Risk of Dairy Bankruptcy in HCM City

HCM CITY, VIET NAM — Thousands of dairy farmers are selling fresh milk to processing plants at prices as low as VND 2,000-2,500 per kilo, about half the price set by the HCM City’s Department of Agriculture and Rural Development.
calendar icon 19 September 2008
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This prompted city officials to meet representatives from dairy cow farms and milk processing companies early this week to outline measures to cope with the risk of bankruptcy in the wake of falling milk purchasing prices in the past few months.

At the meeting, farmers blamed the sharp price drop on dairy companies setting strict regulations on quality and sanitation standards and drastically increasing fines imposed on local breeders for low quality milk products.

Vice Chairman of the municipal People’s Committee Nguyen Trung Tin asked Vinamilk and Dutch Lady, the country’s two major milk processing companies and biggest buyers of unprocessed milk, to adjust the purchasing price to help dairy farmers avoid losses.

Many farmers also proposed that Vinamilk issue clear regulations on its inspection of milk quality and milking methods to assist them to improve standards.

According to a report from the city’s Department of Agriculture and Rural Development, many cow farmers in the suburban district of Cu Chi, the city’s major dairy cow breeding area, have fallen into trouble in recent months.

The rising price of animal feed along with small scale farming and processors’ low purchasing price have created difficulties for dairy farmers. Some farming households are considering a switch to aquaculture to pay back overdue bank loans taken out for raising dairy cows. One of the main problems facing the dairy cow farming was the lack of grass fields, the city’s animal breeding experts said.

The city’s pasture lands cover only 2,400 hectares, averaging 200 tonnes of grass per hectare. This is enough land for 44,000 dairy cows, far below the city’s cow population of 60,000.

Huynh Huu Loi, head of the city’s Animal Health sub-Department, urged local breeders to increase the proportion of grass in the cows’diet to improve the quality of milk and the economic efficiency for milk products.

Participants at the meeting proposed the establishment of a centre for the accurate verification of milk quality, streamlining the milk purchasing sector, and inspecting the mediating agencies in charge of buying milk to prevent dishonest dealers from taking advantage of lax management.

They also asked Vinamilk and Duch Lady to adjust their purchase prices and balance the milk products’ sales price and the purchase price of input materials to narrow the price differences and mitigate losses for dairy farmers.

City officials proposed that Vinamilk continue investing in cow breeding and upgrading processing facilities to ensure the sustainable development of the dairy cow industry.

TheCattleSite News Desk

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