September 24, 2012
Vietnam''s animal feed prices seen up in October
In early October, Vietnam animal feed prices are forecast to pick up by an average of VND200 (US$0.01) per kilogramme and will remain high in the next 12 months, given rising input materials prices.
As such, in less than three months, animal feed prices will have been raised twice. In late July, prices increased by some VND300 (US$0.014) per kilogramme.
Pham Duc Binh, vice president of the Vietnam Animal Feed Association, explained outputs of soy, corn and wheat in the US and Russia had declined due to droughts. Moreover, China is boosting livestock farming, pushing up prices of feed materials.
Because of chicken and pork price drops, many livestock farmers have abandoned their farms or scaled down their herds. As a result, animal feed producers see their sales falling 20-50% on-year.
"A number of animal feed factories in Dong Nai have gone bust, while in the Mekong Delta, many feed production plants also face the same situation," Binh said.
He said most of these factories ran into losses due to poor anticipation. They did not have hedge plans to buy materials when prices were still low, which have been done by the feed production companies that are still operational.
"As animal feed materials were predicted to mark up, several companies bought a large volume of corn and soy when their prices were low, so even though sales go down, they do not incur losses," Binh said.
According to the Ministry of Agriculture and Rural Development, locally-produced rice bran was sold at VND7,200 (US$0.3) per kilogramme in August, up 7.8% against July, while mixed feed prices increased by some 2%.
Imported wheat is currently priced at US$380 per tonne, surging more than US$100 against the price in June, dealing a hard blow to local confectionery and animal feed producers.
The current price is close to the high level of US$420 per tonne during the food crisis in 2008, said Nguyen Phuong Thanh, representative of Sao Xanh Co. Ltd., a wheat importer in Dong Nai.
"Wheat price is now high and volatile, so businesses have reduced imports to wait for new developments," Thanh told the Daily.
Wheat is just an item in the basket of food commodities whose prices have been rising due to unfavourable weather conditions. Food price hikes not only impact businesses in the livestock sector, but also hit confectionery maker.
Given higher wheat price, wheat flour also marks up 30-50%. A cake producer in HCMC said his company is producing perfunctorily and closely following price fluctuations.
Wheat imports in August amounted to 205,000 tonnes, worth US$66 million, taking the total imports in eight months to nearly two million tonnes, equivalent to US$584 million, rising more than 22% in volume and 8.1% in value.
In the first eight months of 2012, Vietnam spent about US$1.48 billion importing animal feeds and their materials.