March 19, 2014
The US Meat Export Federation (USMEF), in a recent market analysis, estimates that Vietnam itself consumed a record amount of imported beef in 2013 and all indicators suggest utilisation will grow again this year.
Official statistics released recently by Vietnamese agricultural authorities show that domestic cattle and buffalo meat production slipped last year, while surging demand from overall economic growth and changes in Vietnam's food service industry, partly linked to tourism, provided a strong impetus for beef importers and distributors.
Unlike China, where US beef is banned, Australia competes directly with the US in the imported beef market in Vietnam. Quantifying domestic usage has been difficult, however, because a significant volume of US beef imported into Vietnam is re-exported to China.
USMEF found that imported beef – mainly from eligible supplying countries including Australia, India and the US - is on the rise currently, due to the growth in beef-oriented chain restaurants, growing sophistication among consumers and increased competition among importers.
Under the Association of Southeast Asian Nations (ASEAN)-Australia-New Zealand Free Trade Agreement, imports of Australian and New Zealand beef are subject to duties of 7%, compared to 20% on imports from the US and other suppliers.
Just a few years ago, most US beef shipped to Vietnam ended up in Korean and Japanese restaurants operated by expatriates who established these outlets as family businesses. More recently, local Vietnamese operators like RedSun have entered the picture, opening dozens of restaurants under different brands, but with clear corporate growth strategies and modern systems of operation.
"RedSun's King BBQ is an example of the new model," explained Sabrina Yin, USMEF ASEAN director. "Its nine outlets cater to a growing middle class domestic urban consumer who can afford to spend US$15 for Korean-style barbecue featuring beef."
Some restaurant chains have grown to the point where they can purchase full container loads of beef directly from exporters. Most of this growth to date has focused on the Ho Chi Minh City and Hanoi markets, but operators are now looking at other urban areas such as Da Nang and Haiphong. There are several distinct markets for imported beef in Vietnam.
India supplies the largest share of Vietnam's imported frozen beef, which USMEF estimates at about 14,000 tonnes in 2013. Most of this product is utilised in factory canteens and other mass institutional settings.
In 2013, Vietnam also imported 56,000 head of live cattle from Australia, with most heading directly to local small-scale slaughter plants for fabrication into fresh beef. Some of the resultant beef is 're-exported' across the border into China.
Last year's imports of Australian live cattle increased more than 1,500% over 2012, with trade in the final few weeks of 2013 exceeding the full-year totals from 2012. Several factors contributed to these results, including Australia's widespread drought and its efforts to diversify live cattle exports away from Indonesia.
Vietnam's low duty (5%) on live imports also assisted this growth. According to local traders, beef derived from imported Australian cattle sold for lower prices than domestic beef in local wet markets, USMEF suggested.
According to 2013 statistics released by Vietnam's Ministry of Agriculture and Rural Development (MARD), domestic beef (285,400 tonnes, - 2.9%) and buffalo meat (85,300tonnes, - 3.5%) production both declined compared to 2012.
Although lower production and higher domestic prices partially explain the import surge, strong demand is well-illustrated by the increase in import utilisation, despite a recent depreciation in the local currency.
US beef exports are also restricted to product derived from cattle less than thirty months of age. Although Trans-Pacific Partnership (TPP) negotiations are ongoing, MARD's head of livestock development issued a call recently for Vietnam's livestock producers to ready themselves for increasing foreign competition as a result of TPP.
