Report Visit To TH Mega-Farm VF2
Report Visit To TH Mega-Farm VF2
Report Visit To TH Mega-Farm VF2
Oct. 2015
This report is a working paper edited under the framework of the REVALTER Research project
(www.futurelivestock.org). The literature review was compiled by Jean-Daniel Cesaro and
Guillaume Duteurtre (Cirad). The visit was conducted in the context of the Initative of
Sustainable Landscapes ISLA (Chng trnh Sng kin Cnh quan bn vng) of IPSARD.
The team was composed of Nguyen Ngoc Luan (Agro-Info/Ipsard), Pham Duy Khanh and
Nguyen Mai Huong (Rudec/Ipsard) and Guillaume Duteurtre (Cirad). The team is thankful to
TH milk Company for organizing the visit. In particular, the team would like to thank Mr L
c Trng (Office Manager, in charge of the Farm in Ngha n and Thanh Ha) and Mr.
Ng Huy Hn (Office Manager, in charge of the dairy processing plant).
Duteurtre G, Cesaro JD, Nguyen Mai Huong, Pham Duy Khanh, Nguyen Ngoc Luan, 2015 :
The TH dairy company (Vietnam): Is such a large-scale investment
sustainable?, Report of a visit conducted in Ngha n District (Ngh An
Province) on July 2nd, 2015 completed with a literature review, Revalter
Working paper, Hanoi, Cirad, Rudec, 17 p.
Summary
The TH dairy farm raises 44 000 cows of which 22 000 cows are in lactation in June 2015.
This is the biggest dairy farm of this kind in Asia. It produces around 500 tons of milk per
day. It is composed of several mega-farms with very high animal concentration integrated to
one single dairy processing plant. This report describes the organization of the TH group
based on a review of existing data available on internet as well as on a field visit conducted on
July 2nd, 2015 on the site in the Ngh An Province. Some questions on its sustainability are
discussed: (i) land access for feed cultivation and the social equity of the project; (ii)
management of animal effluents and the risks of pollution of the environment; (iii) cost of
production of milk and the long term economic profitability of the farm.
interest for researchers and experts working in the dairy sector because it provides a new
perspective of agriculture development.
However, this type of large-scale operation raises a lot of questions related to the
sustainability of such a big investment. The scientific community has to provide data and
prospects on the economic and environmental impacts and sustainability of such a big project.
The objective is to support policy decision for a sustainable future of the dairy sector.
Decision 167/2001/QD-TTg of the Price Minister dated on 26 October 2010 on some solutions for development
of dairy cow production for the period of 2001-2010
4
Decision No 10/2008/QTTg of the Prime Minister dated 10 January 2008 on Livestock development strategy
to 2020
5
Decision 984/QD-BNN-CN of MARD dated 14 May 2014 on Restructuration plan of the livestock sector
towards enhancing added value and sustainable development.
6
The dairy development trend in Vietnam can be compared to the strong and deep transformation of Chinese
dairy sector. The TH milk farm is one example of the new large scale investment in agriculture that are being
made in Asia and elsewhere in the world, in particular in the livestock sector.
See TH milk, 2014 : The TH truebook (in Vietnamese), published by Cng ty C Phn Chui thc phm TH,
Ngh An, 83 p. See also TH milk web site
8
Another interesting women profile in the Vietnam dairy industry is Mrs Mai Kiu Lin, CEO of Vinamilk
9
See http://www.dairyvietnam.com/en/The-solution-for-medium-and-large-scale-farms/US-billion-dairyproject-launches-first-products.html(visited, 20/03/2015)
10
http://cafebiz.vn/ho-so-doanh-nhan/thai-huong-ba-chu-bac-a-bank-th-milk-201305021207545234.chn,
(visited, 20/03/2015)
11
http://www.forbes.com/pictures/fdgk45hmgg/thai-huong-57-vietnam/ (visited, 20/03/2015)
THs milestones
27/02/2010
14/05/2010
25/07/2010
26/12/2010
15/05/2011
26/052011
30/08/2011
27/11/2012
01FeedCenter
15barns/farms;400500cows/barn,0.5ha/barn;
01vethospitalbarn;01milkqualitylaboratory
Capacity:1000tons/day
3
nd
01WaterFacility
Capacity:30,000m /day(2
01WasteWater
Capacity:1500m ;Technology:Aqua(Netherlands)
01Garage
Maintenanceofequipments,machines,etc.
