Vinamilk invests heavily in dairy farming

The Government has given approval in principle to Vinamilk to set up a joint venture with Thong Nhat Farming Area to develop a dairy farm in the north-central province of Thanh Hoa.

The 2,600-hectare facility will become a big dairy farm with a herd of 26,000 head, or around ten head for one hectare, with milk-producing cows making up roughly 50%. The farm whose construction will be divided into many phases will be completed in five years based on Australian and New Zealand models.

Vinamilk has five dairy farms with a total of over 8,000 head at present, with every facility owning 2,000-3,000, which will be raised to around 25,500 head in 2015 and 28,000 by 2016 under the firm’s planning. To carry out the plan, Vinamilk has spent over VND1.5 trillion developing four more farming areas in Thanh Hoa, Tay Ninh and Ha Tinh provinces.

Besides its own farms, Vinamilk purchases fresh milk from farming households, which accounts for up to 60% of the country’s total fresh milk volume provided by local farmers. The company bought a combined 160,000 tons of fresh milk in 2012, posting growth of 12% year-on-year.

An executive of Vinamilk said his enterprise wouldn’t invest in constructing more processing mills but would concentrate on developing input material zones from now until 2017.

Vinamilk in April put into operation a powdered milk factory with a designed annual capacity of 54,000 tons and will commission a liquid milk plant at the end of August with an annual capacity of 400 million liters in the first phase, which will be doubled in the second phase.

With the existing factories, Vinamilk is looking to achieve total revenue of US$3 billion in 2017 to enter the world’s top 50 milk companies. Meanwhile, the entity has set a target of obtaining VND32.5 trillion in sales in 2013 which its leaders said is achievable due to its remarkable sales growth in the first six months.

It is noted that Vinamilk had to scale down its export orders to meet rising local demand and only when the powdered milk came on stream in April could the firm satisfy both exports and domestic sales. Vinamilk earlier this year won export contracts totaling US$230 million, a year-on-year surge of $180 million.