Unusual increase in pork price: Who is manipulating the price?

Real and virtual numbers

According to the Center for Information Technology and Statistics (Ministry of Agriculture and Rural Development), the domestic price of live pigs fluctuated downward in the first quarter of 2018 but increased again in April and especially continuously in May 2018. Compared to the end of last year, the price of live pigs in the Mekong Delta increased by 16,000 VND/kg, to 43,000 - 46,000 VND/kg.

Pig prices in the Northern provinces also increased by 11,000 - 12,000 VND/kg to 43,000 - 47,000 VND/kg. In the Central provinces such as Nghe An, Ha Tinh, Thua Thien-Hue, Quang Nam... pig prices also increased by 12,000 - 16,000 VND/kg, to 43,000 - 45,000 VND/kg. Currently, in many localities, pig prices have exceeded 50,000 VND/kg and show no signs of stopping. The above price, compared to the "rescue" period last year (some places were 17,000 - 20,000 VND/kg), has increased by about 2.5%.

Currently in many localities, pork prices have exceeded 50,000 VND/kg and show no signs of stopping.

The Center for Information Technology and Statistics also stated that the increase in pork prices is partly due to the decrease in supply in recent times. It is estimated that the current number of pigs in the country has decreased by about 5.4% compared to the same period in 2017. So is the decrease in the number of pigs enough to cause a shortage of goods, pushing pork prices up like in recent times?

In fact, many farm owners in pig breeding centers across the country said that last year's pig price crisis caused 50-60% of pig-raising households, farms, and small farms to "hang up their barns", fall into debt, and even go bankrupt.

However, in contrast to the shrinking number of households raising livestock, the import data for animal feed (mainly for pig and poultry farming) shows an increase. According to the Ministry of Agriculture and Rural Development, in the first 5 months of 2018, the country imported 1.61 billion USD worth of animal feed and raw materials, an increase of 11.5% over the same period in 2017. For corn alone, since the beginning of the year, the country has spent about 770 million USD to import over 3.9 million tons, an increase of more than 26% in volume and 23% in value over the same period last year.

The above real and virtual numbers make Mr. Pham Thanh Binh, Vice President of the Vietnam Animal Feed Association, also say that in Vietnam, no one knows the number of pigs.

Mr. Binh raised the question: “The reason for the increase in pig prices is difficult for many people in the profession to explain. Firstly, Chinese pig prices are cheaper than Vietnam's, so they cannot be exported to this market, and the demand factor has not changed. Secondly, while many farmers are almost exhausted, out of money, out of capital after the shock last year, statistics still show that imports of raw materials for animal feed have increased, meaning there are still many farmers. This is very strange.”

Who is manipulating?

Through discussion, a leader of a large livestock enterprise in the North said that the price of pigs increased because the pigs in the population had run out since last year. Even domestic livestock enterprises were losing money, except for potential units such as Hoa Phat, Masan, or "big guys" like CP...

According to this person, due to the loss last year, many foreign corporations, including many Chinese companies, came in to buy back people's farms. "We also realized that the price of pigs would bounce back, however, we could not increase the herd because we had already lost hundreds of billions of dong due to losses. In addition, seeing the big risk, the banks also tightened up, did not pump more, had to accept. When domestic farmers were defeated, the game and the opportunity to make money now belonged to big companies like CP" - this person analyzed.

Is the CP “manipulating” the current pork price market to benefit after the pigs in the population have dwindled? Mr. Nguyen Xuan Duong, Deputy Director of the Department of Animal Husbandry, admitted that with the recent reduction in sow herds, only large enterprises can survive, while small and individual breeders find it difficult to “survive”. “Therefore, in this price increase, farmers are the ones who suffer, while large companies, because they have long capital, can survive and therefore make more profit, and FDI enterprises benefit even more,” Mr. Duong said.

However, Mr. Duong affirmed: "CP cannot manipulate prices, we are even asking big businesses like Dabaco, Masan, CP to lower pork prices, in which CP is doing very well in this". According to him, CP's pork price is always lower than the market price, currently 46,000 VND/kg, so traders have bought CP's pigs and then sold them to the market at 49,000 VND/kg. "We can only advise them on this price reduction, but cannot force them" - Mr. Duong said.

According to the leader of the Department of Animal Husbandry, in reality, CP wants to bring the price of pork down to a stable and sustainable level, not to repeat last year. Last year, C,P lost more than 200 million USD (about 5,000 billion VND) due to the decrease in pork prices.

Mr. Duong also believes that maintaining the price of pork at 40,000 - 45,000 VND/kg is reasonable to ensure sustainable livestock farming. Because if the price increases too high, it will lead to the risk of disrupting the market and affecting consumers.

The leaders of the Department of Animal Husbandry also advised farmers to stay calm. The Department is also taking measures to stabilize pork prices, because if prices continue to increase, there will be a risk of pigs being smuggled into our country from neighboring countries, especially Thailand (currently priced at 42,000 VND/kg) and China (priced at about 43,000 VND/kg). Not to mention, cheap frozen pork from the US, Brazil, etc. may also be imported in large quantities.

“If people rush into the herd while the price of piglets is expensive, it will take at least 5 months before they can sell their pigs. At that time, no one dares to guarantee that the price of pigs will remain above the current level of 50,000 VND/kg. Therefore, rushing into the herd now will be fatal,” Mr. Duong warned.