01VetService
factoryunderconstruction)
3,;
Animalhealthcare
Genetic
TH group imports dairy cows from several countries: Australia, New Zealand, Uruguay,
Canada and United State. No reference to China. Animal breed is 100% Holstein-Friesian
(HF).
Milk production:
Each farm has its own milking facility which has a capacity of 120 cows at the same time.
According the Vietnamese newspaper, the production objectives of the farm was 200 000 tons
per year at the beginning of the project14. According to Afimilk, the company transformed
300 tons per day (109 500 tons per year) in 2012 and would reach 500 tons per day in 2015
(182 500 tons per year). In June 2015, according to Mr Tn, director of the milk processing
plant met during the visit, the production was 450 tonnes/day and may reach 500 tonnes/day
in the winter, which meets the objectives of the company.
12
http://www.afimilk.com/projects/vietnam-project
http://www.afimilk.com/
14
http://www.dairyvietnam.com/forum/threads/th-true-milk-co-nguy-co-do-200-tan-sua-tuoi-ngay.4069/
13
A production of 450 000 litres of milk from 22 000 milking dairy cows is equivalent to an
average production of 20 liters/day/milking animal. This production average is reasonably
high for a pure-bred Holstein cow in hot environment.
Human resources and work force
The farm is supported by international technical consultants and high technologies
- Management of the herd: Afimilk Israel
- Veterinary support: New Zealand
- Financial management: Germany
- Water filtration: Israel
- Wastewater treatment: Aqua (Netherlands)
- Processing: Liquid milk (Tektra Park Sweden); yogurt (Germany), packaging (Italy),
This high technology requires a heavy training for all staff. Management staff usually follows
6-month training.
In June 2015, there were around 1800 workers for TH Group :
1300 on the farm
100 for the cultivation area
500 in the milk processing plant
Manure and water management
The solid part of the manure is managed in the barn by deep litters (m lt sinh hc).
Those litters are a good fertilizer and they are sold to rubber or coffee plantations.
The liquid part of the effluents is treated in an industrial station. The water is processed
through three stages: sedimentation, strainer (this stage, the water is still yellow, see herebelow right) and treatment with chlorine (bleach water). The treated water is rejected into the
nearby lake. Treatment capacity: 60m3/h = 1500 m3/day
According to some newspapers, the risk of pollution of the surrounding areas is very high, in
particular when heavy rains and typhoons are to take place at the end of the summer. A
journalist estimates that around 600 households have been affected by pollution from the farm
in 2013, which involves pollution of fish pounds, rice fields and underground water drilling15.
15
http://cadn.com.vn/news/75_104306_phan-bo-tu-nha-ma-y-su-a-th-true-milk-ta-n-cong-ng.aspx
10
The farms also pump water from the lake to water the cows. In the area, now there are more
than 100 lakes, large and small dams that can meet demand for the farms:
- Cluster No 1: 70,000 m3 of water reserves
- Cluster No 2: 50.000 m3 of water reserves
This water is filtered before being given to the animals.
Animal Feed
The management of feed is based on a Total Mix Ration (TMR) approach using a computer
software. The ration is based on mixing together (i) a fodder ration based on silage; (ii) a
concentrate industrial feed; (iii) other supplements such as salts and nutriments. Some
automatic mixers are used to feed the trucks from the silage area to deliver the farms.
The silage mixture is based on different fodders: maize, Mombasa Guinea grass (Panicum
maximum), and other imported raw material such as Alpha-alpha dry hay and soja envelops
(v u tng) In 2015, the need for fodders was estimated to 850 to 1000 tons/day or
310 250 to 365 000 tons per year. Each of the 44 000 cows needs around 7 tons of fodders per
year, i.e. 20 kg/day. The farm also producers sunflower and peas.
The industrial concentrates are supplied by 4 international feed companies, namely CP, CG,
JAPFA and De Heus. They all process concentrates upon formula pre-determined and ordered
by TH
Feed cultivation
The fresh fodders are from 2 origins:
Fodders cultivated on the farm. In July 2014, the farm recognized cultivating 4000
ha of maize, Mombasa Guinea grass (Panicum maximum), Mulato and Sorghum.
