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Stabilising foodstuff prices begins with breeding industry development
According to Hoang Kim Giao, Head of the Animal Husbandry Department under the Ministry of Agriculture and Rural Development (MARD), the breeding industry only recorded the growth rate of 0.03% in the first six months of the year, while the target is 4-5% for the whole year. 30-40 feed companies halted operation in the first half due to difficulties.
In order to reach the targeted growth rate of 4-5% in 2008, the breeding industry needs to obtain the growth rate of 8-10% a month in the last six months of the year.
Meanwhile, according to Nguyen Xuan Duong from the Animal Husbandry Department under MARD, the added value obtained by the breeding industry is becoming lower due to overly high imported input material prices (feed, stud animals and other expenses).
MARD’s report showed that the turnover of big farms reaches tens of billions of VND a year, while the incomes of many households reach hundreds of millions of VND. However, farms all are worried about the skyrocketing feed price increases. The sharp increases of input material prices have been costing farms billions of VND.
The owner of a farm said that a bundle of spinach, which can be harvested within two weeks, is selling at 3-4,000. A kilogramme of pork (live weight) is also selling at the same price. Meanwhile, a kilogramme of feed is priced at VND5-10,000/kg, and it is not a given that a kilogramme of feed can create a kilogramme of pork.
Escalating feed prices, epidemics and higher labour costs all have been burdening farmers. If the situation cannot be improved, experts say, a lot of farms will suffer heavy losses and have to shut down.
Pham Duc Binh, Director of Thanh Binh Company, said that speculation by many feed trading companies has made prices skyrocket more sharply and made the situation worse.
The price of soybeans, for example, has risen by 133% over mid 2007, while the prices of feed for pigs and fowls have increased by over 50%.
The first thing that needs to be done to stabilise foodstuff prices is to develop the breeding industry. Meanwhile, in order to develop the breeding industry, it is necessary to stabilise feed prices and assist breeding farms.
In the immediate time, it is necessary to cut taxes on materials (now being imposed 5%) and remove VAT on imported materials. In addition, the government should add feed to the list of key products, which would help enterprises reduce the time needed to fulfill procedures for getting loans or making payments.
“We had to contact four banks to open letters of credit (L/C) to import 6,000 tonnes of products,” complained Nguyen Nhu So, Director of Dabaco, who added that domestic feed prices would further increase if no suitable solution could be found to deal with the world’s price increases.
In the first six months of the year, enterprises imported 3.47mil tonnes of fine feed worth over $1.5bil. It is estimated that by 2020, Vietnam will still have to import 3.9mil tonnes of feed. Domestic sources meet 80-85% of the demand.
According to MARD, the domestic demand for breeding products will increase by 8% per annum from 2007-2020. If domestic products maintain a low growth rate, the market share for imports will be larger.
VNN
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