Foreign firms dominate animal-feed market

Foreign firms dominate the supply of animal feed and breeding stock in the domestic market, and control the prices of both, industry insiders say.

There are about 20 foreign invested firms producing animal feed in Viet Nam and they account for 65-70 per cent of the animal feed market.

Pham Duc Binh, deputy chairman of the Viet Nam Animal Feed Association, said feed for shrimp is mostly supplied by foreign firms Thailand-invested CP Viet Nam, Taiwan-invested Uni-President Viet Nam and France-invested Tomboy.

“Shrimp is the fisheries sector’s most important export product. The area under shrimp cultivation is expanding and the demand for shrimp feed is increasing, but domestic companies cannot enter the shrimp feed market,” said Binh.

Foreign firms also dominate the supply of shrimp fries, he added.

Vu Thi Ngoc Trinh, deputy general director of the Minh Dung Veterinary Medicine Company, said forein companies account for 90 per cent of the veterinary and aquatic medicine market.

In the poultry breeding sector, three foreign companies – CP Viet Nam, Japfa and Emivest – now supply nearly 100 per cent of the breeder chicken in the southern region.

The three companies supply about 6.2-6.5 million of breeder chicken every month.

The price of a one-day-old chicken is now VND26,000-27,000 a head, up 3.6 times compared to January.

Binh said the production costs for a day-old chicken is now about VND8,000-9,000 a head.

Breeding companies normally earn profits of 30 per cent from producing breeding stock, but in Viet Nam, they are earning much more, he said.

This year the prices of animal feed have increased seven times and each time, it was pushed up by foreign companies, according to animal feed agents.

These companies often cite a hike in material prices as justification for increasing animal feed prices.

However, when domestic firms are able to reduce their animal feed prices, foreign firms retain their higher prices, and are able to do so only because they occupy a dominant market position, said the director of a local animal feed company in Dong Nai Province.

“Because of their large market share, foreign companies can impose their prices on the market and breeders have no choice but to accept it,” he said.

Domestic producers say they now have to import 60-70 per cent of materials for making animal feed because the country does not have raw material production zones large enough to replace imports.

They also have to raise loans at high interest rates while foreign-invested companies have the advantage of borrowing loans in US dollars at low interest rates and are supported by their parent companies abroad in importing materials at low prices and making deferred payments.

Diep Kinh Tan, deputy minister of Agriculture and Rural Development, said the increasing price of breeding stock and feed in the past years have shown the weak managing capacity of concerned agencies.

The ministry will ask relevant ministries and sectors to issue policies to support the domestic animal husbandry sector with increased access to preferential credit, Tan told the Nguoi Lao Dong (the Labourers) newspaper.

The agriculture ministry would support domestic private companies in producing breeding stock. — VNS

http://vietnambusiness.asia/foreign-firms-dominate-animal-feed-market/