local authorities and framed as a national priority program.