During the time-frame from 1996 to 2006, Viet Nam’s pork production more than doubled (132 per cent). This illustrates rapid growth – not mainly with large scale farms, but through constant growth from small farms, specialised pig households and the large scale farms.

The larger scale commercial farms are concentrated around the two largest markets – Ho Chi Minh (HCM) City and Hanoi.

The results of recent Living Survey by the General Statistics Office (GSO), shows per capita income per month throughout the country in 2010 reached 1.387 million dong (VND; US$66.68), up 39.4 per cent over 2008. In particular, urban areas reached VND2.129 million ($102.36 US/month), up 32.7 per cent and rural areas reached VND1.07 million ($51.44 per month), up 40.4 per cent over 2008. With the improvement in income, especially from rural areas, the demand for meat consumption in this sector will also increase.

Situation in September 2011

Ministry of Industry and Trade reports for this year that the country will produce 2.26 to 2.38 million tonnes of pork. The total consumption of pork is estimated to be between 2.4 and 2.5 million tonnes. The shortfall will be covered by pork meat imports in the range from three to five per cent. This will not significantly affect domestic supply.

During the last week of September, the price for live pigs has dropped from VND2,000 to VND3,000 per kg (US$0.10 to $0.14/kg) as compared to the previous two weeks. Provinces around Hanoi have market pig prices ranging from VND57,000 to VND59,000 per kg ($2.74 to $2.84/kg) live weight. Recent reports from the Ministry of Agriculture and Rural Development (MOARD), have the live price range for pigs in the northern parts of Viet Nam ranging from VND48,000 to VND58,000 per kg ($2.31 to $2.79/kg) – down 10.9 per cent from last month, while in the southern area (Ho Chi Minh), the live pig prices are ranging from VND48,000 to VND55,000 per kg ($2.31 to $2.64/kg) – down 8.9 per cent from August. In September, and looking nationwide, the live price of pigs has dropped an average of 10 per cent as compared to August. Current prices have dropped from the peak of July 2011 by around 18 per cent

During the first two weeks of October, the price of market pigs should continue to decline with price ranging from VND55,000 to VND57,000 per kg ($2.64 to $2.74/kg) in the North; VND52,000 to VND54,000 per kg ($2.50 to $2.60/kg) in the Central region; VND50,000 to VND52,000 per kg ($2.40 to $2.50/kg) and VND47,000 to VND49,000 per kg ($2.26 to $2.36/kg).

Pig prices have been decreasing for several reasons:

1. Supply of pigs in the north is increasing again.
2. Cooler weather has vastly increased productivity and growth rates.
3. Presence and impact of major diseases such as PRRS and FMD has been reduced and thus higher survivability means more pigs coming to market.
4. When the price in Hanoi was high, more pigs and pork moved to the north from the south, but with an increase in northern supply, less meat moves and supply in the south increases.
5. Flooding in the western areas caused farmers to sell pigs at various weights. This increased the supply of pork and thus assisted in reducing prices.
6. Aquatic food sources are currently larger during the past few months (summer time) and thus this supply puts pressure on other meat prices and demand.
7. A lowering of market prices hastens the farmers to sell at lighter weights in order to capture higher returns. For example, farmers were recently selling pigs at 105-115 kg live weight/pig. Now, producers are selling at lighter weights at around 90 to 95 kg live weight/pig.
8. During the past few months, traders were collecting pigs from the northern areas and were exporting pigs to China via Mong Cai in Quang Ninh province (Mong Cai is a border city with Guangxi province in China). However, recently, the traders were having problems with the general procedures-customs, high temperatures, having pigs sit too long on the trucks and trying to handle larger volumes. As a result, many were experiencing losses.

