Oct 27, 2012

Vietnam - Animal husbandry cannot attract FDI

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VietNamNet Bridge – Vietnam has been trying to call for foreign direct investment (FDI) into the animal husbandry industry, which remains unattractive in the eyes of foreign investors.

Animal feed production more attractive than animal husbandry

While foreign investors have poured big capital into the animal feed industry, they keep indifferent to the livestock sector. However, the situation would change in the future, since Vietnam has been trying to call for FDI into the sector.

Hoang Kim Giao, Director of the Animal Husbandry Department under the Ministry of Agriculture and Rural Development (MARD), said the domestic animal husbandry has been built up in a small scale with up to 6.5 million breeding households in 2011.

The household production now provides 70 percent of the total number of poultries and 60 percent of the meat output of the country. As for pig farming, households provide 65 percent of the total number of pigs and 57 percent in meat output.

The FDI in the animal husbandry remains modest, which just accounts for a small proportion in the FDI in agriculture.

The FDI capital in the animal husbandry registered in 2010 was 269.7 million dollars, while the figure is estimated to reach 365.3 million dollars in 2012.

Meanwhile, according to Nguyen Xuan Duong, a senior official of MARD, animal feed production has always been an attractive business field in the eyes of foreign investors. The investments in the field are believed to account for 95 percent of the total investment in the livestock relating sectors.

Other livestock relating sectors such as breeder production, animal husbandry, processing, animal slaughtering and environment protection remain unattractive to foreign investors because of the low expected profits and high risks.

Vietnam now has 233 animal feed factories. Of these, there are only 58 foreign invested enterprises, or 24.9 percent, but they make up to 60 percent of the animal feed output. Meanwhile, the other 175 enterprises account for 75 percent of the total enterprises in the field, but can make out 40 percent of the total output.

Chinese CP Company alone holds 50 percent of the chicken egg market, 30 percent of the chicken market and seven percent of the pork market. The company provides five percent of the total pig breeders, but holds up to eight percent of the pork-relating market because it possesses high quality breeders and modern animal husbandry technology.

Vietnamese enterprises have been overwhelming the fish feed sector. However, most of the enterprises pour money into the fish breeding with an existing infrastructure system.

Meanwhile, the “better pieces of the cake” – making and trading fish feed, exporting products and making fish finished products have been held by foreign enterprises, according to Songmoi.vn.

Vietnam determined to attract FDI to animal husbandry

Nguyen Van Nga from Japfa Comfeed Long An Company, said that the current conditions of the industry are not attractive to investors. The industry has a small scale, lacks the coherence among the links of the chain.

Farmers always suffer the constant anxiety about epidemics, while the policies on the subsidies to farmer and livestock enterprises in case of natural calamities, epidemics or market price fluctuations have not been clear enough. As a result, farmers and enterprises do not feel safe when injecting money in the risky sector.

Giao from the agriculture ministry said in order to attract more investment into the livestock sector, the State would offer bigger preferences and more investment incentives for the investment projects in the field.

Giao said farmers would be able to access preferential loans to develop the material sources to make animal feed. They would also receive the support to breed cows, to carry out scientific research works and receive the technology transfer in terms of meat and dairy product processing.


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