August 5, 2008


Harsh market conditions strangling Vietnam's feed industry

Nearly 40 feedstock-manufacturing companies in Vietnam have closed down so far this year as feed market conditions become harsher, according to Bui Thi Oanh from Ministry of Agriculture and Rural Development's Animal Husbandry Department.


Processors spend more than US$1 billion a year importing ingredients such as soy, corn and flour.


Prices for various types of feedstock have jumped 60-110 percent in the past year while cost of imported ingredients has also increased significantly.


Tighter credit, high loan interest and exchange rates, and high foreign-exchange transaction fees have worsened the situation.


Do Kim Chi, representative of New Hop Co., said the company did not have enough US currency to pay their suppliers because the banks sold US dollars at a high price.


Reserve supplies of feed ingredients are running out and with complicated import procedures and outbreaks of diseases, things are not getting any better.


Nguyen Xuan Duong, deputy director of the Animal Husbandry Department warned that global feed ingredient prices are likely to rise a further 20-3 percent in the near future, which could threaten more feed producers with bankruptcy. Due to shortages of domestic supplies, Vietnam is forced to import ready processed stock-feed.


This year, Vietnam's feed demand is 18 million tonnes, of which domestic manufacturers meet only about 79 percent. In the first half of 2008, Vietnam has already imported nearly 3.5 million tonnes of feed worth US$1.5 billion.


The Ministry of Agriculture and Rural Development has asked the government to make stock-feed products and ingredients essential commodities in an effort to stabilise the market and support manufacturers. The recognition would help to cut import taxes from the current 5 percent to zero.


The Livestock Breeding Department said it will concentrate on developing intensive farming areas for growing soy, corn and grass with high nutritional value.

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