Background

During the timeframe 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, specialized pig households and the large scale farms.

The larger scale commercial farms are concentrated around the 2 largest markets—Ho Chi Minh (HCM) City and Hanoi.

Current December 2011

Pork increased sharply in May and June. The northern part of Viet Nam showed an increase of 54.1 per cent while in the southern part, this figure was up 71.2 per cent over the same period in 2010.

There are several causes attributed to why the price of livestock products increased in the first half of 2011. Two chief reasons can be noted. One is due to the imbalance in supply and demand. 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). Secondly, a recent and emerging niche live pig and pork export to China is showing huge growth. According to statistics, exports of meat across the border in the last four months in 2011 amounted to 2,800 tons. Specifically, in November, there was a large spike in the number of tons sent (more than 936 tons—this is more than three times higher than in May, 2011).

According to the Animal Husbandry Department, this year's production of meat for the country is estimated around 4.31 million tons, up 7.7 per cent compared to 2010. During 2011, Viet Nam imported about 107,000 tons of meat from various countries, but mainly from the US (about 3.5 per cent of total meat production), but this is up 30.5 per cent over 2010. This high amount was not forecasted by the Ministry of Agriculture and Rural Development (MARD). Imported meat, for the first 5 months of the year, was shown at 30,000 tons - with a total 2011 importation forecast being lower than the 83,000 tons imported in 2010. When the increase of meat imports exceeded forecasts by the end of June, then in July, the price of pork in the market increased as many businesses knew that they would have to import large quantities to meet market demand.

During the months of October and November, pig prices declined. In December pig prices showed signs of rising again as market hog prices were as high as 55,000 VND/kg to 57,000 VND/kg ($ 2.62 to $ 2.71 US/kg). On average, market hog prices rose about 10.8 per cent in December as compared with the previous month. Regionally, in the North, market pig price averaged 56,500 VND/kg ($ 2.69 US/kg). In the South, market pig prices were about 52,000 VND/kg ($ 2.47 US/kg)

In the near future, due to growing demand and due to cold weather which can cause more disease problems, pork supply could become very tight just before Tet. From this, pork prices could rise from 10 to 15 per cent during January, 2012.

With data from the Livestock Department, the 2011 year-end report indicated that the production herd size and the total supply of meat, increased compared to the livestock sector in 2010. Even though the production and thus supply had decreased in the early months of 2011, the overall livestock herd increased 1.6 per cent. From this meat output rose 7.7 per cent to about 4.31 million tons as compared to 2010. A breakdown of this total shows pork 3.2 million tons (up 5.7 per cent and 74.2 per cent of the total meat supply), chicken reached 708,000 tons (up 15 per cent and 16.4 per cent of the total meat supply) and cattle reached 406,000 tons (up 11.8 per cent and 9.4 per cent of the total meat supply). Pork is important in Viet Nam.

A quick assessment of the price of inputs for pig production will show many challenges for the producer during 2011. The first months in 2011, there was the impact from the increases of all fuel prices; gasoline prices increased again from 2000 to 2800 VND/litre ($ 0.10 to $ 0.13 US/litre) and this caused major disruption for many commodity prices and services; rice and vegetable prices increased during the New Year and these prices stayed high and electricity prices have increased more than 15 per cent since last spring. Farmers also faced large price increases for replacement breeding stock and weaner pigs; large increases in the price of feed; rising prices for water, labor, vaccine costs and transportation and disease still are major concern. 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). The livestock sector investment is also considered too risky by most banks. Consumer Price Index (CPI) in 2011 increased by 17.9 per cent over 2010. The forecast for 2012 shows predictions of 0.5 to 0.7 per cent increases per month for CPI.

In previous years, demand for meat just before and during Lunar New Year usually increased from 15-20 per cent, but in recent years, this increase has declined. Specifically, as in 2010, meat consumption increased only by about 12-15 per cent. This indicates that the demand for meat is now spread throughout the year, not just focusing on the time frame around the national holidays.

As of 15 December 2011, the preliminary estimate for pigs on the farm is around 27.1 million pigs. This is a 317,000 decrease (-0.73 per cent) over the same period in 2010 and up 755,000 since April 2011.

In November, the price of some animal feed ingredients decreased slightly from October: corn 7,350 VND/kg ($ 0.35US/kg) (down 2.1 per cent), soybean meal 9,975 VND/kg ($ 0.47US/kg) (down 6.9 per cent), cassava 5,880 VND/kg (0.28US/kg) (down 3.4 per cent). While other ingredients increased: rice bran 7,875 VND/kg ($ 0.37US/kg) (up 7.1 per cent), fish meal 22,050 VND/kg ($ 1.04 US/kg) (up 5 per cent). Other materials were stable: Lysine 60,900 VND/kg ($ 2.90US/kg); Methionine 120,750 VND/kg ($ 5.74 US/kg). Feed and material imports in November were estimated at 160 million USD.

Three major sources of feed ingredients for Viet Nam are Argentina (23.4 per cent), India (21.6 per cent) and the United States (10.5 per cent).

Forecasting and looking at National Government’s plans for 2012, the first notion is that there will not be quotas or import restrictions on meat implemented, but that normal and self-regulating market supply and demand will be encouraged. Currently, the favorable weather conditions have improved breeding performance and that the disease factors that reduced the market pig supply during 2010 and the first few months of 2011, were not evident. Total improved livestock production has increased the output of the total meat supply by an estimated 7.7 to 8 per cent. This should be positive for the consumer prices as they increase their demand for meat, especially pork during Tet. Viet Nam's agriculture sector is likely to grow by 2.6 per cent in 2012, according to the Ministry of Agriculture and Rural Development. In 2011, the sector grew at 5.2 per cent.