Hanoi (VNS/VNA) - Vietnam will produce more than 23 million tonnesof animal and poultry feed this year, according to a report by the Ministry ofAgriculture and Rural Development (MARD).

The report showed that the output of animal and poultry feed has increasedrapidly in recent years, up 13 million tonnes compared to 2008.

However, the market is now tilted towards foreign direct investment (FDI)enterprises.

According to statistics from the Vietnam Animal Feed Association, the countryhad 240 animal feed production businesses, of which 180 were domestically run.Although domestic enterprises outperformed in terms of quantity, foreign firmsstill led the way in terms of capacity and market share.

The production capacity of Vietnamese enterprises is about 12,465 tonnes peryear, while FDI enterprises have a capacity of over 15,700 tonnes per year,accounting for 59.15 percent of the total output.

FDI enterprises are developing their production to dominate the animal feedmarket. Since the beginning of 2018, a series of new factories have beeninaugurated, including a 31.5 million USD factory in the northern province of HaNam, which is the fifth to be funded by the Republic of Korea’s CJ Group, andanother from Mavin Austfeed Dong Thap worth 30 million USD, which is also thefifth to be invested by Mavin Group, a joint venture between Australia and Vietnam.

In order to regain market share, a large number of Vietnam’s big companies suchas Masan, Hoa Phat, Hung Vuong and Vingroup are investing in animal feedproduction. However, the process could prove lengthy as FDI many companies havebeen in the Vietnamese market for 10-25 years, with advantages of investmentcapital, modern technology and long-term strategies to dominate the market.

“FDI enterprises have a history of research and invention for animal feedsuitable for each growth stage of pigs and chickens,” said Vice Chairman of theVietnam Animal Feed Association Pham Duc Binh.

Meanwhile, domestic enterprises are vulnerable due to lack of capital, slowinvestment in modern production lines, and a shortage of raw materials,” headded.

To minimise the monopoly of FDI enterprises in the domestic market and createcompetition on prices, Binh said the State should plan raw material areas, andhave preferential policies for domestic enterprises to borrow capital to buildthem. On the side of domestic production, plans and long-term strategies arealso needed.

Tran Xuan Dinh, Deputy Director of MARD’s Department of Cultivation, said thatdomestic corn production had met about 40 to 45 percent of demand for animalfeed processing.

“At present, all imported maize is used for the production of animal feed. Vietnamonly produces rice bran and cassava. We have failed to develop feed productionareas because of poor crop productivity, and people have not joined the animalfeed supply chain for businesses,” said Dinh.

Agricultural expert Dang Kim Son said that the value of the poultry sector waslow due to a dependence on feed imports. At present, farmers only made a profitthrough hard graft and the real profit fell into the hands of importers andproducers, mainly FDI enterprises.

In its latest forecast, the Ministry of Industry and Trade confirmed thatdemand for imports of animal feed will continue to increase, with thepossibility of spending 3.8 -3.9 billion USD by the end of this year.

According to the US Department of Agriculture’s forecast for 2019, 76 percentof Vietnam’s total raw material would come from imports as the animal feedsector continues to grow. Raw materials include soybean powder, corn, othercereals and bran from copra, canola and rice bran. Imports also include animalproteins such as meat and bone meal (MBM) and fish meal.

Deputy Director of MARD’s Department of Livestock Production Nguyen Xuan Duongsaid that Vietnam could produce 150,000 tonnes of beans each year - not enoughto meet the demand for human consumption. For maize, the country could supplythree million tonnes per year, accounting for half of the total demand.

 "We will not necessarily continue to expand maize plantations whileother countries’ corn is much cheaper. Vietnam should reserve land to growother crops with higher economic value such as fruit trees, cash crops and herbaltrees,” said Duong.-VNS/VNA