The breakdown was as follows: buffalo meat production reached 50.4 thousand tons, up 3.7 per cent; beef production reached 174.8 thousand tons, down 1.5 per cent; dairy cattle continued to grow with the number of milk cows increasing by greater than 14.24 per cent and producing more than 2.0 million tons of milk; pork in the country increased by 4.8 per cent to 1.9 million tons and poultry increased by 5.8 per cent. Poultry had been affected by avian influenza (AI) in March and April. However, because of the high flock increase at the end of last year and because there has been better control of AI this year, then the overall flock has increased by 13.7 per cent to produce 439.3 thousand tons. On top of this, egg production reached 4.1 million eggs, an increase of 4.6 per cent as compared to the first 6 months of 2011.

Pork meat production as compared to total meat production represents about 73 per cent of the total meat produced in the first six months.

Total livestock inventory: buffalo and cattle throughout the country and in the first 6 months tended to decrease due to cold weather damage that affected early grazing areas. This also caused low breeding efficiency. According to a survey conducted by GSO, there were 2.7 million buffalo, down 5.1 per cent, 5.3 million beef cows, down 7 per cent from the same period in 2011. However, dairy herds have increased quite rapidly (14.24 per cent). This is mainly due to a number of businesses that have invested heavily into the dairy industry and high technology used in processing. These businesses have better bio-security and are less affected by diseases. Also, there is a stable milk price.

Pig production during the first six months of 2012 was quite difficult, due to disease challenges and increasing cost of production. Because of the use of banned substances to promote lean growth in pigs (substances such as clenbuterol) this, in turn, caused the consumers to change from pork consumption to the other meats and seafood. Both consumption and pig prices decreased rapidly.

According to a recent survey of the GSO, the total number of pigs in the country was 26.7 million, up 1.5 per cent over the same period in 2011.

In the North part of the country, the price of market pigs ranged from 43,300 to 45,500 VND/kg ($2.08 US/kg to $ 2.19US/kg) while in the South, the average selling price for market pigs was about 42,000 VND/kg ($2.02 US/kg), a slight decrease from the previous month.

In June, the price of some animal feed ingredients increased from May: rice bran6,961.5 VND/kg ($0.335US/kg) (up 6.9 per cent);soybean meal 11,130 VND/kg ($0.535 US/kg) (up 6.2 per cent), lysine 54,810 VND/kg ($2.64 US/kg) (up 5.9 per cent) and methionine 111,280 VND/kg ($5.35 US/kg) (up 1.0 per cent). Prices of some raw materials decreased slightly: dry cassava 5,260.5 VND/kg ($0.253 US/kg) (down 13.3 per cent); corn 7,266 VND/kg ($ 0.349 US/kg) (down 8.0 per cent) and fish meal 20,482 VND/kg ($0.985 US/kg) (down 7.8 per cent).kg. Complete mixed feed for pigs from 60 kg to market weight was 9,336 VND/kg ($0.449/kg). This is down by 9.1 per cent for the same period in 2011.

In 2011, Viet Nam imported over 8.9 million tonnes of feed ingredients valued at $3.7 million US. According to Le Ba Lich, the president of Viet Nam Animal Feeds Association, the imports accounted for more than 62 per cent of the inputs for feed production (total in Viet Nam was 14.3 million tonnes of livestock feed manufactured). He said that 4.8 million tonnes were protein sources including soybean meal and meat and bone meal and 3.8 million tonnes were energy sources including corn, rice bran and wheat. In 2011, Viet Nam produced 0.87 million tonnes of corn, 0.57 million tonnes of rice bran and 2.3 million tonnes of wheat. The recent drought in the US will have a huge impact on feed prices in Viet Nam, since imports account for 62 per cent of the total livestock feed consumed in Viet Nam.

What to look for over the next few months

With PRRS (Blue ear disease), the major problems occurred in April and May. The number of districts and provincial outbreaks for this year has increased compared to 2011. The total number of affected pigs was also higher, So far in 2012, the number of infected pigs that were destroyed is about 66 per cent, while the 2011 figure indicated about 96 per cent of the diseased pigs were destroyed. Most of the recent outbreaks occur initially in the midland and northern mountains including Lao Cai, Dien Bien, Lai Chau, Yen Bai, Hoa Binh and Phu Tho; then spreads down to the Red River Delta provinces such as North Ninh and Nam Dinh. Currently, the country has 08 provinces: Dien Bien Phu, Bac Ninh, Quang Ninh, Hoa Binh, Lang Son, Bac Lieu, Ha Noi and Dong Nai with PRRS at less than 21 days. (PRRS was first detected in the northern mountainous province of Lao Cai on January 11 and has since spread to 123 districts within 13 provinces nationwide, affecting 34,000 pigs of which 21,700 had to be destroyed).

Farmers have been reluctant to use vaccines for PRRS as the drop in market pig prices has caused farmers to try and reduce their costs. According to Hoang Van Nam, head of the Animal Health Department under the Ministry of Agriculture and Rural Development, this lack of vaccination protocols may cause more outbreaks in the southern regions (especially Dong Nai and Bac Lieu provinces).

In late June, 2012, the Viet Nam Government announced an investment of about 9 trillion VND (432 million USD) to assist the pig farmers with extending their credit and to reduce the interest rates to about 10 per cent. The Ministry of Livestock Breeding Department, suggests that 3,000 farmers can receive favorable credit terms and that the move is aimed to help targeted farmers to boost the supply of pork and keep the price lower for the second half of 2012. Further to this, the farmers would be able to reschedule their loans and delay their debt payments. To encourage the importation of breeding stock, the department is proposing a reduction or exemption of the fees for quarantine.

In our last report, it was estimated that pig farms across the country had lost about 500 billion VND ($24 million US). Market pig prices in and near Ho Chi Minh City had plunged by nearly 20 per cent to 42,000 VND/kg ($2.02 US/kg). In a recent discussion with local pork producers, they were losing from 500,000 to 1.1 million VND ($ 24.04US to $ 52.88US per pig marketed (market weight of 100 kgs).

According to the Ministry of Agriculture and Rural Development, Viet Nam annually consumes about 3.3 million tons of pork. The recent drop in market pig prices, the increase in the cost of production, difficulty in getting capital and operating loans at favorable rates and the reduced demand for pork as a result of banned substances found in pork has brought about many pig farmers to shut down their farms. From this,Viet Nam may need to import pork to meet the above annual requirements by the end of this year.

As reported by the General Statistics Office, the consumer price index (CPI) in June for the country declined 0.26 per cent over the previous month, after 38 consecutive months of increases. The reduction of the national CPI this month over last month comes without much of a surprise after Hanoi and Ho Chi Minh City, the two leading economies in Viet Nam (occupy about 30 per cent of the country's CPI basket), announced that their respective CPI showed a significant reduction. With this reduction and comparing to the end of last year, the CPI rose 2.52 per cent. As compared with same month last year, CPI rose by only 6.9 per cent, very close to the inflation expectations of the year according to government officials. The petrol price and retail gas prices with large discounts have impacted on the price index of the transport group (-1.64 per cent) Also, housing and construction materials declined (-1.21 per cent). These two groups have the biggest decline from the previous month and also reduce the costs associated with pig production