In the early time-frame, increasing the pig numbers increased pork production but in 2006, increased yields were solely responsible for the continuing increase in pork supplies. In recent years, the intensification of Viet Nam’s pig sector has shown rapid growth. The larger scale commercial farms are concentrated around the two largest markets – Ho Chi Minh (HCM) City and Hanoi.

With rising incomes in Viet Nam and within both of these major cities, producers have seen the market for pork expand. With this, the demand by the consumer for better quality pork has increased. The large scale farms construct near and around the large cities and they in turn respond to the consumer demands. The cities have made the pork producers especially the large scale farms more market-oriented. With this, the farms want to improve pork production techniques, introduce new management and source better genetics for pig production. Large scale commercial feed mills are providing better nutrition for the farmers. All of these factors have added substantially to the total supply of quality pork in Viet Nam.

Data in Table 91 (p.217) of the Results of the 2006 Rural, Agricultural and Fishing Census: Volume 3 – Agriculture, Forestry and Fishing, General Statistics Office, Hanoi, 2007, indicate that in 2006 more than half of Vietnamese households (55.72 per cent) had two pigs or less and that only 1.75 per cent had 21 pigs or more. In 2001, the corresponding percentages were 66.8 per cent and 0.3 per cent, respectively. Also, data from the same report indicate that there were only 10,811 registered pig farms in Viet Nam in 2006. Thus the small household farms and the specialised pig households still produce and market the majority of the pigs in Viet Nam.

Situation in 2011

Ministry of Industry and Trade reports for this year that the country will produce 2.26 to 2.38 million tonnes of pork. The total consumption of pork is estimated to be between 2.4 and 2.5 million tonnes. The shortfall will be covered by pork meat imports in the range from three to five per cent. This will not significantly affect domestic supply.

In the first six months of 2011, the livestock industry has faced many difficulties due to epidemics (such as FMD, Swine Influenza and PRRS) along with some natural disasters.

According to statistics from various ministries, the preliminary evaluation on the production of livestock herds in the country has 26.3 million total pigs (down 3.71 per cent over the same period last year-27.3 million for 2010 and down from 27.6 million for 2009).

Currently, Viet Nam’s total pig production ranks fourth in the world behind China, US and Brazil. Viet Nam’s supply of pork rose from 14.8kg (32.6 lbs) per person in 1996 to 29.8kg (65.6 lbs) in 2006. This year, if one uses 2.5 million tons of pork consumed for 2011 divided by 87.2 million residents, then the total is calculated at 28.7kg (63.1 lbs) per person per year). From this, Viet Namese consume ample pork. Consumption for 2015 is projected to be about 43kg (94.6 lbs) per person per year; however, the past few years have seen the effects of disease and thus this projection will be difficult to realise. The Vietnamese National Government has in place plans to encourage and incentives to enhance pig production. Will they want to greatly increase imports of pork? Doubtful.

During the first part of 2011, most fresh foods have seen excessively high prices as compared to recent years. The price of pork is no exception. Pig prices have increased rapidly and recently had reached about VND70,000 per kg (US$3.36). Currently, in Ho Chi Minh (HCM) City and nearby provinces (southern Viet Nam), the slaughterhouses have to pay a range from VND60,000 to VND64,000 per kg ($2.88 to $3.07). In the northern region (Ha Noi City and surrounding provinces) prices range from VND67,000 to VND69,000 per kg ($3.22 to $3.31). These are all live weight prices for around 100kg (220 lbs.) market pigs.

As pig prices increase, then consumers have to spend higher prices for special cuts For example, recent prices include: VND135,000 to VND140,000 per kg for bacon (with ribs; $6.48 to $6.72) and VND100,000 per kg for hams ($4.80). These are unprecedented high prices. Normally, after Tet Festival (New Year) and during the summer heat-wave, the consumption of fresh foods decreases and thus, the price of food also drops. However, this year, food prices, especially pork increased during the first six months (up from 26 to 60 per cent depending on type of cuts as compared to December 2010) and is currently at the highest price ever measured.

