Hanoi (VNA) – As Vietnam’s dairy industry enters a new phase of growth, a key priority is building a modern and sustainable processing sector by expanding dairy herds, improving fresh milk production, and increasing the technological value of dairy products to meet domestic demand while enhancing its competitiveness in the global market.
Per capita milk consumption in Vietnam currently stands at around 36kg per year, significantly lower than that of countries such as Denmark (394kg), France (251kg), the US (228kg), and Japan (61kg). This highlights substantial room for growth in the domestic market, particularly as incomes rise and public awareness of nutrition improves.
Alongside this growth potential, Vietnam’s dairy industry has undergone significant structural changes over the past 15 years. The proportion of liquid milk produced from reconstituted milk powder declined sharply from 92% in 2008 to 48.6% in 2020 and further to 32.3% in 2023. Meanwhile, the share of fresh milk used in processing increased to 67.7%.
The shift reflects consumer preferences for products with higher nutritional value and transparent origins, creating opportunities for premium fresh milk products.
However, domestic fresh milk supplies currently meet only about 40% of actual processing demand. Vietnam spends over 1 billion USD each year importing milk and dairy products, with milk powder making up the majority. Dependence on imported raw materials not only places pressure on the trade balance and foreign exchange reserves but also slows the expansion of domestic dairy herds, limits the competitiveness of local enterprises, and affects broader goals for agricultural and rural development.
To address these challenges, the dairy industry development strategy to 2045 has set specific growth targets. By 2030, the industry aims for annual growth of 12–14%, with processed liquid milk output reaching approximately 4.2 billion litres per year. Domestic fresh milk production is targeted at around 2.6 billion litres annually, meeting 60–65% of processing demand.
In the milk powder segment, annual growth is projected at 7–8%, with output reaching about 245,000 tonnes per year and per capita consumption increasing to around 40 litres annually.
Looking ahead to 2045, the industry is expected to maintain annual growth of 5–6%. Processed liquid milk output is projected to rise to about 9.7 billion litres per year, including 8 billion litres of domestically produced fresh milk, sufficient to meet 80–85% of domestic processing demand. Milk powder output is forecast to reach approximately 415,000 tonnes annually, while per capita milk consumption is targeted at around 100 litres per year.
Dr Nguyen Xuan Duong, Chairman of the Vietnam Livestock Association, said the goal of raising per capita milk consumption among Vietnamese people to over 100kg by 2045 is entirely achievable, with domestically produced fresh milk accounting for more than 60%.
He emphasised that shifting from reconstituted milk to fresh milk is not only beneficial for public health but also supports national development and agricultural self-reliance while maximising benefits for farmers.
To fully tap domestic market potential, developing raw material production areas will be crucial. The industry plans to establish large-scale, high-tech dairy farms while promoting cooperation among enterprises, cooperatives, and farming households to increase raw milk production and reduce dependence on imports.
Drawing on practical experience, Ngo Minh Hai, Chairman of the Board of Directors of the TH Group, said Vietnam has the conditions to achieve complete self-sufficiency in fresh milk supply and that this should be treated as a national priority.
The TH Group outlined two herd development scenarios to meet around 70% of domestic demand by 2035. Under a concentrated high-tech farming model with an average productivity of 35 litres per cow per day, Vietnam would require a herd of about 700,000 dairy cows. If production continues to rely primarily on traditional smallholder farming with lower productivity, the herd would need to expand to around 1.2 million cows to achieve the same output.
Therefore, expanding dairy herds is considered a prerequisite for achieving breakthroughs in raw material self-sufficiency.
Alongside increasing production, dairy enterprises are expected to diversify product offerings, focusing on high-value products tailored to specialised nutritional needs. Bui Thi Thu Hoai, Research and Development Director at Vinamilk, said companies must be agile in responding to consumer trends, from health-oriented products to environmentally friendly solutions.
She added that businesses should make greater use of data analytics and market research to anticipate emerging consumer demands and help promote healthier lifestyles within communities.
The effective implementation of school milk and school nutrition programmes, which serve approximately 13.8 million preschool and primary school children, is also expected to create a large and sustainable domestic consumption channel.
To stimulate domestic consumption, experts and businesses have proposed a range of breakthrough policies. Financial measures include applying a 0% VAT rate on domestically consumed fresh milk, along with subsidies for fixed-asset investments, preferential lending rates, and support for livestock breeding in high-tech farming operations.
In terms of land policy, they have called for measures to facilitate land consolidation and convert underperforming agricultural and forestry enterprises into concentrated livestock farming zones, creating favourable conditions for companies to invest in integrated value chains from pasture to processing facilities.
According to industry stakeholders, accelerating the transition from reconstituted milk to fresh milk, combined with clear policy direction and proactive business initiatives, will be the key to unlocking the vast growth potential of Vietnam’s domestic dairy market in the coming decades./.
