Local Trajectories in the Vietnamese Transition to Market Economy: Alliances Between Firms, Farmers and Government Officials in the Livestock Sector

Since the end of 1980s, the liberalization of the Vietnamese economy has led to the rapid emergence of a private dairy sector. This fast development can be understood as a major institutional change related to the transition to the new market economy. Our objective is to understand how globalization, public policies and institutions have driven this dairy development process in the last 50 years. We analyze this transition referring to economic sociology and in particular to Fligstein’s political-cultural approach (2001). We consider how alliances or dominations between workers (farmers), capitalists (firms) and government officials (State) impact the evolution of social structures.

The study is built on empirical observations conducted from 2010 to 2015 in the Bavi district located in the north of Vietnam. This district was chosen because of its strong involvement in dairy production and marketing. This dynamism included small scale dairy producers, but also large private corporations and local government authorities, both very proactive in supporting rural development. Our field visits were completed by an extensive literature review on dairy development in the region.

In Vietnam, indigenous cattle breeds are not milked, hence, there was no tradition milk consumption. The first dairy cows were introduced in Bavi by French colonists in the 1920s. From 1960 and during the collectivist period, milk production was concentrated in a large State dairy Farm raising around 1000 cows. In the early 1990s, the dairy animals and the land of the Farm were confined to a hundred families who embarked on dairying. Today, this production has been spreading gradually in 3 communes of the district. The majority of those farms are pretty small-scale, with an average of 6 cows/farm kept in stables. Milk is collected by private collectors and delivered to a limited number of dairy processing units. The two largest dairy companies involved in this milk collection have been supported by public authorities, including by a certified trade-mark "Bavi Cow milk". In 2009, after 10 years of public support of the small-scale dairy production, a new national livestock policy started to support large-scale industrial projects. This policy shift was based on a strong alliance between private firms (international and local) and government officials. This policy change had a strong impact on the Bavi dairy-shed with the establishment in 2012 of a large industrial dairy farm of 350 cows. But government authorities continue to support contracts between private processors and small-scale producers. And family farming continues to play an important role.

The model proposed by Fligstein (2001) is particularly appropriate to understand those institutional dynamics based on alliances between firms and government authorities that shape property rights, governance structure, rules of exchange and conception of control in the dairy sector. We discuss this model in particular with regards to the role of consumers in the new institutional arrangements. We also underline how globalization leads to a complete reorganization of the livestock sector, with institutional arrangements shaping specific local trajectories.