Domestic animal feed has no ‘door’

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Source thanhnien.vn

Statistics of the Department of Livestock Production (MARD) show that the animal feed industry (feed) has 265 companies. In which, the foreign direct investment (FDI) business sector has only 89 enterprises, but the output accounts for 60% of the whole industry.

Agents also give priority to selling to foreign enterprises

Mr. Duong Van Sen (shrimp farming, in Hoa Tu 1 commune, My Xuyen Soc Trang) said that there are many feed agents in this area, but the products only revolve around a few familiar foreign names such as CP, Cargill, etc. De Heus or Japfa… If asked, the agent advises that these food brands are good and effective, but according to Mr. Sen, the agent always gives priority to selling to businesses with high discounts and great incentives.

“The proof is that shrimp farmers have five wins, five wins, but agents only get richer and richer. But to be honest, a shrimp pond is how much capital is in it, now I don’t dare to risk using the feed of a new company,” said Mr. Sen.

That is probably also the thinking of most farmers in many other fields according to household size in Vietnam. In the industrial livestock segment, FDI enterprises also account for a dominant proportion, so it is natural for them to dominate the feed market.

After the covid19 epidemic, while many economic sectors are facing difficulties, feed enterprises are still quite optimistic when up to 57% of enterprises rated their growth as positive and slightly better than before, with more than 14% rating prices maintain growth and 28.6% rate growth will be slightly lower. In the medium and long term, Vietnam’s feed market is forecasted to continue to grow at a relatively high rate.

To what extent is the development potential of the Vietnamese livestock and feed market? About this, perhaps no one knows better than De Heus Group (Netherlands). De Heus has just strongly bought 14 feed factories from Masan. The deal completed earlier this year makes De Heus the largest feed producer in Vietnam with 22 factories and Vietnam also becomes their “headquarters” in Asia.

Before De Heus, CP Group (Thailand) was the giant in the Vietnamese market with the highest market share up to about 20%. Besides the two giants above, there are many big names doing very well such as Cargill (USA) in 2020 profit after tax to 939 billion dong, up 46% compared to 2019 or like Japfa (Indonesia) profit after tax 2020 reached 1,964 billion VND, increased 3.4 times compared to 2019.

Animal husbandry in Vietnam only reaches the level of … hired labor

As a trader of agricultural products, a focal point for supplying imported feed materials, Mr. Tran Vu Khanh, Director of Hiep Quang Agro Company in Ho Chi Minh City, analyzed: There are 3 main reasons why businesses make businesses VN lost to FDI at home. Firstly, foreign enterprises have strengths in the capital market. Second, owning technology leading. Third, the most important is the price of input materials.

Accordingly, the leading brands in the Vietnamese market are currently global brands. In particular, some also come from countries with highly developed animal husbandry such as the Netherlands, the US or Korea. They not only develop an industry or a value chain but also an entire ecosystem of the livestock industry from breeding stock, feed, veterinary medicine, then raising and processing products after breeding. As global corporations, with a long history of development, capital strength, scientific and technological level, deep knowledge and wide network of connections, they are always at the forefront and leave Vietnamese enterprises a distance away. really far.

However, the most important thing that makes Vietnam’s feed processing industry uncompetitive is the import of raw materials. In Vietnam, the cost of feed accounts for about 80-85% of the cost of livestock, while the supply of imported feed is up to 70-80% for corn, wheat, soybeans, etc.

Therefore, the price of feed of domestic enterprises has no “door”. Not to mention FDI enterprises also have the advantage when they can negotiate large contracts at very competitive prices compared to Vietnamese enterprises. “Each ton of imported raw materials only needs to be 5 – 10 USD / ton cheaper than us, it is considered that Vietnamese enterprises have lost,” said Mr. Khanh, adding that there are also some Vietnamese enterprises that negotiate very good prices for raw materials. better than FDI enterprises, but sometimes the “smart” of Vietnamese enterprises is not synonymous with long-term reputation in the market, so it is difficult to develop stably.

Still knowing to identify those strengths and weaknesses to overcome and develop, however, according to Mr. Khanh, Vietnam’s feed industry is falling into a vicious “chicken and egg” story. In order to have a strong capital market, enterprises must do business effectively. To do business effectively, it is necessary to have knowledge, experience, invest in science and technology … But to get these factors, it is related to capital, time and government support policies.

Referring to the animal husbandry and feed processing industry, Mr. Nguyen Van Ngoc, Vice President of the Southeast Livestock Association, admitted: “We have lost. Now I can only accept to work for foreign enterprises.”

According to Mr. Ngoc, over the years, some Vietnamese giants have also seen great potential in this field, besides it may be national pride that they should invest capital. However, even the “big man” Masan has to accept to sell 14 feed factories to foreign countries. Previously, the Con Co brand was also sold to foreign countries.

“Why is that? Because they really have the knowledge, technology and experience in these areas. But livestock is now a science about breeding animals and animal nutrition, not merely an economic branch. The level of FDI enterprises is at a very long distance compared to Vietnamese enterprises. I have to be honest, now that they don’t need any marketing, people buy from them because people see the effectiveness of the product. Looking back at the livestock industry, we see such fragmentation and backwardness that recently, Singapore has a need to import chicken while Vietnam has a surplus of chickens without a qualified farm to export. Very sad!” Mr. Ngoc said.

In the first 6 months of this year, the output of industrial feed is estimated at 10.5 million tons, equivalent to the first 6 months of 2021; in which pig feed accounted for about 55% of the industry’s total output, an increase of about 13.2% over the previous year.



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