Phuong Huynh
Tâm Lê
University of Economics Ho Chi Minh City, International School of Business
Guenola Nonet
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Taking environmental and social issues into consideration are key elements of a company policy and business operations and it is essential for the future growth of the company. A route2020 strategy was based on developments in the world and in dairy farming. Its purpose statement – “Nourishing by nature” – represents for better nutrition for the world, a good living for its farmers, now and for generations to come. The purpose statement connects the daily activities with values that FrieslandCampina wants to make a contribution to solving the a challenge of the growing population, sufficient farmers to grow food and scarcity of natural resources. A mission ‘Nourishing by nature’ is clearly increasing the rate at which FrieslandCampina is safeguarding sustainability and creating added social value. It reflects both the ambition of making a meaningful contribution that is for example by supporting and training small farmers in Vietnam and a goal of safeguarding food and nutrient security for a rapidly developing population.
Besides the business development mission, the company has also committed to enhance the life of Vietnamese people. That is to help local dairy farmers to achieve sustainable dairy farming, offer consumers a broad range of milk-based beverages and improve the nutritional awareness in Vietnam. To accomplish this vision a message is: “develop, produce and market a broad range of reliable, natural and nutritious dairy products that should contribute to the well-being and vitality of life”.
To accomplish the above-mentioned mission, FrieslandCampina has planned many strategic programs to gain profit with low cost for company as well as bring the benefits to the community, especially the difficult in need. On aspects of dairy farming, including improving dairy and nutritional knowledge for local farms, support them to collect and sell milk in the market with the aim of enhance living standard, our group interviewed Mr Dang The Vu, Dairy Development Program (DDP) former project team leader of FCV on this issue. Under his leadership, this program of FCV has made a significant and impactful outcomes for business in particular and society in general. He proudly shared with us: "At FrieslandCampina, to be a great leader, we always have to think about continuous improvement, added-value result with cost effieciency for organization. Moreover, unlike other fast-moving-consumer-goods (FMCG) companies, FrieslandCampina operation is based on corporate sustainable responsibility (CSR) based, not basically customer-based. Therefore, it is acknowledged that we have to find the way to improve living standard for local farmers who are valuable business partners of ours". With this motivation, Mr. Dang The Vu found the way to connect business between FrieslandCampina and local farmers.
Dairy Development Program (DDP)
FrieslandCampina initiated Dairy Development Program (DDP) since 2015 to support local dairy farmers (mainly small farmers) with the aim of improving the quality of milk, increasing the farm productivity and to support farmers in getting a market for their milk.
Through Dairy Development Program, FrieslandCampina directly and indirectly reached more than one hundred thousand farmers. In 2015, local DDP teams trained 6306 dairy farmers in subjects such as animal welfare, fertility, calf rearing, milk quality and hygiene, feed and water management, housing, data management and milking technology. In addition, this program also has offered many field trips to the Netherlands for farmers who want to improve dairy knowledge and farming management skill. In brief, with this program, fresh milk is collected to produce dairy products from local farmers who are nourished knowledge and capabilities by FrieslandCampina. After purchasing milk from farmers, the quality of milk is verified by the advanced system of quality management. This still ensures the high-quality and natural milk to customers in the market. Especially, farmers can become prestigious milk suppliers for other dairy companies, not only FrieslandCampina to maximize their profit and improve living standard.
FrieslandCampina Vietnam with ambition becoming a sustainable dairy zone in Asia
In Vietnam, FrieslandCampina also follows the the DDP content and the commitment of headquarter: “Nourishing by nature”. However, Mr. Vu said: "FrieslandCampina Vietnam was more proactive in approaching and supporting local farmers". In comparison with other developing countries in the world, the living condition and standard of farmers are still much lower. Therefore, cow bank is set up to support in providing cows as initial investment for local farmers in need. Over four consecutive years, FrieslandCampina Vietnam cooperates with the Central Res Cross to donate more than 240 cows for farmers. Moreover, a stream of nutrition and farming management training classes were provided by FrieslandCampina experts. This enabled local farmers to have more opportunities to get closer to nutritional experts for addressing concerns towards cow feeding, farm management and the quality of milk. With these significant outcomes, "it is confident to confirm that what we do matters for business and community" - Mr. Vu said.
Inspiration – Creating shared value
Over 100 years ago, many of dairy companies opened in the world with the production model of internal dairy farming. It is believed that integrated dairy manufacture process set up separately within the organization can ensure the inputs as well as the quality of milk at the highest level. This means there are hundreds of cows feeding in centralized herbs of the factory. More specially, with the advanced technology nowadays, the whole period from pregnancy of a cow to the point of time generating cow milk is operated by chemicals and mechanics. This model is applied at most of well-known dairy companies all over the world, such as: Nestle, Fonterra, Mead Johnson, Abbott, Vinamilk, TH Milk… In the meantime, it is required for organizations in this industry to invest a huge budget in building high-quality herbs of cow, spending relatively high labor cost for the low-level staff – workers and milk collectors who have simple job without career development query.
In contrast, pursuing the purpose statement “Nourishing by nature”, FrieslandCampina with over 140 years of experience in the world of dairy farming has made big effort in ensuring milk production process in a natural way. It is so called as the concept “Grass to glass”. With this concept, FrieslandCampina has built network with local farmers to utilize resources for dairy production process instead of setting the centralized herbs of cow in the factory. Simultaneously, “creating shared value”, mutual interest and benefits between local farmers and company is the essence of the way FrieslandCampina do business. With the aim of bring valuable benefits to social community, Mr. Dang The Vu expected to help company gain profit with low cost as well as offer opportunities for surrounding local farmers to improve living standard. All of these messages have been delivered via Dairy Development Program.
In general, it can be said that Dairy Development Program of FrieslandCampina make impactful on sustainable development for business of corporation and social community.
FrieslandCampina Vietnam is partly successful in making the message “Nourishing by nature” become highly impactful and influencing in the dairy community. Furthermore, FrieslandCampina Vietnam is appraised as one of the corporations saving the operation cost, expense of farm management in particular, at the highest level of efficiency in the Asian region.
Like mission statement “What we do matters”, the program has proven successful with remarkable figures: over 3000 local farmers joining Dairy Development Program; about 35,000 cows provided to dairy farmers by FrieslandCampina Vietnam; approximately 104 million kilogram of milk annually supplied to dairy companies as well as consumers in the market. Another outstanding outcome of this program is that each dairy farmers can get amount of monthly income within 15 – 20 million Vietnam dong per month. This is not a little number of income for the local in Vietnam.
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Dang The Vu, Former Dairy Development Program (DDP) Project Leader
FrieslandCampina Vietnam (FCV) is a joint-stock company which established in 1995 between
Binh Duong Im-Export company and Royal FrieslandCampina as the leading company of dairy products in Netherlands with 135 global experiences. These days almost all products are produced in Vietnam and Dutch Lady is one of the six brands of FCV. There are two factories near Ho Chi Minh City and Hanoi and three local warehouses, where in total are 1,487 employees working. Production of more than 1.5 billion cartons per year and this volume is growing with an average rate of 15% per year. The yearly turnover in Vietnam is US$350 million. FCV’s products can be subdivided into three categories: powder milk , sweetened condensed milk and ready-to-drink dairy.