Vietnam’s livestock industry loses to foreign firms

Vietnamese businesses in the livestock industry are losing their home market to foreign competitors, with the latter holding most of the animal feed and livestock breeding market share — the two most important sectors of the industry.

According to many analysts, although numbering only around 20, foreign animal feed manufacturers are holding up to 70 percent of the country’s market share.

The poultry breed sector, for example, are being dominated by three foreign companies, CP Vietnam Livestock Corporation, Japfa and Emivest, supplying around 6 million poultry to the domestic market monthly, leaving hundreds of domestic firms to compete for the remaining market share.

The fierce competition has driven 30 percent of domestic firms out of business, experts said.
Holding manipulating power over the domestic market, the foreign firms freely conspire with each other to hike their prices, causing great difficulty to livestock farmers.

According to the Vietnam Animal Husbandry Department, the animal feed manufacturers have already increased their prices a dozen times since early this year, making the current prices 40 percent higher over the same period last year.

Early this month, the price of a day-old breeder chick shot to VND27,000, 3.6 times higher than early this year, according to the Ministry of Agriculture and Rural Development.

Although their domestic market is dominated by the foreign competitors, Vietnamese businesses are still at a loss on how to find a solution to the problem.

Many companies said while 70 percent of the materials needed to produce animal feed for the domestic market are imported from abroad, the government has yet to develop an alternative supply source to support them.

In addition, while domestic businesses are only allowed to borrow in local currency and at high lending rates, their foreign counterparts can borrow in foreign currency at low interest rates and, supported by their parent companies, purchase raw materials at low cost.

Pham Duc Binh, deputy head of the Vietnam Animal Husbandry Department, urged the government to develop a policy to help the domestic livestock industry have access to a reliable and sustainable supply source of animal feed.

“We should put up technical barriers to keep domestic materials from flowing abroad,” he said. “With the current zero percent export tariff on corn and manioc, we will soon run out of these materials to produce animal feed for the domestic industry.”

Nguyen Thi Le Hong, CEO of Dong Nai Food Industrial Corporation (Dofico), also suggested the government devise an appropriate policy to curb the materials being exported en mass.

“If we do not have a solution soon, the livestock farmers will have to depend on, and thus remain at the mercy of, the foreign firms forever,” she worried. – Tuoitre

Tags: Vietnam’s livestock industry