Animal feed: Paradox of shortage and surplus

Every year, Vietnam spends about 3 billion USD to import animal feed and raw materials. Meanwhile, it is estimated that our country has a surplus of nearly 7 million tons of rice. This is a matter of concern that needs to be resolved promptly.

Export rice, import corn

According to the report of the Ministry of Agriculture and Rural Development, the import value of animal feed and raw materials in July 2017 is estimated at 258 million USD, bringing the total import value of this item in the first 7 months of the year to 2.03 billion USD, up 9.5% over the same period in 2016. The main import markets of this item in the 6 months were: Argentina, accounting for 46.6% of the market share; the United States 9.5%; India 4.6% and China 4.3%. The import value also increased in most markets, even in some markets increasing 2-10 times, for example, Italy increased more than 10 times, India increased more than 2 times.

Statistics show that in 2016, Vietnam imported 3.39 billion USD of animal feed and raw materials. Of which, corn imports were 8.3 million tons with a value of 1.65 billion USD; soybeans 1.56 million tons. Mr. Tran Xuan Dinh - Deputy Director of the Department of Crop Production (Ministry of Agriculture and Rural Development) - shared that currently, domestic corn production only meets about 40 - 45% of the demand for corn kernels for animal feed processing. Every year, Vietnam still has to spend a large amount of foreign currency to import corn kernels for animal feed processing needs. That is the internal contradiction of the crop industry; while rice exports are large, corn must be imported for more than 50% of the value compared to exported rice.

Animal feed production is not enough to meet domestic demand.

Reduced competitiveness

In fact, the price of imported corn and soybeans is always lower than the price of domestically grown corn, and the quantity is not limited; while domestic products are unstable in terms of output and quality, causing difficulties for producers. According to the latest survey by the Institute of Agricultural Planning and Design, the cost of corn production is up to 4,200 - 4,300 VND/kg, farmers must sell for 5,000 VND or more to make a profit, which is difficult to compete with the price of corn imported from the US and Argentina to Vietnam's ports, which is currently being offered at 4,700 VND/kg.

According to experts, the dependence on imported feed sources makes the competitiveness of Vietnam's livestock industry contain many risks. Mr. Dang Kim Son - former Director of the Institute of Agricultural and Rural Strategy Policy (Ministry of Agriculture and Rural Development) - said that the livestock industry currently depends heavily on imported feed, so the value of the industry is not high, even only taking labor as profit. In the past 5 years, feed prices have increased sharply, seriously affecting the development strategy of the industry as well as domestic livestock farmers due to low added value. Some feed production areas in Vietnam cannot develop because of poor crop productivity, people cannot participate in the feed supply chain for enterprises.

Calculations show that animal feed accounts for 70 - 75% of the cost of livestock products. Farmers earn their living by labor, while most of the profits go to animal feed importing and processing enterprises, mainly foreign-invested enterprises. For example, in 2016, there were 59 factories out of 239 animal feed processing factories nationwide, but these enterprises accounted for 60 - 65% of the market output.

According to Mr. Tran Xuan Dinh, the reason why the animal feed industry still has many limitations is because our country lacks technical packages for corn production for each ecological region, so productivity is not high, costs are high, and there is little competitive advantage compared to imported corn. Therefore, to improve the competitiveness of the livestock industry in general and compete with imported corn in particular, it is necessary to solve the problem of reducing costs through two main factors: Reducing farming costs and improving productivity.

According to Industry and Trade Newspaper