VCN - According to the report of the top 10 reputable feed companies of Vietnam Assessment Report JSC (Vietnam Report) published on December 21, 2021, animal husbandry is one of Vietnam’s important economic sectors with high development potential, attracting many businesses, especially foreign-invested units.
FDI enterprises boost the market
According to Vietnam Report, Vietnam’s industrial animal feed industry has grown spectacularly, reaching an average of 13%-15% per year. Total production of industrial animal feed from 10.8 million tons in 2010 has almost doubled in 2020, reaching 20.3 million tons.
Vietnam has become the world’s 10th largest country and 1st in Southeast Asia in terms of industrial animal feed production, ahead of both Thailand and Indonesia. The above results were achieved thanks to the significant contribution of foreign-invested enterprises.
|Top 10 Reputable Feed Companies in 2021. Source: Vietnam Report|
According to the Department of Livestock Production (MARD), as of July 2021, there were 265 enterprises in the animal feed industry, including 89 FDI units and 76 domestic units. However, the FDI enterprises’ output in 2020 accounted for 59.8% while domestic enterprises’ only accounted for 40.2%.
Among the top 10 prestigious animal feed companies in 2021, there are eight FDI enterprises, including: C.P Vietnam Livestock JSC; Cargill Vietnam Co., Ltd; CJ Vina Agri Co., Ltd; Japfa Comfeed Vietnam Co., Ltd; De Heus Co., Ltd; Greenfeed Vietnam JSC; Viet-France Cattle Food Production JSC (Masan Office); and Mavin Group JSC.
In fact, FDI enterprises not only excel in market share but have methodical business strategies with closed production and business chains and strong financial resources. Thus, although the animal feed industry, as well as many other industries, is heavily affected by the pandemic in 2021; many feed production enterprises fell into a shortage of raw materials because the shipping and road transport industries faced difficulties due to the pandemic, and high transportation costs lead to an increase in the cost of feed ingredients by 20%-30%, in the first 10 months of 2021, the import turnover of animal feed and raw materials continued to increase and reached nearly US$4.14 billion, up 29% over the same period in 2020.
Prepare for opportunities
Going through 2021 with many difficulties, many businesses are optimistic and believe that the Government's appropriate management of living with Covid-19 will help restaurants and manufacturing plants resume operations, demand for food will increase, and the feed industry will also have a better outlook in 2022. Additionally, many countries have also determined to live with Covid-19, so they will ease management issues to reduce shipping costs.
A survey of Vietnam Report showed that 57.1% of enterprises voted for positive growth, slightly better; 14.29% voted for maintaining growth, and 28.57% thought that growth would be slightly lower.
According to Mordor Intelligence's forecast, Vietnam's animal feed market is expected to achieve a CAGR of 4.6% in 2021-2026, in which there will be a large contribution from the poultry feed market as more and more consumers prefer chicken, quail, duck, and eggs. In 2020, poultry feed reached 10.7 million tons, accounting for 53.7%; pig feed accounted for only 8.9 million tons, equivalent to 43.8%, and feed for other livestock accounted for 0.6 million tons, accounting for 3.0% in the structure of animal feed production. The OECD has forecasted that in the next 10 years, poultry meat consumption in Vietnam could reach an average growth rate of 2.9%/year.
|Top five solutions for feed enterprises in the new normal. Source: Vietnam Report|
According to experts, to continuously develop in the future, feed businesses must be well prepared for challenges ahead (suppression of supply chains; escalation in raw material costs; changes in consumer habits; and costs for circulation and transportation of goods). The survey of Vietnam Report shows the top five solutions needed by businesses in the feed industry in the near future.
Specifically, study organic animal feed products, meeting biosafety quality standards; invest in machinery and automatic feed production lines, meeting international standards; develop a complex of biosafety models; strengthen measures to manage financial risks, price fluctuations, and quality of input materials; and carry out M&A, strengthen cooperation relationship to expand the business chain.
Compared to the survey conducted in 2020, there are two more new solutions, which are to strengthen measures to manage financial risks, price fluctuations and quality of input materials; and to carry M&A, strengthen cooperation relationship to expand the business chain.
That is because in 2020, market share competition among businesses is said to be the most influential factor on the performance of animal feed businesses. As for this year and 2022, the factor of market share competition is not as worrisome as the three other factors, which are pandemic developments, climate; price fluctuations of input materials; and economic recovery.
By M.Dung/ Ha Thanh