Those 4000 ha are part of the 8000 ha claimed by the Farm (see above: access to land
tenure). Est. annual forage production: 40 000 tons of dry matter (10 tons DM/ha)
Maize and other fodders bought from small-holder farmers on contractual basis.
Daily average purchase is about 400-500 tons of corn the whole year round. Est.
11
annual purchases of fodders: 28 000 tons of dry matter (17 % of dry matter for green
fodder)
This land was formally owned by some State farms (Nng lm trng) which had been
established in the 1950s: the Ty Hiu State Farm, the ng Hiu State Farm, the State farm
of the 1st of May (1-5), the State Farm of the 19th of May (19-5) and the C State farm17.
Totally, the area of those former State Farms is estimated to 8 000 ha. However, we did not
understand yet by which process those former State farms where converted into land used by
TH.
In 2015, the web site of the company claims having access potentially to 37 000 ha (target by
the end of Phase II).
16
http://super-sorghum.jp/vietnum-j/th-milk20140508/
See https://vi.wikipedia.org/wiki/Ngha_n (in Vietnamese) : In 1963, those 5 state farms nng trng
were created in the Ngha n district
17
12
But in June 2015 (end of phase I), the farm only cultivate less than 8 000 ha. No land from
private farmers is said to have been cultivated yet.
Production standards and certification
The TH milk farm is not engaged in applying for the Globalgap certificate. The company
does not want to apply for Vietgap certificate.
Dairy products
All products are made from fresh milk collected at the farm and are sold under the Brand TH
True Milk. The company produces 4 main types of products:
UHT sterilized fresh milk (sa ti sch tit trng) The milk is heated to 137C and
then cooled within 10 seconds to 20C.
13
Pasteurized fresh milk (sa ti sch thanh trng). The milk is heated to 75C and
then cooled within 20 seconds. This is only a new market, very thin.
Yoghurt (or Yogurt) in pots (sa chua n) that follows the international standards
and are made with acidophilus
Drinking yoghurts (or Yogurt) in bottles (sa chua ung) that do not follow
international standards and are made from paracasei. We shall call those products
fermented milks or lactic acid drinks
There are 4 different areas in the factory for processing activities: (i) the sterilization and
pasteurization room; (ii) the fermentation room for yoghurt making; (iii) the packaging room;
and (iv) the logistics area.
Price of products on the Hanoi market: 30 to 34 000 VND/liter for liquid milk.
The marketing focuses on healthy and secure
The company accounts for 50% of the fresh milk market share in the North and 35% of the
market share in the South of the country. The distribution of the TH milk products is managed
by the subsidiary TH food chain JSC. The products are sold to consumers through specialized
shops TH True Mart and through other supermarkets and minimarkets. This strategy based
on specialized TH milk distribution shops is unique in Vietnam. It illustrates the efforts of the
company to differentiate the product from its competitors. This strategy requires major
investments of TH food chain JSC in commercial facilities in order to promote the image of
its products.
The marketing of TH True Milk JSC is based on calcium supplement, health, natural products
and food security. The company wants to be as transparent as possible for consumers. The
theme of transparency is fully integrated in the discourse of the chairman Thi Hng. The
company shows every step of milk production from harvesting the crops to dairy farming
system and processing dairy products. TH Milk Food JSC provides many products as UHT
pure milk, UHT less sugar, UHT sugar with many flavors, TH True Milk with Collagen
additional specializing for women, All of milk products are in closed process which is
controlled strictly and managed carefully, as a result, the quality of milk is high.
Acces to media
One key of TH True Milk development is the access to media. From internet to television, the
marketing of the brand uses all mass media channels. This privileged access has to be linked
with political support. The morning after 2015 Tt celebration, TH true Milk had a one-hour
14
documentary on the quality of their products and the official support of government on the
development of the brand activity. The advertising documentary shows the strong public
private partnership.
