April 7, 2004

Vietnam's 2003 Soymeal Imports Seen At 990,000 MT

Vietnam's soybean meal imports have increased considerably to meet increasing demands from the animal feed industry. Vietnam's 2003 soybean meal imports are estimated at 990,000 metric tons, 26% higher than 2002's level, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site.

SOYBEANS
 
Production
 
Although Vietnam's soybean area has increased, production is very small. Annual soybean production is around 200-225 thousand metric tons, and crop yields are low, between 1.0-1.2 MT/ha. Soybeans are cultivated as a buffer crop between two rice crops.
 
Vietnam's soybean production is unlikely to grow rapidly in the near future due to low demand from the animal feed and vegetable oil industries. High soybean production costs (low crop yields and high agro-chemical costs) prevent animal feed mills from utilizing domestic soybeans. Domestic retail prices of grade one soybeans are quoted at VND 7,000/kg - 8,500/kg (or $450- 500/mt).
 
Another major constraint is a lack of soybean crushing facilities (which would product edible oil for the domestic vegetable oil industry and meal for the domestic animal feed industry).
 
Reportedly, the Government of Vietnam and several sets of private investors are doing feasibility studies regarding the construction and operation of oilseed crushing facilities, the report said.
 
Consumption
 
Most of the locally produced soybeans are used for human consumption in the form of soy sauce, tofu products, and soymilk beverages. Only a small quantity of lower-quality soybeans is used for homemade animal feed. Industrial vegetable oil processors hesitate to use domestic soybeans due to scattered production areas, high costs and the low fat content (about 20%) of local soybeans.
 
Trade
 
Vietnam imports some whole soybeans for the livestock feed industry. According to traders, Vietnam annually imports approximately 20,000-23,000 MT of soybeans, mainly from neighboring countries such as China and Cambodia.
 
SOYBEAN MEAL
 
Production
 
Vietnam's domestic soybean meal production is very small, given the absence of crushing facilities and since most local soybeans are used for human consumption and food processing (tofu, soybean milk) products. Therefore, the booming livestock feed sector must rely on imported soybean meal.
 
Soybean meal imports
 
Vietnam's soybean meal imports have increased considerably to meet increasing demands from the animal feed industry . Soybean meal imports to Vietnam increased from 515,000 MT in 2001 to 785,000 MT in 2002, an increase of 52%. Vietnam's 2003 soybean meal imports are estimated at 990,000 MT, 26% higher than 2002's level.
 
In 2003, Argentina was the largest soybean meal supplier, with a market share over 50%. India was the second largest soybean meal exporter to Vietnam, selling about 200,000-300,000 MT. Other soybean meal suppliers include China, Brazil and the United States. According to traders, U.S. soybean meal exports to Vietnam are constrained by high prices, although millers regard the U.S. meal quality as quite high.
 
Vietnam's leading soybean meal importers include both animal feed mills and trading companies. In general, only the big production animal feed mills such as Taiwan's Uni-President, Thai's CP group; U.S. Cargill, French- Vietnamese Proconco, Amasco, Lai Thieu, and Afiex (Vietnamese) import soybean meal. Smaller (and most local) animal feed companies purchase soybean meal from trading companies or the larger mills.
 
Vietnam's 2004 soybean meal imports will drop due to high import prices and decreasing demand from the animal feed industry (due to avian-influenza and food & mouth disease problems), the report said. Post estimates a slight decrease in Vietnam's 2004 soybean meal imports to 900,000 MT.
 
Soybean meal prices have jumped since the end of 2003. Local retail prices of soybean meal are quoted at VND 6,000-6,500/kg ($380-410/mt) up significantly from last year's price of VND 3,000/kg ($190-200/mt). To deal with the problem, animal feed producers are using cheaper materials such as rapeseed meal (imported from China), palm kernel expeller cake (imported from Malaysia and Indonesia) and copra expeller cake (imported from Indonesia and Philippines).
 
The avian influenza (AI) epidemic that hit Vietnam in December 2003 greatly harmed the animal feed industry. According to an estimate (from Vietnam's Association of Animal Feed Producers) the AI epidemic caused a loss of about VND 700 billion ($44 million) to the animal feed sector due to accumulation of unsold poultry feed. Prices of poultry feed will probably increase by 10-15% after the epidemic, as feed producers want to recoup their losses.
 
Imports of soybean meal into Vietnam are free from import duties, i.e., a zero tariff.
 
VEGETABLE OIL INDUSTRY
 
Edible vegetable oil production
 
Vietnam's 2003 edible vegetable oil production is estimated at 320,000 metric tons, an increase of 15% compared with 2002's production.
 
Materials used for vegetable oil production are both domestic products (sesame, peanut) and imported crude oils including palm and soybean oil. In 2003, Vietnam imported about 270,000-280,000 metric tons of crude vegetable oil (accounts 80-85% of total materials used for the industry) of which 30-35% was crude soybean oil. Vietnam also imported some refined vegetable oil (the refined oil imported in 2003 is estimated at 20,000 MT). Malaysia, Indonesia (mainly crude palm oil), Argentina, Thailand and Singapore are reportedly the leading vegetable oil suppliers to Vietnam.
 
In 2004, Vietnam's vegetable oil production is estimated to increase by 14- 15% to 360,000-370,000 MT.
 
Although Vietnam is trying to increase domestic oilseed supply by expanding oilseed production (soybean, sesame, peanut), the edible vegetable oil industry relies heavily on imported crude oil. Post estimates Vietnam's 2004 crude vegetable oil imports at 296,000-300,000 MT.
 
Vietnam has developed a strategy to develop the vegetable oil industry by 2010
 
According to the central government's plan, Vietnam hopes to produce 450,000 MT of cooking oil by 2005 and 660,000 MT in 2010. Out of that production, Vietnam plans to export about 100,000-150,000 MT to nearby markets. To achieve those targets, the vegetable oil processing industry needs about $300 million to update current processing factories, to build new processing and refining facilities and to develop local oilseed production.
 
Vietnam's domestic vegetable oil consumption
 
Currently, Vietnam's per capita vegetable oil consumption is estimated at 4.0-4.5 kg/person/year. Vietnam expects to increase the vegetable oil consumption to 8 kg/person/year by 2008.
 
Vietnam's vegetable oil processing industry
 
Currently, there are 10 vegetable oil factories (including 4 foreign invested companies) operating in Vietnam with total capacity of 420,000 MT/year. Reportedly, several vegetable oil factories will be built in different regions including Hai Phong city (in the North); Da Nang (in the Central) and in Can Tho province of the Mekong River Delta.
 
Vegetable oil exports
 
Reportedly, in 2003, Vietnam earned about $150,000 from exports of vegetable oil to Japan, EU and the Middle East.
 
In 2001, Vietnam exported about 20,000 MT of edible oil to Iraq under the UN's "oil for food" program.
 
Policy
 
Vietnam's commitment to the implementation of the Common Effective Preferential Tariffs (CEPT) agreement for Southeast Asian countries (ASEAN) brings fierce competition to the domestic vegetable oil industry as tariffs are quickly being cut across the region. The import tariffs charged on refined vegetable oils imported from ASEAN's countries will be reduced to 15% in 2004; 10% in 2005 and 5% in 2006.
 
Vietnam's current Preferential Tariff rates applied for refined vegetable oil imported from other countries, including the United States, range from 40% to 50%.

Source: USDA