VIETNAM: Pork Crisis, Agriculture Ministry Begging To Increase Exports To China

Pork likely will be hogging menus in Vietnam's factories and army canteens for some time to come, as the country tries to keep pig farmers stricken by a glut in supply from going under.

Millions of farmers are struggling after China began blocking imports from Vietnam in November. The crisis has highlighted the risks of depending on a single foreign market, especially such a big one: half of all pork the world eats is consumed in China.

Pork prices fell to as low as 50 cents a pound in early May, less than half the price a year earlier. So far, a surplus of 300,000 tons to 400,000 tons has accumulated, according to state media.

To help farmers weather the crisis, the military, police and trade unions are boosting pork portions in meals served in their canteens.

At a recent Cabinet meeting, Prime Minister Nguyen Xuan Phuc told officials to review planning of farm production and distribution to prevent future gluts in pork supplies.

The agriculture ministry, meanwhile, is lobbying to increase exports to China and other markets.

The rescue effort may have come too late for farmers like Do Huu Thuyen, who lost all his savings when pork prices recently crashed to record lows.

The price of pork has never been cheaper, said Thuyen after feeding his herd at his farm in Xuan Son, a village about 34 miles northwest of Hanoi.

Vietnam is the world's sixth-largest pork producer with about 3 million households raising pigs, mostly in small, backyard farms. Such small-scale farming usually earns them badly needed cash income, but it's relatively inefficient and difficult to regulate.

If farmers see a chance for profits they will do as they like, as they have done many times before despite cautions from the government, said Nguyen Anh Dung, another pig farmer.

China's crackdown on the border trade was a harsh blow: Vietnamese sold 600,000 tons of pork to Chinese buyers in 2016 through such channels.

It also came at an especially bad time, since many farmers had expanded their herds two years earlier when prices spiked. Pork output in 2016 was 3.9 million tons, triple the output of 15 years earlier, according to the agriculture ministry.

Thuyen, 42, says his farm was worth hundreds of thousands of dollars when he mortgaged his home to expand his herd to 170 breeding pigs and 400 pigs for slaughter.

He hasn't sold a single piglet in the past three months because with pork prices so low, nobody wants to raise them.

In six months he lost $88,000 or 10 years' worth of savings, he says.

I could go bankrupt, if the price stays the same, he said.

Vietnam's farm ministry is lobbying Beijing to resume imports, and Agriculture Minister Nguyen Xuan Cuong hopes to meet with his Chinese counterpart on the sidelines of a regional forum to be held in Vietnam in November, state-controlled media have reported.

Farmers complain that the winners in this pork crisis are traders who are paying rock bottom prices for pork in a buyers' market, while markets still charge relatively high prices.

Thuyen said he is losing $66 for every pig he sells, while traders make that much or more.

I am waiting for the bank to come to seize my house, he said. I may have to work as a construction worker to make ends meet.

At the end of September and according to the General Statistics Office, Vietnam had about 2.5 to 3.0 per cent more pigs on farm as compared to last year at this time (all livestock are up about 4 per cent), write Ron Lane, Business Director for Asia Pacific and Meggie Vo, Genesus Marketing Representative in Vietnam.

Currently in Vietnam, pork production is a relatively well developed market with stable demand and reasonable profits.
Large scale breeding farms and the pork value cold chain from the farmers through distributors to the consumers continue to grow with economic efficiency.

Recently, pork prices in the southern provinces were lowered as there was reduced pork consumption because of decrease in demand in the Northern area. Pork supply is increasing in Vietnam.

Market pig prices have slipped this past while. In the Southeast region, the market pig price decreased approximately 500 to 1,000VND/kg and decreased from 1,000 to 2,000VND/kg ($ 0.06 to $ 0.09/kg-$ 0.02 to $ 0.04/lb.) and in the Mekong Delta to the level corresponding to 45,000 VND/kg ($ 2.06/kg-$ 0.93/lb).

