August 28, 2018

Foreign feed producers keen to expand operations in Vietnam

 

 

Vietnam has seen an increase in local production of animal feed, but still has to spend US$3 billion to import feed and raw materials for production yearly, Hanoitimes reported. 

 

Moreover, the country's animal feed market has attracted several foreign feed companies like De Heus, Cargill and CP, thanks to a two-digit growth in the past two decades.

 

Vietnam's livestock industry currently needs about 16 million tonnes of animal feed worth some US$6 billion yearly. By 2020, the demand will increase to 25 million tonnes, valued at US$10.5 billion.

 

A key factor which attracts foreign investors to Vietnam's feed industry is its annual 10-15% growth rate. With the rising number of foreign investors in the sector, Vietnam, in term of animal feed production, is the leading country in ASEAN and the 10th in the world.

 

Reports from the Vietnamese Ministry of Agriculture and Rural Development showed that the country has 239 feed plants, of which 61 are foreign-invested firms. Although Vietnamese animal feed producers outnumber their foreign peers, they hold a market share of just some 35%, with the remaining 65% belonging to foreign producers.

 

Many foreign feed plants are planning to further expand production in Vietnam to catch up rising demands.

 

According to Montri Suwanposri, general director of CP Vietnam, the company has 10 animal feed and seafood production plants with a total output of 4.2 million tonnes per year in Vietnam. CP is expected to continue expanding production in this field.

 

Other foreign feed producers such as CJ, De Heus and Haid have also planned to increase output of their existing plants.

 

Industry insiders said that animal feed production requires high technology and huge investment - aspects which local producers are often weaker in than foreign direct investment (FDI) companies.

 

Le Ba Lich, chairman of the Animal Husbandry Association of Vietnam, also admitted that foreign firms have stronger financial capacity, experience, modern production line and especially appropriate distribution strategies to expand their market.

 

In addition, Dong Van Hoa, deputy director of Thanh Binh Company, said that to attract customers, FDI firms have also provided a full package solution for its partners and customers that supplies feed and one or all of its support products and services such as livestock breeds, farming equipment, technical advisory services, processing and consumption.

 

Farmers thus prefer products of foreign companies as the companies' completed production and consumption chains have helped them cut costs and have stable consumption.

 

Hoa suggested that domestic firms must join hands with other companies to provide complete supply chains in order to bolster their longevity.

 

Recently, some domestic large companies such as Masan, Hoa Phat, Hung Vuong and Vingroup have made big investments in the feed industry to provide complete supply chains with the aim of regaining local market share.

 

Masan has bought Proconco, Anco and Green Feed to become the second largest livestock feed supplier in the country as well as the largest Vietnamese corporation in term of feed production. Hoa Phat Group has also put into operation a feed plant with a capacity of 200,000 tonnes per year.

 

According to Tran Van Quang, head of the Dong Nai Department of Animal Husbandry and Veterinary, Masan and Hoa Phat have feed plants in Dong Nai while Hung Vuong and Vingroup are also likely to invest in the country's largest livestock-producing province.

 

- Hanoitimes