Pig farming industry struggles to overcome challenges

Pig farming in Vinh Cuu District in Dong Nai Province. (Photo: SGGP)

Nguyen Quang Thuy, a farmer from Thong Nhat District in Dong Nai Province, raises a herd of over 200 pigs. Just two months ago, the live hog price was around VND60,000 per kg, but it has now fallen below VND50,000 per kg, causing Thuy much concern as he fears incurring losses.

‘Animal feed accounts for about 30 percent of the total costs, so farmers are losing VND2,000-3,000 per kg of live pigs. Many other pig-raising households in the district are also sitting on pins and needles and possibly have to quit raising pigs and switch to other jobs," said Thuy.

Not only do farmers encounter difficulties, but through the financial reports of pig-raising enterprises published in the fourth quarter of 2022, many enterprises also suffer losses due to difficulties caused by high agricultural raw material prices and poor consumer demand. Specifically, Dabaco Group saw a net loss of over VND79 billion in the fourth quarter of 2022, marking the first time in five years that the company has posted a negative profit.

BaF Vietnam Agriculture Joint Stock Company also had a net loss of over VND6 billion from its business operations. Meanwhile, the Hoa Phat Group achieved a revenue of only VND1.69 trillion in the agriculture sector in Q4-2022, with a profit of only VND22 billion - the lowest level since 2016. Hoang Anh Gia Lai Joint Stock Company recorded a consolidated profit of VND110 billion in Q4-2022 in the pig farming sector, a decrease of 36 percent compared to the previous quarter.

According to Mr. Le Xuan Huy, Deputy General Director of C.P Vietnam Livestock Joint Stock Company, the largest pig-raising enterprise in Vietnam, quality live pigs are sold at the farm for VND48,000-50,000 per kg, excluding delivery costs, resulting in a loss of about VND3,000 per kg for the company. Before the Tet holiday, the live pig market decreased because enterprises reduced their workforce and staffing, and restaurants had fewer party guests and events.

But the strange thing is that the hog prices are falling and the quantity of live hogs in the wholesale markets is also decreasing day by day; The amount of pork sold at the traditional market is small, and there is no longer a bustling scene like before. Statistics show that in January, an average of 5,600 live pigs entered the Hoc Mon Wholesale Market in HCMC a day at VND60,000 per kg. However, by February 10, there were only about 4,800 pigs per day, and the price was only VND50,000 per kg.

Reducing costs, expanding market

Facing poor consumption, many pig-raising enterprises have made plans to maintain production, aiming to expand the market. According to Mr. Le Xuan Huy, the farm must cut the herd and reduce production costs, such as electricity, water, and labor.

Mr. Nguyen Chanh Trung, Deputy General Director of BaF Agriculture Joint Stock Company Vietnam, shared that small-scale pig farming by households has become less common, and pig farming is now mainly carried out by large-scale enterprises. As a result, the criteria for food safety and disease-free areas for pigs have been strictly controlled. However, to overcome these challenges, enterprises must increase their focus on deep processing by creating a wide variety of products, such as bacon, pork bologna, and sausages, to diversify their offerings in the market.

Another issue attracting the expectation of pig farmers is that the Government needs to negotiate with other countries to expand export markets. At this time, live hog prices in Vietnam remain cheaper than in other countries. Specifically, live hog price is VND65,000 per kg in Laos, VND70,000 per kg in Thailand, and VND55,000 per kg in China.

A Dong Nai Livestock Association leader said that Vietnam should soon negotiate with other countries to export live pigs to stabilize the domestic price. Depending on the time, live hog exports to other countries will have a better selling price. For example, by the end of 2022, live hog price in China was VND15,000 per kg higher than in Vietnam. If we could export to China at that time, it would have brought in a large profit.

Dr. Nguyen Quoc Dat, Vice Chairman of the Vietnam Livestock Association, suggested that Vietnam needs to export pigs officially to ensure consumption to avoid being passive in the face of cross-border trade. To officially export live pigs to other countries, Vietnam needs to build strict technical barriers following the standards of the World Organization for Animal Health (OIE).

It requires the participation of large corporations and enterprises to reduce livestock costs, cut intermediate stages, build disease-free areas, and ensure food safety. For the Government, if there is an export protocol with regulations on technical barriers, enterprises will quickly deploy to meet the requirements.

About five years ago, Vietnam signed a memorandum of understanding with China on the official export of live pigs, but so far, it has not been promoted successfully. Meanwhile, unofficial export only develops the border economy and cannot change the situation of the whole livestock industry.

Mr. Phung Duc Tien, Deputy Minister of Agriculture and Rural Development, said that recently, after receiving a directive from the Government on studying pork export to China, the ministry asked the Department of Animal Health to study and build a disease-free area under the OIE regulations to meet various markets. Currently, Vietnam has some disease-free zones in the Southeast region, which will be replicated for export.