Animal feed production relies too heavily on material imports

The farming area and output, especially maize, has been decreasing sharply over the last few years, making Vietnam’s animal feed producers rely more and more on material imports.

Domestic output down, enterprises increased imports

In 2009, the maize import turnover increased vigorously by 133 percent, or $171.1 million, over 2008, attaining a record high of $300.21 million. The import revenue of DDGS (Distillers dried grains with solubles) in 2009 reached $67.92 million, an increase of $7.23 million over 2008.

Meanwhile, Vietnam’s maize export turnover in 2009 was $730,000 only, a sharp fall of 83,6 percent in comparison with 2008.

Agricultural analysts maintain that this is because, in 2009, the growing area fgor farm produce, especially maize growing regions in the northwest, decreased sharply. The total maize grown in Vietnam in 2009 was 1.09 million hectares, a decrease of 4.68 percent from 2008. Of the key maize growing provinces, Dien Bien and Thanh Hoa saw farm lands decrease sharply, dropping by 3000 hectares in each province. Farm land in Nghe An decreased by 2000 hectares.

The average yield increase of 1.7 percent could not offset the maize decrease in 2009 and explains why the 2010 maize output still decreased when demand rose. This has forced animal feed producers to import maize, mainly from Thailand, China, the US and Argentina.

The average domestic maize price in 2009 was 3980 dong per kilo, lower by 158 dong per kilo compared with the average 2008 price. However, prices rose dramatically in the fourth quarter of 2009.

Just within six months, the domestic price soared from 1950 dong per kilo to 5500 dong. The sharp rise was explained by the plunge in domestic output and by the Ministry of Finance’s 2009 decision to raise import tariffs on maize.

Shortages pressed the domestic price up, but the world’s price in 2009 was always low, so Vietnamese enterprises imported maize in large quantities.

2010 market prospects

Agricultural policy makers have learned lessons from the 2009 maize shortage. They have realized the importance of maize in the animal feed industry. When setting up the 2010 production plan, the Ministry of Agriculture and Rural Development decided to increase maize farm land by 10 percent and increase the expected output by 19 percent over 2009.

Commenting on the plan, some analysts remarked it would not be easy to implement. Even if only 70-80 percent of the plan is fulfilled, it can ease the burden on domestic production and help the industry partly reduce its reliance on imports.

Agromonitor, a market forecast firm, predicts that 2010 imports of maize and animal feed materials will increase. Vietnam’s economy will also recover, with an expected GDP of 6.5 percent. With better economic performance, industries will also recover, including those of husbandry and seafood.

Thoi bao Kinh te Saigon

Tags: Vietnam agriculture, Vietnam Animal feed production