The main purpose of this study was to gain insight into the household
and farm economics of small-scale dairy farmers in Hanoi, and to obtain
estimates of their costs per unit of output in milk production so as to
gauge their potential for improvement and vulnerability to international
competition. Costs of production are assessed using market prices and
'social' prices using a policy analysis matrix (PAM) approach.
The study applies a method of economic analysis developed by the
International Farm Comparison Network (IFCN) which is based on the
concept of 'typical farms'. Three farm types were selected to
represent typical farms in the region of Hanoi, Viet Nam. The farms were
located in two villages near Hanoi (10 to 15 km away), benefiting from
good market access. The farms kept two, four and five crossbred dairy
cows and practiced stall-feeding. Each farm was analyzed in detail and
assets, production costs, profits and other economic information are
presented graphically and are described in the text. A policy analysis
using the PAM methodology is carried out for each of the typical farms.
Furthermore, a preliminary analysis of the dairy chain in Hanoi was
Applying market prices, cost of milk production varies from 11.5 to 17.0
US$ per 100 kg energy corrected milk. The farm with four dairy cows has
the lowest costs (11.5 US$), which is mainly due to lower labour costs
for family labour and lower costs for means of production. A set of PAM
ratios shows that farm outputs are supported and inputs are taxed by
21.5 and 20.0 percent respectively. The net result is that all farms
benefit significantly from current policies and market conditions and
about 24 percent of the private returns of the farms come from external
support. Public support for the farms ranges from 6.0 US$/100 kg milk
for the smallest to 9.5 US$/100 kg milk to the largest farm. The high
level of support clearly indicates a high degree of imperfection in the
Vietnamese dairy market. Consequently, there should be potential for
increasing productivity and competitiveness through policy measures.
A four page executive summary is available in addition to this paper.
PPLPI, FAO, Rome, Italy, ii+51 pp.