While the livestock and aquaculture industries face heavy impacts from the slowing economy, foreign feeds manufacturers seem to be unaffected, even growing.
Opposite from the spontaneous rises and drops in cattles and aqua products, the feeds manufacturers still enjoy stable prices.
Input cost decrease, output price remain slightly the same
In recent months, the raw materials of feeds products drop continuously. Since May 2014, the prices of corn, dried soybeans, cassava chips have all dropped about 30%
Seeing the lower costs in raw materials, many livestock and aquaculture farmers felt hopeful that feeds prices will also drop; unfortunately that did not become reality.
According to Mr. Nguyễn Trọng Long, the President of the Union of Cattle Farmers Hoàng Long, ward Tân Ước, Thoanh Oai province, Hà nội, a place with over 4,000 pigs and consume 100 tons of feeds/month; the price of pig feeds in January, 2014 was 279,000 VNĐ/bag, it dropped to 272,000 VNĐ/bag in December, 2014; however, the price increased to 280,000 recently.“The evidence shows that the feeds we buy from Cargill (a US origin feeds manufacturer) did not drop but in fact increased a little” Long said. Those were the price he bought straight from the company, without adding transportation costs or any retail markup. While the price of feeds never dropped, prices of livestock dropped drastically since the new year, current price showing only 35,000 – 40,000 VNĐ/kg when at the end of last year it was 52,000 VNĐ/kg.“With current prices, farmers need to be careful or else they will go bankrupt” Long said.
“If the government had not intervened, I would have sold my factory to a foreign company because I can’t compete with 99% of the foreign companies” said Mr. Nguyễn Trọng Huy, Chairman of the Board of Tomking Aqua Feeds Corporation.
The aquaculture industry is not any better. According to Mr. Nguyễn Ngọc Hải, the President of the Union Bass Farmers in Thới An, district Ô Môn, Cần Thơ city, the aqua feeds prices did not drop much, from 12,700 VNĐ/kg to 12,000 VNĐ/kg. “This decrease is far less than what we had hoped,” Mr. Hải said.
The aquaculture industry weakened while facing the expensive feeds cost, “Low export count caused catfish and shrimp prices to drop, in addition, white spot syndrome on shrimps is causing massive losses to farmers.”
Mr. Nguyễn Hữu Dũng, Vice President of Vietnam Association of Seafood Exporters and Producers (VASEP), notified that currently, many aqua feeds manufacturers are foreign companies.
FDI companies in feed industry is making profit
Shrimp feeds are almost entirely supplied by foreign companies. While raw material prices dropped, the price for feeds seemed to have not dropped.
In the last 15 years, many major companies, corporations have joined in this industry. For example, many Thai companies (CP Foods), Taiwanese (Grobest, Uni President), Chinese (Tongwei), Korean (CJ Master), French (Tomboy), USA (Cargill). These companies grow stronger constantly and dominate the Vietnamese market.
The shrimp feeds market alone, three foreign companies dominate 80% of market share, these companies are Grobest, Uni President, and CP.
Mr. Nguyễn Trọng Huy, Chairman of Tomking Aqua Feeds Company, said that the reason for these foreign companies’ success is due to their extensive experiences in these industries of up to 40 years. With high capacity, they also have many connections and reliable raw material suppliers, especially with two main ingredients, fishmeal (from Peru, Chile), and soybean (USA).
The most important reason is because they have huge fundings from the mother corporations, with low interest rates from global banks. Vietnamese companies do not have the necessary fundings so they are not able to claim market shares, cannot control prices when there are changes in raw material prices.
According to local businesses, feed costs is 70% of total costs for every shrimp cycle. Whenever the shrimps are at their most important growth stage, all the foreign companies simultaneously raise feeds prices. If lucky and shrimp prices are high, the farmers are able to turn a profit; but if prices are low, they are surely to take losses.
The current feeds prices in Vietnam are higher than India by $2 USD/kg.
According to Mr. Dũng, foreign companies are able to dominate the industry because of the lack of government regulations. Mr. Huy said that foreign companies have too many benefits when it comes to leasing properties, tax-free policy for new foreign companies, then creating new companies when it is time for them to be taxed.
Due to that, Mr. Dũng said that the government needs to conduct a thorough examination to find how foreign companies avoid paying taxes and control prices. “That alone will be able to reduce the gap between foreign and local companies,” Mr. Dũng said.
Source : Thuy Dung/ thesaigontimes.vn