August 6, 2020
Vietnam to replenish pork stocks pre-ASF levels by 2022
In the best-case scenario, it will take at least until the start of 2022 before Vietnam's pork supply meets the demand, De Heus' Vietnam general director said, S&P Global Platts reported.
ASF, which destroyed Vietnam's pig population and led to a decline in feed demand, remains to be a threat with fresh outbreaks, and the disease is resurfacing again amid the rainy season, according to De Heus Vietnam General Director Johan Van Den Ban.
Vietnam is one of the largest feed grain importers in Asia. It imports corn in large quantity, and also buys wheat to some extent, to meet its animal feed demand.
After losing nearly six million pigs, or 23% of its total swineherd, to ASF in 2019, pig farmers at the beginning of 2020 started repopulating their farms due to high market prices.
Farmers have learned from the past and enhanced their biosecurity measures, but even with the best biosecurity measures in place, ASF appeared to be a disease hard to control, Van Den Ban said.
"Even though we are trying to support the farmers with improving their biosecurity, particularly the smaller farms in densely populated pig production areas will remain vulnerable to new ASF outbreaks. Losses from ASF have increased in the last few months compared to the beginning of the year," Van Den Ban said.
While professional farms have tried to expand and gradually repopulate their farms with better genetics, driving better production results, small-sized farms, which account for the bulk of the live pig supply, could not lay their hands on good genetics and even have been using finishers for reproduction purposes, Van Den Ban said.
"It depends on the ASF situation where the total pig population will end in 2020, but it's clear that the pig herd will show a significant growth compared to 2019. Companies are en masse attempting to get their hands on (G)GP material, but the top genetics players in the world are struggling to catch up with the rapid demand growth, especially driven by China," he said.
"The herd is repopulated with more efficient sows, so less breeding animals will be needed to achieve similar herd size of slaughter pigs. All in all, by 2022-23 we expect the herd size to be back to pre-ASF levels," he said.
Prior to the outbreak of ASF, pork production accounted for the vast majority of the total feed market of approximately 30 million tonnes.
Of the total feed consumed in Vietnam, about 65%-70% of feed or feed ingredient is imported.
Vietnam imported 18.4 million tonnes of feed ingredients in 2019, according to an estimate by the US Department of Agriculture's Foreign Agricultural Service.
According to USDA's Vietnam local representative report, the total feed demand in Vietnam fell by 10%-11% to 26.8 million tonnes in 2019, of which 20.1 million tonnes was for animal feed and 6.8 million tonnes for aquaculture feed.
Following the ASF there was a huge decline in swine feed, which was partially compensated by growth in the poultry sector, Van Den Ban said.
Van Den Ban sees total animal feed demand of around 20-22 million tonnes in Vietnam in 2020.
During the initial period of lockdown some of the meat sectors, especially the white broiler chicken market, suffered, but the demand for animal protein as a whole has not been hit severely by coronavirus, Van Den Ban said.
The white broilers have very short production cycles. The meat is used in fast-food restaurants, schools, and factory canteens, which were all the sectors that were heavily impacted by COVID-19, and there was a temporary drop in demand, Van Den Ban said.
The COVID-19 impact on protein markets that are dependent on the domestic demand is mostly gone, he said.
Vietnam's pork imports rose 20% on-year to nearly 150,000 tonnes in 2019, according to Rabobank's estimate, accounting for 6% of total consumption.
This year, frozen pork meat imports into Vietnam are likely to be close to 200,000 tonnes, according to Van Den Ban.
"The Vietnamese appetite for fresh meat will drive domestic production, and cannot completely be replaced by frozen meat imports," he said.
With pork prices at an elevated level, the pork industry is attracting investments and there is a faster integration of value chains.
"We see that a lot of pig feed production companies have started integrating the pig value chain because they see that there is a lot of profit to grab in the sector," Van Den Ban said.