Agriculture in Vietnam needs to face new challenges

Vietnam has made remarkable agricultural progress but further policy action is required to address new and emerging challenges. Those are the main conclusions of a new report from the Organisation for Economic Cooperation and Development (OECD).
The OECD Review of Agricultural Policies in Vietnam describes the progress made by the country’s agricultural sector since the Doi Moi reform program started in the mid-1980s. A threefold increase in farm production is credited with a reduction in the proportion of undernourished people from 46 percent in 1990-1992 to 13 percent in 2012-2014. At the same time, the country has become a leading exporter in some foods, including becoming the world’s third-largest exporter of rice and fisheries. The country needs to build on these achievements and at the same time, address new challenges that include a deceleration in output growth, falling commodity prices, limited land resources and growing signs of adverse effects of farming on the environment.
“Vietnam’s agricultural transformation over the past two decades has been nothing short of remarkable,” OECD trade and agriculture director, Ken Ash, said during a launch event in Hanoi with Vietnamese Vice Minister of Agriculture and Rural Development Le Quoc Doanh. “Going forward, Vietnam needs to improve its policy environment, to enable investments that will allow the farm sector to continue to adapt to the opportunities created by rising demand and the challenges of climate change and limited resources. Rising labor costs will open opportunities to adopt new technologies and encourage larger farms but they may also reduce the sector’s overall competiveness, particularly if newer labor-saving techniques are not readily accessible or adaptable to the dominant small-scale farming.”

Vietnam’s pig sector

Pig meat is the second largest sector in Vietnamese agriculture with a 15 percent share, according to the report. Output has increased at an average rate of 6.9 percent per year since 1990 although it has declined in recent years. Almost all pig meat produced is consumed in the country, and export potential is limited by poor meat quality and persistent diseases, according to the report. Local producers are effectively protected from imports by restrictive barriers.

Vietnam’s poultry sector

Average annual growth in poultry meat output in Vietnam is also above the global norm at 5.8 percent, with chickens and ducks widely reared across the country. Prices are not internationally competitive, according to the OECD. Since 2008, imports totaling between US$60 and US$90 million have entered the country, mainly from China and the U.S.
Local farmers will soon find they are losing market share to regional and international rivals, Nguyen Thanh Son, chairman of the Vietnam PoultryAssociation, has warned. Thanh Nien News reports that he was addressing a meeting attended by the agriculture minister in Hanoi a month ago, where there was a call for a case to be brought against the U.S. for “dumping” chicken thighs.
The egg sector in Vietnam is relatively small, according to the OECD report, but it is growing at an average annual rate of more than 6 percent.

Feed and grains

Rice is the leading grain produced in Vietnam in terms of area cultivated, followed by maize. Four-fifths of the maize produced goes into animal feed, while substantial and growing volumes are imported.
Non-farming companies have been showing signs of investing in the agricultural sector, reports Nikkei Asia Review.  Steelmaker, Hoa Phat Group, has set up an animal feed subsidiary and it is said to be investing VND300 billion (around $13.3 million) in a feed mill near Hanoi with an annual capacity of 300,000 tons. Production is scheduled to start there by March 2016, followed by another plant in Dong Nai province in the south of the country as well as pig and poultry farms.
The newspaper values Vietnam’s animal feed market at US$7 billion and says it is expanding at an annual rate of around 10 percent. Eighty per cent of the market is covered by local mills belonging to foreign companies, leaving just 20 percent for the 180 or so domestic players.
Other agricultural sectors are also attracting new investors. Vietnamese property company, Hoang Anh Gia Lai, started up a dairy farming business along with other agricultural ventures a few years ago, while 3 Japanese companies have recently invested in rice production in Vietnam.

Vietnam cracks down on banned pig feed ingredient use

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  Andrea Gantz

  Vietnam officials will close down establishments once a third offense of using banned pig feed ingredients.

