Livestock farms accused of price collusion

The latest increase in livestock prices in the domestic market, which has surprised both traders and consumers, is being blamed on price manipulation by big breeding companies.

Lending strength to the suspicion of price manipulation is the fact that the surge has come during the low season, but several retailers say demand and supply factors have also played a role.

Pork prices in the city’s retail markets have increased by between VND5,000-8,000 per kilo on average in the last few days. Prices of lean-fat cuts have gone up to VND110,000 (US$5.2) per kilo and the upper leg has been sold for VND130,000 ($6.2).

“Despite the price hike, consumers still have to buy them,” a retailer at Tan Binh District’s Pham Van Hai market said, explaining that they had no choice but to increase their prices as those of all other livestock items have also got increased prices.

The pricing typically depends a lot on supply and demand, but the pork market is an exception, said deputy head of the country’s main livestock supplier Vissan’s Market Office Do Minh Trung. “A new standard price is being set up in the pork market.”

The Tuoi Tre newspaper cited the owners of some pig farms in the southeastern region as saying prices of live pigs increased because of a shortage in supply following an epidemic in Aprilû. The prices went down later with supply returning to normal.

The latest increase, however, was not caused by any lack in supply.

The pork supply in southern markets has been sufficient, according to a trader at HCM City’s suburban Hoc Mon market, but the price has gone up because of increasing demand from northern markets. “The number of pigs sold to the north sometimes reached 2,000 a day and this made southern pig farmers push up the price.”

Meanwhile, the Ministry of Industry and Trade has said it has not made any plan to import pork so far this year and is unlikely to do so in the coming years as domestic production and supply are abundant.

The head of the Livestock Breeding Department under the Ministry of Agriculture and Rural Development, Hoang Kim Giao, confirmed that supply was sufficient in the domestic market. He attributed the latest hike to international trends and argued it was not a bad thing.

“The increase (in livestock prices) would encourage breeders to further invest and develop their livestock farms after suffering big losses following epidemics last year,” he said.

However, breeders argue that the real beneficiaries of the price hike are not farmers, but livestock companies.

The high price of cattle feed has actually forced quite a few farmers to give up on animal husbandry.

The current suppliers of livestock are mostly large breeding companies, many of them foreign-invested. With their large-scale operations and advanced technologies, they have taken a majority stake in the domestic market.

About 9,000 pigs are sold to HCM City market everyday and the foreign livestock companies supply up to 80 per cent of the total, said HCM City Veterinary Department.

At current prices, breeders can make profits of VND2 million ($95) per 100kg of pig sold, and this is the highest margin so far, according to an owner of a breeding farm in southern Dong Nai Province’s Bien Hoa City.

Speaking on the condition of anonymity, he said these figures indicated how much profit the breeding companies were making and also explained the price hike.

The poultry market is facing a similar situation. The market is dominated by big foreign invested companies like CP, Emivest, Japfa.

The price of industrially-raised chicken went down to VND38,000 ($1.8) per kilo late last month but went up again to VND41,000 (almost $2) per kilo over the last few days. Breeders are enjoying record high profits of 50 per cent, as a kilo of chicken, which requires an investment of VND27,000 (nearly $1.3), is sold for VND40,500 ($1.9)

http://vietnambusiness.asia/livestock-farms-accused-of-price-collusion/