Feed Companies in Trouble

VIET NAM - Up to 40 feed companies have ceased trading so far this year as they struggle with imports and unfavorable exchange rates.
calendar icon 4 August 2008
clock icon 3 minute read

Bui Thi Oanh from the Ministry of Agriculture and Rural Development's Animal Husbandry Department said that the failing businesses produced feed for cattle, pigs, poultry and even fish, according to an official source.

Processors spend more than $1 billion a year importing most of the ingredients, such as soybeans, corn and flour.

Prices for the various feed ingredients have risen 60 to 110 per cent in the past year while the cost of imported feedstuffs has also risen considerably.

Much tighter credit, high loan-interest and exchange rates, and high foreign-exchange transaction fees have added to the problems.

"We did not have enough foreign currency (US dollars) to pay our suppliers because the banks sold US dollars at such a high level," said Do Kim Chi, a representative of New Hop Co.

On top of all this, supplies of ingredients held in reserve by manufacturers became exhausted. Complicated import procedures, plus outbreaks of diseases did not improve the overall outlook.

Nguyen Xuan Duong, deputy director of the Animal Husbandry Department warned that prices for feed ingredients are likely to increase a further 20 to 30 per cent in the near future, threatening many more producers with bankruptcy.

Vietnam is now being forced to import finished feed because of the shortage of domestic supplies.

This year, the nation's demand for animal food is 18 million tonnes, of which domestic manufacturers meet only about 79 per cent. In the first six months of the year, nearly 3.5 million of tonnes of feed worth US$ 1.5 billion had to be imported.

Stability efforts

In an effort to stabilise the market and support manufacturers, the Ministry of Agriculture and Rural Development has asked the government to make feed products and ingredients essential commodities.

This would enable import taxes to be dropped to zero from the present 5 per cent.

However, the ministry is initially guiding farmers on how to economise on the use of feed supplements.

Hoang Kim Giao, director of the Animal Husbandry Department, said that the growth of animal husbandry was only 0.03 per cent in the first half of the year.

"To reach an annual growth rate of 4-5 per cent, in the second half of the year, the industry must grow by 8-10 per cent at least," he said.

The Livestock Breeding Department of the Ministry of Agriculture has already declared that it will focus on developing intensive farming areas for growing soy beans, corn and grass with high nutritional value.

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