December 27, 2010
Costly feeds force Vietnamese farmers to quit
Prices of animal feed products have risen for the 14th time this year, causing numerous farmers in the southern region of Vietnam to suspend their businesses, according to the Vietnamese media.
Animal feed producers are intending to plan a new price hike, an owner of Dong Nai-based retail agent said. There were nine price hikes in the past three months, causing retail prices of feed for chickens to increase by VND5,000-VND27,000/kilogramme (US$0.26-US$1.39/kilogramme), he said.
Nguyen Van Ngoc, who is also from Vietnam''s southern province of Dong Nai, said that he postponed his business because of increasing animal feed prices. Although he owned a 100,000-chicken farm last year, his farm is empty now.
Le Chi Binh, deputy chairman of the provincial fisheries association, said farmers tend to delay their business after harvesting due to a capital shortage as banks are limiting lending and feed prices are surging.
Only those who operate as breeders, feed producers and retailers can earn profits this year, Le Thanh Phuong, director of Emivest said. "Individual, household farmers operating on a small scale suffer losses due to information shortage."
The media also reported that foreign-owned companies such as CP, Proconco, and Cargill take the lead in the price hike. As a result, they rake in sizable profits.
An expert said that foreign-owned animal feed companies often have big storage facilities to stock up input materials at the beginning of a year when the price is low.
This causes domestic suppliers to face a supply shortage and high costs as they have to buy inputs monthly and their production would be lessened in time to come.
Meanwhile, Chamnan Wangakkrangkul, deputy general director of CP Vietnam, attributed the price hike to the rise in input prices, mostly caused by imported raw materials, which have surged from 30%-50% since the beginning of this year.
The depreciation of the dong against US dollar also aggravates the situation, he added.
Vietnam is predicted to import animal feeds for the next ten years as domestic firms fail to meet soaring demand, which will grow at least 8%-9% in the 2009-2020 period.
The country is now home to 265 animal feed producing and trading companies, with 225 having their own producing factories.