The new high price of pork has been happening since April. The fluctuation in the price of pork has caused both the farmers and consumers concern. Pork price stabilisation programmes in HCM City have recently been twice adjusted; the first is on 25 May and again on 30 June. On 30 June, the price increased from VND4,000 to VND15,000 per kg ($0.19 to $0.72), depending on the type of cuts.

With many farming enterprises, the lower amount of pork produced this year was affected by multiple diseases (a problem stemming throughout 2010 and into the early months of 2011). Other production factors such as increased feed costs, increased vaccine costs (and instability in supplies; some farmers mentioned no supply of FMD vaccines during this past Spring), increased utilities cost and also high interest rates curbed production. High interest rates caused producers to be afraid to expand their production or to buy replacement animals to replenish their breeding stock and or weaner pigs.

Although the price of pork in the domestic supply was rapidly rising, the Department of Animal Health, Ministry of Agriculture and Rural Development, in the first six months of 2011 still sold 2,584 tons of frozen pork exports to the markets of Hong Kong and Malaysia. In addition, during the period from January to March this year, traders also sold 19,235 pigs to the Chinese market.

Significantly, the outbreak of diseases has directly affected the sow numbers. So far, the total pig herd has fallen by more than six per cent. Replacement breeding stock and weaner pigs for feeding to market have become more expensive. Estimated average price of feeder pigs range from VND1.2 million to VND1.5 millionper pig ($57.64 to $72.05) for a small weaner pig upward to a range of VND2.0 to VND2.3 million ($96.06 to $110.47) for larger feeder pigs. Higher costs of breeding stock plus feeder pigs coupled with higher feed costs and increased overall production inputs have affected the optimism of the farmers. On top of this, interest rates on operating loans can range from 22 to 25 per cent per annum. Many of these farmers experienced the huge financial losses due to the disease epidemic and are reluctant to start right now.

Even though, all of these factors are included, actually with the current meat prices, farmers can profit from VND15,000 to VND25,000 per kg ($0.72 to $1.20).

As in all countries, the price of feed and raw ingredients has been quite volatile in 2011. Viet Nam has seen in the first six months, feed prices continued to increase – from the beginning of the year, the price of feed has been adjusted seven times – with the total increasing from VND800 to VND1,400 per kg ($0.038 to $0.067) compared to the beginning of 2011. The reasons prices have fluctuated include:

1. Rising world prices of raw materials including the price of US corn (compared to May 01/2011, rates have increased from $61 to $62 per ton for US corn).
   
   
2. Exchange rate US$/VND has an increased impact on production costs of enterprises by the feed manufacturer in the country heavily dependent on imported raw materials.
   
   
3. The cost of input factors such as adjustment of fuel prices, electricity, water and other related feed production costs.
   
   
4. Some other issues affecting the supply of raw materials such as contaminated goods or export tax increase, such as one delivered by India with an increase on bran.

According to the Feed Association, Viet Nam annually imports 55 to 60 per cent of feed inputs. In 2010, the country imported nearly 7.8 million tons, worth approximately $2.7 billion. For the expected total in 2011, Viet Nam will have to import 8.5 to 9.0 million tons of ingredients with prices closer to $3.2 to $ 3.4 billion. The breakdown includes the import from 20 to 25 per cent energy-rich feed material, 65 to 70 per cent of the total protein and 85 to 90 per cent additional ingredients of animal feed production—vitamins, enzymes, lysine and other products).

Most of the raw material prices have vastly increase over last year: including corn reached VND7,897 per kg ($0.379), up 23.7 per cent; cassava to VND6,069 per kg ($0.291), up 18.1 per cent; lysine VND51,750per kg ($2.486), up 8.3 per cent; rice bran VND6,150 per kg ($2.95), up 6.3 per cent. Other materials showed some decline: soybean meal VND10,477 per kg ($0.503), down 5.9 per cent; fish meal VND22,218 pr kg ($1.067), down 9.0 per cent and methionine VND110,147 per kg ($5.29), down 5.8 per cent.

There are 241 feed mills in Viet Nam.