Animal feed makers face fierce competition

Thursday, May 15, 2014 08:26

Animal feed being packed at Geen Feed Viet Nam's factory in Nhon Hoa industrial Zone, southern Binh Dinh Province. Domestic animal feed companies are unable to compete with foreign rivals in the local market. — VNA/VNS Photo Dinh Hue

HA NOI (Biz Hub) — Local animal feed companies are unable to compete with foreign rivals on the local animal feed market, said experts.

The Viet Nam Animal Feed Association said Viet Nam has about 58 enterprises producing and processing animal feed with 200 factories, 50 of which with foreign investments account for 60 per cent of the local market share, reported the Tien Phong (The Vanguard) newspaper.

The companies that dominate the local market include CP, Cargill, Japfa, Grobest and New Hope from the US, Thailand and China, the association said. Some of them have expanded their production in Viet Nam.

For example, Cargill has just completed a US$20-million expansion project of its factory in Binh Dinh Province, one of its eight factories producing animal feed in Viet Nam.

With this project, the group has increased its capacity to 1.4 million tonnes of animal feed each year in Viet Nam and its total investment in the country to $117 million. At present, Cargill controls 7 to 8 per cent of the local animal feed market, the company said.

The US Gold Coin group has just begun operations of its Gold Coin Hai Duong animal feed factory with a capital of VND260 billion ($12.38 million), including a number of its animal feed production factories in three units in Viet Nam.

Last year, CP of Thailand started construction of its animal feed production factory in Binh Dinh Province. Kyodo Sojitz of Japan invested $24 million to build a factory in Long An Province.

Greenfeed started operating its third and fourth factories that produced animal feed, in Binh Dinh and Hung Yen provinces.

The Ministry of Agriculture and Rural Development said Viet Nam needs 18 to 20 million tonnes of animal feed at present and 25 million in 2020, reported, an online newspaper. The local animal feed market has total revenue of $6 billion every year.

The local animal feed industry has supplied 15.5 million tonnes per year with a growth rate of 13 to 15 per cent, becoming the largest animal feed producer in the Southeast Asia region.

Meanwhile, there are a few well-known domestic animal feed firms, including Proconco, Vina, Dabaco and Lai Thieu, with a total output of 300,000-400,000 tonnes per year, the association said.

Almost all Vietnamese firms are small and medium enterprises and often lack capital for production, it said.

Pham Duc Binh, General Director of Thanh Binh Company, said the market share of Vietnamese firms on the domestic animal feed market has reduced because management of domestic firms is weak while foreign firms have attractive trade promotion activities to make new customers.

Le Quang Thanh, chairman of Thai Duong Animal Feed Joint Stock Company, said that since Vietnamese firms cannot compete with their foreign rivals, they compete with each other for a slice of the market share. That action has made local firms weaker.

Nguyen Van Anh, director of an enterprise specialising in production of animal feed in Dong Nai Province, said Vietnamese animal feed producers are weaker on the local market, either because they lack capital for production or get loans with high interest rates.

Foreign firms, meanwhile, get funding from their parent companies for building factories and capital with soft interest rates from foreign banks for production, Anh said.

Therefore, local firms should cooperate with each other to increase their market share in the future, he said. — VNS

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