Over the past five years, the growth of Vietnam's dairy cow population has stagnated, with Ho Chi Minh City - the country’s largest dairy farming hub - seeing its herd shrink by more than 50%.

In a recent communication sent to the Ministries of Industry and Trade, Agriculture and Rural Development, and Health, the Vietnam Livestock Association reported a sharp decline in dairy cow numbers, especially within the smallholder farming sector.

Several traditional dairy farming regions, including Ho Chi Minh City, Ba Vi (Hanoi), and Moc Chau (Son La), are on the brink of collapse. In Ho Chi Minh City alone, the herd has declined by more than half, despite once accounting for 60% of the nation’s dairy cow population.

Statistics show that from 2010 to 2015, the average annual growth rate of Vietnam’s dairy herd was 15.4%. However, from 2020 to 2024, it has plummeted to just 0.4% per year.

This decline makes it unlikely that the national goal of reaching 500,000 dairy cows by 2025 will be met. The current herd stands at approximately 330,000 cows - only 65% of the target.

If no corrective measures are taken, the association warns that by 2030, Vietnam will not be able to reach its projected dairy herd size of 650,000 to 670,000 cows.

Similarly, the growth rate of fresh milk production has decreased sharply - from 17.7% annually between 2010 and 2015, to 6.7% during 2015-2020, and only 3.3% from 2020 to 2024.

Vietnam is also unlikely to reach its goal of producing 2.6 to 2.8 million tons of fresh milk annually, equivalent to 25–26 kg of milk per person. The goal of supplying 60% of raw materials for the domestic dairy industry from local sources appears unattainable.

The association attributes the rapid decline in both dairy herd size and milk production to three main factors, particularly since 2020.

First, imports of raw milk have surged, increasing by 8–12% annually on average, with some years reaching as high as 20%.

According to preliminary data from the General Department of Customs, in the first seven months of 2025 alone, Vietnam imported more than $858 million USD worth of milk and dairy products - up 34.9% year-on-year.

Second, the domestic dairy market has overheated, with a proliferation of producers, businesses, and brands. This market saturation has not only confused consumers but also pressured large corporations to maintain stable prices and local sourcing.

Third, the COVID-19 pandemic disrupted supply chains, including input sources for livestock production. Farmers were unable to sell milk or had to sell at such low prices that they could not sustain operations, forcing many to reduce or cease farming activities altogether.

To sustainably develop Vietnam’s dairy industry, the Vietnam Livestock Association has proposed four key solutions:

First, domestic advantages must be fully leveraged - especially in raw milk production and agricultural by-products. Imports of dairy inputs that can be produced domestically should be minimized.

Second, Vietnam should implement a nationwide school milk nutrition program using fresh milk products, a model successfully adopted in many countries. This would provide children with optimal nutrition while stimulating domestic dairy farming.

Third, technical standards and clear labeling guidelines must be developed to distinguish between dairy products, particularly fresh milk versus reconstituted milk. This would benefit consumers, producers, and regulators alike.

Fourth, regulations should require dairy producers and businesses to either operate their own domestic supply zones or use a minimum percentage of locally sourced fresh milk - typically between 5% and 20%.

The association explains that while fresh milk is beneficial to consumers, it is often the least profitable product for businesses. Even in countries with underdeveloped dairy sectors such as India, Indonesia, Thailand, China, and the Philippines, similar sourcing rules are in place.

For instance, in the Philippines, dairy processors are required to purchase at least 5% of their raw milk locally. Companies exceeding this threshold receive tax incentives worth 10% of the value of the additional volume purchased.

Tran Chung