The price in the northern region ranged from 46,500 to 50,000 VND/kg ($ 2.13/kg-$ 0.96/lb.) and in the southern region, the range was lower at 44,000 to 46,000VND/kg($2.01/kg-$0.91/lb to $2.10/kg-$0.95/lb.)

The import value of commodity groups and animal feed ingredients for the month of September is estimated at $ 344 million, bringing the value of imports for the first 9 months of 2015 at $ 2.59 billion - up 3.9 per cent over the same period in 2014.
For this year, the major importers of the various commodity group/feed ingredients are Argentina (42.0 per cent market share); the USA (14.4 per cent ), Brazil (7.8 per cent ) and China (5.9 per cent ). The market value increased sharply compared to same period from last year.

The estimated corn import volume in September reached 408 thousand tonnes with a value of $ 84 million, bringing the volume of imported corn in the first 9 months of 2015 to 4.67 million tonnes with an import value reaching $ 1.04 billion-up 48.9 per cent in volume and up 28.4 per cent in value over the same period of 2014.

Brazil and Argentina are the two main suppliers accounting for 48.1 per cent and 46.6 per cent respectively, of the total import volume of commodities.

During the month of July, Vietnam imported 21 thousand tonnes of soybeans with a total value worth $ 10 million. During the first 9 months, Vietnam imported 1.195 million tonnes of soybeans (value of $547 million - an increase of 2.1 per cent in volume and an increase of 20.0 per cent in value compared to last year.

In the past marketing year (2013/14), the USA became the largest exporter of soybeans to Vietnam. The USDA Grain Report showed that close to 700,000 tonnes of soybeans came to Vietnam (an increase of 26 per cent over the previous year).

On another note and with soybean meal consumption, John Baize, President of John C. Baize & Associates, says that global soymeal consumption in 2014/15 was 198.6 million tonnes and that in 2015/16, the USDA projects use to reach 208.6 million tonnes.

He also states that five of the main importers (after China) in 2015/16 year will be from Southeast Asian countries- Indonesia is predicted to import 4.7 million tonnes, followed by Vietnam at 4.25 million tonnes, then Thailand at 3.05 million tonnes, the Philippines at 2.65 million tonnes and Malaysia at 1.5 million tonnes.

We were recently asked about the use of DDGs in Vietnam. During the crop year in 2014 the US exported around 12 million tonnes of DDGS. According to Justin Cauley, US-based CHS Export Commodity Manager, 39 per cent was exported to China, 6 per cent to South Korea, 6 per cent to Vietnam and 4 per cent to Japan. This year, China’s share is reaching 52 per cent .

In the last report, we mentioned how the Vietnam Institute for Economic and Policy Research mentioned that domestic livestock production is unsustainable, non-competitive and vulnerable and would be at a disadvantage when the new Trans-Pacific Partnership (TPP) (now signed) and the Asean Economic Community (AEC) are engaged.

Again, the large number of small-scale farms, the dependence on imported breeding stock, devastating diseases, technical limitations and poor slaughtering facilities, including basic hygiene will put Vietnam’s market pig producers behind and a continued surge in imports will continue.

In defense of Vietnam’s livestock and poultry industries, Dr Tong Xuan Chinh, Director of Livestock Production Department, Ministry of Agriculture and Rural Development (MARD), predicts that the Country will grow to become very competitive.

As he mentions, already large-scale poultry companies in Vietnam, such as CP Vietnam, Japfa and Emivest operate very efficient “farm-to-table” systems for poultry and all are rapidly expanding to do the same in market pig and pork production. Furthermore, he states that currently, Japanese companies are looking to invest in Vietnam.

In another meeting, Dr Tong Xuan Chinh, comments on the larger movement of meat products among member countries of the new Asean Economic Cooperation (AEC) trading bloc.

“It will be important for member countries to develop standards on animal health, food quality and safety as well as technical standards for poultry(livestock) raising, such as AEC GAHP, AEC GMP, etc,”.

The Consumer Price Index (CPI) in September recorded a lower increase, 0.21 per cent compared to August. For the past 9 months, the CPI rose an average of 0.40 per cent . Vietnam’s GDP growth is about 6.2 per cent this year.