  From WATTAgNet:
  The Vietnam Ministry of Agriculture and Rural Development (MARD) is cracking down on pig and pig feed producers that are using substances that are banned for use in feed.
  Nguyen Xuan Duong, vice head of the ministry's Department for Animal Husbandry, during a press conference held April 6, said that businesses in violation of using banned substances in pig feed would be issued warnings for the first two offenses. If a third offense were to occur, the establishment in violation would be forced to close. The MARD official added that closed establishments would also have their names released to the media.
  While the agriculture ministry is taking feed quality concerns seriously, it does admit that there will be challenges for MARD officials to thoroughly do inspections at all facilities because of the imbalance between the number of inspectors and pig production and feed production facilities. As a result, inspections in 2015 will focus on pig producers, feed mixers and traders of pig feed and veterinary medicine. Pig farms that mix their own feed will also be given higher priority for inspections, according to Duong.
  MARD states that during times when pig prices are high, such as now, the use of substandard pig feed appears to increase.

Pig breeder Hypor delivers gilts, boars to Vietnam

Pig breeding company Hypor has delivered 700 great grandparent-generation gilts and boars to the new multiplication farm started in Vietnam by Vietnamese integrator Long An Comfeed Japfa.
In September 2011 the companies announced their agreement to form a joint venture called Japfa Hypor Genetics Co., created to establish a high-health breeding structure for Vietnam’s growing pig sector. Currently, Vietnam is estimated to have about 4 million breeding sows. Between 2011 and 2015 its production is forecast to grow by 36 percent to reach 2.6 million metric tons per year, in response to the stimulation of domestic meat consumption due to rising personal incomes.
Hypor is part of multi-species breeding group Hendrix Genetics. Long An Comfeed Japfa, with headquarters in Vietnam’s Long An province, is the Vietnamese arm of Japfa Comfeed of Indonesia. In Vietnam it is a feed producer as well as having activities in poultry and pig production. The Japfa enterprise has approximately 14,000 sows, but plans to increase the number rapidly to around 75,000. 

Vietnam frozen poultry, pork imports rise 20%-30%

Imports of frozen meat, particularly poultry and pork, have increased by 20% to 30% in Vietnam as prices on the country's domestic market have increased. In April, 8,219 metric tons of poultry meat and 456 metric tons of pork were imported, two to three times higher than typical numbers, according to the Ho Chi Minh City Sub-Department of Animal Health.
The price of imported meat has increased alongside domestic meat, but global prices have not, resulting in significant profits for importers. With taxes and other expenses, the global price for frozen chicken wings is VND65,000 (US$3.14) per kilogram. A kilogram of imported chicken wings, however, is being sold for VND90,000 (US$4.35). Similarity, the cost of a kilogram of imported pork is about VND60,000 (US$2.90) including tax and other expenses, while its retail price in the domestic market is VND70,000-80,000 (US$3.38-$3.87) per kilogram. Imported meat is roughly VND10,000 (US$0.48) cheaper than domestic prices.

Vietnam projects pork increase

An estimated seven million households in Vietnam produce pigs, according to a profile of national livestock production prepared by the Vietnamese Ministry Of Agriculture And Rural Development for an intergovernmental meeting on avian influenza held in Hanoi.
Projections from the ministry’s livestock department suggest that on-farm pig numbers in Vietnam could rise from 33 million in 2008 to 57.6 million in 2020, taking the country’s annual pork production from 2.77 million to 4.12 million metric tons, as the demand for pork by Vietnamese consumers rises by 38% from 30.7 kilograms to 42.5 kilograms per person per year.
Vietnam is a rapidly growing nation with a population of some 86 million people, according to the ministry. Its human population is expected to increase to 110 million by 2030—equivalent to adding another million people annually. Population density is highest in the Red River Delta and the south and southeast, including the Mekong River Delta and Ho Chi Minh City. In 2009, 29.6% of the population was living in towns or cities, compared with 23.5% in 1999. Urbanization is a strong influence on the market, with 77% of all population growth over the past 10 years occurring in cities.
Livestock production is one of the fastest growing sub-sectors in Vietnam’s agriculture and is projected to account for about 42% of the agricultural yearly turnover by 2020. Based on a recent assessment, agriculture represents about 22% of the national GDP and more than 60% of employment. The livestock sub-sector supplies 27% of agriculture’s share of gross domestic product (about 6% of the total gross domestic product). Out of this, pig production is the most significant contributor—it provides about 71% of the total contribution to national income from all livestock sectors.