VIET NAM - Ron Lane, Senior Consultant for Genesus Viet Nam & Meggie Vo, Research Assistant, provides the latest update on the hog market situation in Viet Nam.
- The first 6 months of 2013 has been very difficult for swine producers. The rise in fuel costs, disease challenges and production costs-mainly due to increased feed ingredients costs, coupled with low market pig prices, have seen most farmers show losses during this time period. Farmers are seeing financial stress and have little incentive to invest in their farms (several farms are closing down or reducing their sow herd). Also the blue ear disease (PRRS) has occurred in many provinces including Nghe An, Quang Nam and Quang Tri. An estimate of about 6,000 head have died or been destroyed from February to May due to PRRS related factors.
- The estimated total number of pigs in the Country on June 15/2013 was 26.5 million- a drop of 0.52 per cent compared to the same period in 2012. This compares to a recent survey done by the General Statistics Office at the beginning of April, that showed the estimated total number of pigs to be 26.98 million, an increase of 1.08 per cent compared to April, 2012. The total number of sows was 15.43 per cent of the 26.98 million total pigs or 4.16 million sows.
- According to estimates by the Department of Livestock, from the beginning of 2013 to the end of June, total meat production is estimated at 2.62 million tons, up 2.32 per cent from last year. In particular, pork was 1.9464 million tons (accounting for 74.0 per cent); poultry was 0.4457 tons (16 per cent of the total) and beef was 0.230 tons (9 per cent of the total meat supply to date).
- In the first 6 months of 2013, the market price has been many times below the production costs and thus farms have showed unprofitable or less profitable cash flows. Market pig prices were: January, 48,000 VND/kg ($2.26US/kg-$1.03US/lb.)(North region) and 44,500 VND/kg ($2.10 US/kg-$0.95US/lb.) (South region); in March, 43,000 VND/kg ($2.03US/kg-$0.92/lb.)(North region) and 38,000 VND/kg ($1.79US/kg-$0.81US/lb.)(South region); and in May, 41,000 VND/kg ($1.93US/kg-$0.88US/lb.)(north region) and 37,500 to 39,000 VND/kg-$1.77US to $1.84US/kg-$0.80US to $0.83/lb.) (South region).
- As hog prices fell, this further pushed commodity meat prices to a lower level. For example, lean pork tenderloin prices were quoted at 102,000 VND/kg ($4.81US/kg-$2.18US/lb.); down 3,000 VND/kg ($0.14US/kg-$0.06US/lb.) and hams were quoted at 92,000 VND/kg ($4.34US/kg-$1.97US/lb.); down 3000VND/kg ($0.14US/kg-$0.06US/lb.).
- Compared to the first 5 months of 2012, the prices of feed ingredients for mainly energy and protein sources were up considerably. For examples; fishmeal was 28,980VND/kg ($1.367US/kg-$0.62US/lb.) and this was higher by 41.5 per cent from the same period in 2012; soybean meal was 13,797VND/kg ($0.651US/kg-$0.295/lb.). There were also increases for cassava at 5,691VND/kg ($0.268US/kg-$0.122US/lb.)(Up 8.2 per cent); rice bran at 7,220 VND/kg ($0.341US/kg-$0.155US/lb.) (Up 3.7 per cent); and corn at 7,528 VND/kg ($0.355US/kg-$0.161US/lb.) up 3.6 per cent. Complete feed costs for finished products increased by 10.2 per cent for hog feeds (average price of 10,284.20 VND/kg ($0.485US/kg-$0.220US/lb.).
- General Statistics Office has released the consumer price index (CPI) for May, 2013 and it decreased by 0.06 per cent from the previous month. May CPI has increased by 6.36 per cent (year on year as compared to May 2012) and increased 2.35 per cent since December 31st, 2012. CPI declined mainly due to a lowering of gasoline prices (2 times in April) and the prices of food and food consumption continue to decline due mainly to consumers fears of diseases in beef and poultry. For June, the CPI increased by 0.05 per cent from May.
- A recent survey by the Dong Nai Department of Agriculture and Rural Development compared the profitability of foreign livestock production, which employs modern technology and facilities, with the production from local backyard farms. With the recent market pig prices dropping to 38,200 VND/kg ($1.80US/kg-$0.817US/lb.), the modern farms still showed a profit whereas the backyard farmers were losing 4,250VND/kg ($0.20US/kg-$0.091US/lb.). Also within the survey, the local Dong Nai Department feels that the utilizing of improved breeds and advanced production and technology, could lower production costs and improve reproduction and overall productivity.
- The Vietnamese Government is working on initiatives to improve food safety, inspection services and is increasing the control of the distribution of live pigs and carcasses in Viet Nam. Recently, the Thu Duc Animal Quarantine Station in HCM City in cooperation with the Traffic Police, seized a truck carrying about 1 tonne of dead pigs. The health tests confirmed positive tests for PRRS and Hog Cholera. Since January, 2013, 117 similar incidents of illegal transportation have been recorded.
- For the first time, the US has commenced shipping bulk soybeans to Viet Nam. Both Cargill and Sojitz companies accepted the first 2 loads of bulk soybeans via "handymax" freighters. An additional 3 loads are on order for importers in Viet Nam. The US Soybean Export Council expects an increasing demand for bulk soybeans.
- For the first five months of 2013, the Viet Nam imports for feed ingredients jumped 40.6 per cent year on year to a value of 1.15 billion USD. For the month of May, imports reached 236 tonnes. Viet Nam mainly buys soybean meal, corn and DDGS from India (25 per cent of all imports), the USA (18 per cent) and Argentina (14 per cent).
- The rising costs of imported feed ingredients coupled with poor pig prices, has the Ministry of Agriculture and Rural development (MARD) proposing to the State Government to remove the 5 per cent value added tax (5 per cent VAT) charged on feeds/ingredients. Also, to help producers with their losses, The State Bank of Viet Nam has asked 5 commercial banks to lower the interest rates on existing loans to swine farmers to 10 per cent. Last year, the interest rate reached as high as 20 per cent.
- McDonald's is considering the entry of the Viet Nam market in 2014 as they can see the growing popularity of fast food in the country. To find partners and suppliers of their materials, especially potatoes is the next step before entry.
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