Chicken farmers in southern Vietnam fear they will lose their livelihoods as cheap imports flood the domestic market
Many poultry farmers are at risk of losing their livelihoods after dubiously cheap imports have flooded the domestic market, forcing sharp reductions in production, industry insiders say.
They say the industry is now on the verge of collapse as producers, even when selling below cost, cannot compete against low-quality and very inexpensive imported chicken.
Most farmers in Vietnam raise chicken for three foreign-invested companies Thailand's CP Group, Malaysia's Emivest and Indonesia's Japfa Comfeed Tbk.
Until recently, the companies pretty much controlled the market. Data for the region south of Da Nang showed that together they had sold 5.7 million heads every month, with CP accounting for 44 percent of the sales.
But when the market turned to cheap imports, despite quality concerns, all the three firms have had to struggle with the falling market price, which they say is lower than their cost price.
Statistics compiled by global veterinary health company CEVA Santé Animale indicate that wholesale chicken prices have fallen more than 15 percent this year to around VND35,000 (US$1.70) per kilogram.
"Over the past month, we have asked farmers to extend the break between two flocks to around one and a half or two months and reduce the number of heads by half," said Nguyen Quoc Trung, general director of Japfa Vietnam.
"Chicken prices have fallen to a very low level, forcing huge losses on us," he said.
CP and Emivest also confirmed that they have taken measures to cut output by 30 to 50 percent to ease losses. The former said it is still breeding 600,000 new heads every week, incurring a loss of VND72 billion ($3.4 million) per month. Emivest estimates its monthly loss at VND60 billion while Japfa has reported losses of VND48 billion every month.
Many chicken farm owners who supply for these foreign companies confirmed that they have been given less work recently. Some even feared that they will have to stop raising chicken flocks next year if cheap imports continue to dominate the market.
Le Van Quyet, a farmer in Dong Nai Province, said China, South Korea and Thailand have an excessive amount of low-quality poultry meat often used as animal feed while the US and Brazil markets mostly consume chicken breasts, leaving other parts as unwanted items.
"They are willing to sell these cheap products to Vietnam at any cost," he said, adding that smuggled poultry from China further complicates the situation.
"That's the reason cheap chicken is everywhere in the market, killing local livestock production," Quyet said.
According to the Animal Husbandry Department of the agriculture ministry, at times there were up to 300 tons of low-quality poultry being smuggled into Vietnam from China every day.
The cheap chicken, which the department described as "junk," was worth only 70 US cents per kilo in China and often used to feed animals due to low nutritional value, the department said. It has been retailed in Vietnam at the price of normal chicken.
A similar chicken product legally imported from South Korea was removed from supermarket shelves early October. The move only came after local media reports showed the meat came from discarded hens which had no more value to egg producers.
Nguyen Van Ngoc, another farmer in Dong Nai, said the problem should be taken seriously.
"If the three foreign firms die, all chicken farmers in the Southeast will be dead too," he said. "In fact, considering the losses they are facing, the companies will go bankrupt in just a few months. Farmers will lose their jobs and there is no way they can pay back bank loans, which usually make up for 70 percent of their capital."
"The authorities need to pay more attention to the industry and quickly put up technical barriers to restrict low-quality imports to save farmers, businesses and banks," he said.
Pham Duc Binh, vice chairman of the Southeast Poultry Association, said as a member of the World Trade Organization, Vietnam cannot ban imports as long as they meet all the requirements, but it can act against dumping.
If imported chicken is of the same quality as Vietnamese poultry, it cannot be much cheaper, Binh said, calling for immediate government efforts to rescue the industry.
"Although taxes in Vietnam are a little higher, domestic producers can compete against foreign rivals," he said. "How can they sell it here at under one dollar per kilo? That is just impossible."
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