Obstacles for developing pig farms in economic integration

Vietnam’s accession to the World Trade Organization (WTO) has prompted tough competition in the domestic meat market.

Swine production remains the key economic activity in both smallholders and big farms in Vietnam. Pig breeding farms in the Red River delta contribute about 20 percent to total meat production and have a big impact on markets thanks to the large production scale.

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According to a recent survey jointly conducted by researchers Nguyen Thi Duong Nga and Pham Van Hung from the Hanoi University of Agriculture, pig farms in the Red River delta are often vulnerable to external conditions, the most significant being disease outbreaks and market fluctuations. Both of these contribute to higher cost and lower market prices for pork, resulting in weak competitiveness of domestic pig producers.

Pig raisers to face tough competition

In 2012 the pork tariff will be reduced by 50 percent, so pig producers are likely to face tough competition from cheap imported meat. To sharpen competitiveness of pig farms, disease prevention and control should be emphasized, while ensuring sustainable supply of piglets by building breeding stations in selected areas, according to a survey presented at a recent international conference held in Hanoi on agriculture and food security in Asia.

Joined ASEAN in 1995 Vietnam has to follow a schedule for lowering regional tariffs through the common effective preferential tariff (CEPT), where Vietnam committed to reducing its tariff to 50 percent next year. The country’s commitment will impact pig producers who depend greatly on Vietnam’s competitive edge in pig production.

According to researchers, the Government plays an important role in facilitating and protecting pig producers through increasing management of imported meat, building alliances among farmers and relevant actors, and granting more incentives through macro policies.

During the 2001-2006 period, the total number of pig farms increased about 14 times, reaching 7,475 farms in 2006. Pig stocks of the country reached 27.6 million in 2009 and ranked fourth in the world after China, the US, and Brazil, according to recent statistics by the United Nations Food Association (FAO).

Pork production become major concerns

Currently, pork represents 73 percent of total meat consumption of Vietnamese diets, and the domestic demand continues to rise due to population growth and increasing consumer income. Therefore, the pig breeding sector is crucial for rural livelihoods as well as food markets in the country.

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Since 2000, pig production on a larger scale has been encouraged and given due attention by the government. However, there remain snags in both production sales and marketing since further adjustment in tariffs for imported pork in 2012 will put pig farmers in fierce competition.

On average, in 2010 total farm income was estimated at VND231 million, of which pig production accounts for about 70 percent.

Three problems faced by pig farmers have been identified, including epidemics, market fluctuations, and land and credit constraints. About three-quarters of pig farm owners report that pig disease, mainly foot and mouth and diarrhea, have caused an average loss of 10 – 40 percent of pig farmers’ total revenues.

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Farmers view market price fluctuations as one of the highest risks. Pig prices have fluctuated due to supply and demand conditions – which are both influenced by disease outbreaks and input prices. While pig prices do not show a strong increasing pattern, the cost of animal feed steadily rose by about 40 percent from 2008-2010.

Farmers also find it difficult to expand breeding area to ensure biological safety. Small housing areas means farmers can’t separate sick pigs from healthy ones during disease outbreaks.

Credit is also a persistent problem for many farmers, especially after disease outbreaks. To borrow from banks, land use-right certificate or valuables assets are required for deposit; furthermore, high interest rates lead to high costs, discouraging farmers to invest more in pig production.

To promote the sustainable development of pig farms, the link between producers, corporations, scientists and government should be strengthened so that farmers can be benefit from advanced technologies, preferential policies, and the most current market information.

Tran Ngoc