October 21, 2003



New Zealand-Vietnam's $20 M Trade Deal to Develop Dairy Farms & Milk Processing Plant


New Zealand's AEL livestock company has reached an initial agreement with Vietnam's Son La province's local government to develop dairy farms and a milk-processing plant, an estimated worth of $20 million.


In the first stage of the project, AEL, in partnership with the local Moc Chau Milk Company, the country's oldest dairy farm, is to provide the province with between 1,000 and 2,000 dairy cows. The shipment is scheduled for February 2004.


In the following stage, the foreign company is to build a milk-processing plant in Mai Son district with a daily processing capacity of 100 tons of fresh milk.


An investment official from Son La Provincial Planning and Investment Department said the agreement was reached after AEL made a study tour in the province last month.


"The meeting results prove very promising for future cooperation between Son La and the Kiwi investor. We hope the initial stage of the project will make quick progress, paving the way for the following stages," the official said.


Son La plans to increase its number of cows from 4,000 to 10,000 in the next few years. Figures show that Son La has so far received four foreign-invested projects with a total investment capital of $22.5 million.


Last month, the Ministry of Agriculture and Rural Development (MARD) said AEL wanted to invest $20 million in dairy farms in the country's two northern mountainous provinces of Son La and Lai Chau.


In initial plans, the foreign dairy company aimed to set up dairy farms, a breeding house and a dairy-processing mill with a daily capacity of 100 tons of fresh milk in both provinces. MARD experts said Vietnam was encouraging foreign-invested projects in cow raising and dairy-processing projects in line with the country's targets to raise milk output fourfold and double the number of dairy cows by 2005.


At present, Vietnam has 55,000 cows, producing 92,000 tons of milk per year. By end 2002, Vietnam had imported nearly 10,000 cows, mostly from Australia.


According to MARD, a proposed $15-million dairy-farming venture between state-run Ho Chi Minh Dairy Cattle Company and three Australian companies has yet to get going as a result of a land lease problem in Australia and agreement over profit sharing.


According to the Ho Chi Minh Dairy Cattle Company, an agreement was signed with the foreign partners at the beginning of the year to set up a farm in Queensland, a northern Australian state, to raise dairy cows to be sent to Vietnam.


Under the initial agreement, the local partner would contribute 70% of total capital in the venture, and the foreign party would fork out the remainder in dairy-farm technology and managerial know-how.