A ceremony at the TH milk factory with H.E. Cao c Pht, Minister of Agriculture and Rural Development,
and Mrs Thi Hng, president of the TH group on May 17th 2015
The following social activities are conducted, among others, by the company:
15
However, the study of the project reveals some risks or weaknesses that may be studied in
order to evaluate the sustainability of the whole project. 3 main emerging questions are:
1. Does TH have a sustainable access to land for cultivation?
Our research is not yet clear about the figures given by the company on the land that is
currently cultivated or that shall be cultivated in the future. Does the company cultivate 4000
ha or 8 000 ha ? How will the company access s 37 000 ha? Does the company face difficulty
to access those land? Is the land currently cultivated only the land of the former state farms?
What is the real Master Plan of the district and when will it be implemented? What are the
real intension of the TH milk company to buy land in the Dak Lak and Thanh Hoa
Province18?
These questions are related to the social sustainability of the project. In order to assess the
social impact of the Farm settlement, and in particular the number of farmers that might have
been exited out of their land, we need to know exactly the size of the cultivation area and the
number of producers who were settled down on this area before the installation of TH. A
study of the transformation of the former State Farms would be useful to answer these
questions. It would be also interesting to review the Ngha n District development plan.
On the contrary, a large number of farmers are involved in contractual production of maize
for the company. What is the total area cultivated in this context? What is the social impact of
this new market for local farming systems ?
Another issue is related to the employment offered by farmers formerly working on the land
used by the Company. Until know, the company claims that in each family who had leaved on
the area of the former state farms before the installation of TH milk, at least 1 person was
recruited by TH. Could we confirm this assertion?
2. Does TH manage sustainably the livestock effluents from all its farms?
Some information published in the daily Press in Vietnam seems to show that some of the TH
farms are not equipped yet with an optimal system of effluent management. Because of that,
many farmers (600) have been affected by pollution from the farm according to the District
authorities19.
This question is related to environmental sustainability. Where some of those farmers
relocated? Are there other communities threatened by this pollution? What is the real
effectiveness of the water treatment station? What are the effects of heavy rains on the manure
treatment systems? What is the long term impact of the farm on the local water lakes ?
3. What is the real production cost of the TH milk farms?
This question was not answered during our visit. However, the milk production company is
independent from the processing and commercial facilities, and has its own accountability.
18
http://baodautu.vn/he-lo-sieu-du-an-bo-sua-cua-th-true-milk-tai-dac-lac-d5136.html
19
See http://www.dairyvietnam.com/vn/Sua-Viet-Nam/Phan-bo-tu-nha-ma-su-TH-True-Milk-ta-cong-nguodan.html
16
Why is this figure not available? What are the real benefits of the TH group? What is the level
of the financial charges and their impact on the results of the farm?
The question is related to the economic profitability of the operation. Currently, the milk
prices are quite high in Vietnam. But in the future, TH milk may face milk prices volatility
and may therefore become more vulnerable than small farms. In the history, family
agriculture has always show its plasticity compared to industrial agriculture because its ability
to reduce family labor costs in case of price fall down.
4. Some key performance indicators
The table below compares the performances of the TH milk company with those of
smallholder farms in Bavi
Indicators
TH Milk
Dairy smallholder
farms in Bavi (aver.)
2.44
0.9
0.4
4.76
Number of workers
1,400
Farm area (total) in ha
8,100
Fodder crops area in ha
4,000
Production of feed on farm in tons
1
/year/dairy cow (est.)
Number of dairy cows (total)
44,000
Number of milking cows
22,000
Production of milk (total) in kg/day
450,000
Production of milk (total) in tons/year
164,250
Productivity per cow in kg/day
10.2
Productivity per milking cow in kg/day
20.4
Productivity per worker in kg/day
321.4
Fodder crops area per cow in ha
0,09
Turn-over (in million VND per worker
1,525
and per year (our estimation)
Other non-milk agricultural activity
0
Share of milk activity in income
100
Use of imported dry hay
Yes
Source : Revalter surveys, see in particular : Pham Duy Khanh et al., 201521
21
6
3.4
37
13.6
6
10.9
15.2
0.07
131
2.4
73
No
Pham Duy Khanh, N. Hostiou, S. Messad, S. Cournut, G. Duteurtre, 2015: Typology of dairy farms in Ba
Vi, working document, Revalter project, CIRAD, RUDEC, Janv 2015, 52 p.
17