Enterprises producing animal feed "drown" in their home yard

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List of Top 10 prestigious animal feed companies in 2020. Source Vietnam Report

Three leading positions in the top 10 respectively belong to: C.P Livestock Joint Stock Company. Vietnam, DES HEUS Company Limited and Viet Phap Joint Stock Company produce PROCONCO cattle feed. Next areJAPFA COMFEED Vietnam Company Limited, GREENFEED Vietnam Joint Stock Company. All are foreign businesses. So in the top 10, there are six foreign enterprises.

This shows foreign enterprises dominate the animal feed market in Vietnam.

According to the Ministry of Agriculture and Rural Development, at present, Vietnam has about 265 animal feed factories, of which 85 belong to foreign enterprises (accounting for 32%) and180 factories belong to domestic enterprises (accounting for 68%). However, domestic small and medium enterprises are weak compared to foreign companies.

Specifically, foreign firms account for 65% of market share, while the remaining 35% is held by domestic firms. Thismarket shareisstill at risk of declining due to the expansion of the size andnumber of businesses as well as the output of foreign businesses due to the development potential of the Vietnamese livestock industry.

One of the reasons is that foreign enterprises have a methodical business strategy with a closed production and business chain, while domestic firmsstill lack linkages.

In 2019, when the African swine fever broke out, 5.7 million pigs were destroyed, equaling about 10% of the total production with 3.85 million tonnes of pork, making livestock production enterprises. The country was severely affected, especially small businesses, andmany factories were forced to close or reduce their operating capacity sharply due to the drop in demand forfood.

Large corporations, including foreign-invested firms, also faced many difficulties, but they still resisted due to their large capital, building a chain of links from the beginning of the production process to the dining table.

Another limitation that makes domestic animal feed businesses less competitive is that feed ingredients mainly depend on imports. This is why domestic livestock product prices are always high and struggleto compete with imported ones because animal feed accounts for more than 70% of the production cost of the livestock industry, so when the price of raw materials has increased, feed prices immediately increased.

According to the General Department of Customs, in the first 10 months of 2020, Vietnam spent more than US$3.2 billion on importing animal feed and raw materials, up 2.4% fromthe same period in 2019.

In addition, according to the survey results of Vietnam Report, animal feed manufacturers are currently facing fivemain difficulties. That iscompetition among businesses in the industry (85.7%); prices of raw materials and inputs increased (71.4%); demand for animal feed decreased (57.1%); the supply of raw materials for production was interrupted (57.1%); and lack of capital for doing business (42.9%).

To motivate animal feed businesses to gain market share, experts have given fiverecommendations that is to control input materials; upgrade investment in factories to meet international standards; link with livestock households; development of the 4F model biosafety model (Farm-Food-Feed-Fertiliser); to invest in automated machines and animal feed production lines that meet international standards.

In addition, the Government needs to step in to support businesses to develop a 4F model biosafety complex (Farm- Food- Feed- Fertiliser); to step up the quality control of animal feed products, especially with new products brought to the market by standards and regulations; planning organization and development of raw materials for the production of animal feed; create conditions for animal feed enterprises to expand production, access preferential loans; support to accelerate the re-herding work, strictly control epidemics and develop livestock herds in localities; as well as reduce import tax on raw materials for production.