Many pork producers (of all sizes and scale) have mentioned that because of the impact of the disease occurrence of late 2010 and early in 2011, this caused the national herd to be pulled back by 3.7 per cent and that sow numbers were shrunk by 8.6 per cent (currently, new outbreaks out FMD have been identified in a Northern and Central province). Plus, this reduction of sow numbers that was mainly caused by diseases, also leads to reduced piglet production and thus eventually, fewer market pigs. This leads to the next cause: the large increase in weaner pig prices. So as any farmer and looking at large price increases for replacement breeding stock and weaner pigs; large increases in the price of feed; rising cost of electricity, water, labor, vaccine costs and transportation and disease still a major concern, then you can see the reluctance in ‘jumping’ back into production.

All of the above causes that are mentioned, are also influenced by the shortage of capital and credit. Interest rates are too high (ranging from 16.5 per cent to 25 per cent per annum) and are not as major a burden for the larger pig farms but the small farmers dare not (or cannot) borrow from banks because the livestock sector investment is also considered too risky.

Both farmers and consumers, consider that traders and slaughterhouse owners are contributing to the price spread. Looking at the price differences between the farmer’s price per pig and the selling price of pork, are pork prices being inflated by the intermediate traders and slaughterhouses? For example, are they pushing prices because they buy from the farmers at around VND60,000 to VND62,000 per kg ($2.88 to $2.98/kg) live weight but the pork is charged upwards of VND100,000 to VND130,000 per kg ($4.81 to $6.25/kg)?

Even though, all of these factors are included, actually with the current meat prices, farmers can profit from VND12,000 to VND22,000 per kg ($0.58 to $1.06/kg).

As pig prices increase, then consumers have to pay more for special cuts. Data from Hanoi Department of Statistics has looked at year-over-year prices for pork. In July 2010, the price of pork was only VND45,000 to VND70,000 per kg ($2.16 to $3.37/kg), depending upon the cut of the meat. By December 2010, the price of pork in Hanoi was on the threshold of VND70,000 to VND90,000 per kg ($3.37 to $4.33/kg) and up by 25 to 50 per cent per kg. Another six months later and the price is pushed up to VND110,000 to VND130,000 per kg ($5.29 to $6.25/kg). Thus, within a year, the price of pork in the markets in Hanoi has increased about 100 per cent.

Meat prices in the domestic market especially in the Hanoi city market is growing rapidly and sharply in recent years, causing huge pressure on the consumer price index (CPI) in July and the CPI for the first nine months of 2011 (in August, the CPI had jumped by 23.02 per cent as compared to August 2010 with food prices surging by 27.87 per cent year-on-year). For example, retail price of hams in the Hanoi markets and in the first two weeks in July have increased 2.3 times higher (approximately 130 per cent) over the same period one year ago. Meanwhile, in Ho Chi Minh, retail meat prices have increased only 1.4 times (approximately 40 per cent). Ho Chi Minh, which is commonly known to have a higher retail price than Hanoi market, has seen a reverse in this trend in the last months of 2010 and is continuing throughout 2011. The difference between the price of pork between Hanoi as compared to Ho Chi Minh is more than VND20,000 per kg ($0.96/kg).

In particular, Ho Chi Minh proved far superior to Hanoi on the basis of specialised fresh food markets (19 compared with two in Hanoi). With these strengths, the sales stabilisation of Ho Chi Minh has a stronger effect than the sales in Hanoi. Ho Chi Minh has three major pork suppliers that dominate the market (Vissan, Saigon Coop, and Sagrifood). They have contributed significantly in curbing the rise of the pork prices. Meanwhile in Hanoi, the traditional retail channel (market roadside stands and small wet markets) still dominate. These channels have little control over prices and greater psychological impact. When the Hanoi market sees any market fluctuations, (the change in the price of gold, dollar exchange, rising gasoline, electricity, coal and other factors0), then with certainty, the retail meat prices will be increased even though the supply or demand does not significantly change. This will ensure the profitability of small businesses owners.

CP Viet Nam Livestock Corporation (CP) has set a target to double its breeding sow herd from the current 180,000 sows (at the end of 2011) to the new target of 350,000 sows by the end of 2015. This is an annual growth of 20 per cent. CP mentions that the country’s pig industry is at risk because of disease and that 80 per cent of the pigs are raised in backyard farms where biosecurity is very poor.