Imported Meat Price Stuck20 October 2008
VIET NAM – Following the raising the taxes on imported meat, prices still have not changed.
The decision on raising the taxes on imported animal and poultry meat was officially signed by the Ministry of Finance with the aim of saving the domestic animal husbandry industry but the prices of imported meat have still not changed, reports an official source.
Big supermarkets in Hanoi all say that the prices of imported animal and poultry meat have not seen any changes. They are still selling products they imported before. Therefore, the prices of meat of different kinds, especially poultry meat, are still 20% lower than the domestic products.
The ratios of meat imports are different at different supermarket chains. At Big C, the ratio is 30-40%, while it is nearly 20% at Intimex, and only several percent at Citimart.
However, the supermarkets all say that the best sellers now are imported chicken wings and legs, thanks to the much lower prices compared to domestic products, while the imports prove to fit the tastes of consumers.
Vu Thi Hau, Director of Fivimart chain, thinks that import prices will go up as a result of the higher tax. However, she said that products like chicken legs or wings, listed as by-products, which have seen the tax increase of 8 per cent (from 12 per cent to 20 per cent), will not see big price increases if importers are experienced in negotiations with suppliers.
Under the newly released decision by the Ministry of Finance, the biggest tax increase is applied to whole imported chickens, from 15% previously to 40%. However, in fact, supermarkets are not keen on distributing this product.
As for high-grade products, like Australian or New Zealand beef, a representative of Intimex said that the prices of the products are very expensive already, at some VND175,000 per kilo, which is affordable only to high-income earners. Therefore, though the tax rate has increased by 2% to 17%, purchasing power will not be influenced.
Nguyen Xuan Duong, Deputy Head of the Animal Husbandry under the Ministry of Agriculture and Rural Development, said that the decision on raising meat taxes will not show any affect for a few months.
Duong said that as for pork alone, enterprises imported 8,612 tonnes of meat and viscera in the first eight months of the year, or 18 times more than in 2007 as a whole. Moreover, 103,400 tonnes of poultry products also arrived in Vietnam, 2.5 times more than the figure for all of 2007.
In total, enterprises spent $82.7 million to import poultry meat, $12.5 million on imported pork, and $17.2 million on buffalo meat and beef in the first seven months of the year.
Meanwhile, feed prices have skyrocketed by 40-60%, which have forced breeders to ‘run away’. In fact, feed prices have decreased slightly decreased, but Duong said that farmers are still incurring losses with farming.
Farmers also hesitate to resume farming at this moment as they fear epidemics with winter coming.
What will happen if farmers give up their farming, while enterprises limit imports due to the high import tax rates, and Tet is nearing?
In Hanoi, the local livestock husbandry increased by 2% only in the last nine months, instead of 5-6% as seen in the same period of last year. 60% of the demand for pork and 50% of poultry meat has been satisfied by supplies from other localities.
Duong said that domestic demand and supply are nearly equal, and that it is just necessary to reduce imports a little, and domestic prices will go up thanks to psychological impacts. MARD has instructed local departments to support farmers to resume husbandry. Meanwhile, supermarkets have been urged to help sell domestic products.
Citimart has signed a contract with Duc Viet Company on the company's providing enough fresh meat and other products for Citimart's system. Fivimart is focusing on distributing Vietnamese chicken provided by Phuc Thinh Company.
Meanwhile, Intimex has committed to have fresh domestic products accounting for over 80% of meat products in its chain from now to the end of the year, concludes the report.
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