The price of milk has increased three times this year, from VND5,000 per kg at the beginning of the year to VND7,200 at present, and domestic supplies of fresh milk are not keeping up with demand.

Dan Chu Hamlet in Hung Yen Province’s Binh Minh Commune has two major dairy processing plants, owned by Vinamilk and the Viet My company. Local dairy farmer Hoang Huu Diem said the two companies were vying with each other to purchase fresh milk from farmers in the hamlet.

If one company raised its buying price today, the other would immediately match it tomorrow, said Diem.

"The two companies are now purchasing milk at a price of about VND7,100 per kg," he said, noting that the price was bringing local farmers a handy profit.

In Ha Nam Province, a kilo of milk fetches VND6,600, but even at that price, said dairy farmer Tong Van Roi of Moc Bac Commune, farmers make an easy profit.

"My family raises four dairy cows and we have two that are pregnant," he said. "We produce 22kg of milk a day, while our costs for feed are only VND45,000. So, we still clear VND100,000 per day."

Sensing the potential profits, farmers in rural provinces near Ha Noi are buying dairy cattle. Diem said he had received several offers from people seeking to buy three cows from him for VND90 million. Last year, he said, he would have only been able to sell them for VND30 million.

Diem cautioned, however, that the purchase of a dairy cow was a gamble. If only one in four cows purchased turned out to be a ‘dud,’ he said, the buyer would suffer a loss.

Farmer Phung Quang Lap experimented in cross-breeding his cows. They produced less milk as a result, he said, and he has been unable to breed the offspring successfully.

"I don’t know why, but they can’t get pregnant," he said.

The Animal Breeding Department confirmed that the poor quality of breeding stock, low milk output, small-scale breeding efforts, scattered purchasing outlets and poor preservation of fresh milk were among the difficulties undercutting dairy farmers.