May 5, 2023

 

Vietnam's livestock sector faces challenges from FDI enterprises and imported meat

 

Nguyen Thanh Son, chairman of the Vietnam Poultry Association's (VIPA), said that the country's domestic livestock industry is faces challenges from the increasing dominance of foreign direct investment (FDI) enterprises in the market and increased meat imports into the country, Vietnam Net reported.

 

The domestic livestock industry has seen significant growth in recent years, especially in the poultry sector, which has witnessed a 1.5-fold increase in the number of poultry, rising from 342 million in 2015 to 533 million in 2022.

 

Meat production has also surged 2.87-fold from 700,000 tons to nearly 2 million tonnes. The output of poultry meat and eggs has fulfilled domestic consumption needs and has been officially exported, which was not previously possible.

 

Despite this growth, Son said there are challenges that require immediate attention in the livestock industry. The profitability of poultry production is declining steadily, while the growth of imported meat is outpacing that of domestic production. Fierce competition between domestically produced meat and cheap imported meat has created an unstable market with domestic consumption still dominating, and processed products, especially deep processing, are in short supply.

 

Livestock diseases have continued to happen frequently, particularly in smallholder farming areas, posing significant risks. Consequently, the livestock industry is currently highly vulnerable and unsustainable.

 

The VIPA chairman said recently domestic livestock companies have been losing ground to FDI livestock companies, resulting in smallholder farmers and domestic livestock companies being gradually forced out of the market. FDI companies have taken over pork and poultry production in the Vietnamese market, investing heavily in large-scale projects in Vietnam, focusing on pork and poultry production.

 

He said the main cause of this situation is the lack of capital and the significant drop in market prices, which has shut down domestic livestock facilities over the past two years. As a result, many domestic livestock facilities and companies are forced to provide livestock raising services for FDI companies in which they receive breeding animals and livestock feed from FDI companies and raise animals on their farms for a fee.

 

Son said this has resulted in the higher growth rate of imported meat compared to the domestic livestock industry. Statistics show that the livestock industry has experienced an annual growth rate of 6.3% from 2018 to 2022. But over the past two years (2021-2022), the growth rate of imported poultry meat skyrocketed to almost 60%, which is an alarming trend.

 

The domestic market is being flooded with imported chicken meat and low-quality by-products, sold at very cheap prices of VND 30,000 (~US$1.28; VND 1000 = US$0.043) to VND 40,000 (~US$1.71) per kg, while FDI companies are taking over market share in the local market. This raises the question of how local farmers and domestic companies can survive. VIPA's calculations show that the current poultry farming cost is around VND 29,000 (~US$1.24) to VND 30,000 (~US$1.28) per kg, but the average selling price is only VND 25,000 (~US$1.07) per kg. This means that farmers are selling below cost.

 

VIPA has urged the government to implement policies that will support domestic companies and farmers to compete on an equal footing with FDI companies on their home turf. They also proposed reviewing the strategy for developing the poultry farming sector in light of the oversupply situation as there are too many licensed firms in the market.

 

-      Vietnam Net