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Markets & Prices

Last updated: Friday, July 21, 2017

 

“Rescuing” Pork Prices, Supporting Farmers

Posted: Friday, May 19, 2017


Hog prices have plunged for many consecutive months. By early May, the downward spiral was stopped, but hog prices still hovered at just VND20,000 per kilo, the lowest in more than 20 years. It is imperative to take urgent and long-term solutions to tackle pig consumption deadlock and price drop.

Oversupply crisis
Mr Tong Xuan Chinh, Deputy General Director of Livestock Production Department under the Ministry of Agriculture and Rural Development, acknowledged that the price of live hogs dropped sharply on supply-demand imbalance. Farmers were unable to predict market movements to control outputs and they depended too much on the Chinese market. Therefore, when China ended buying and tightened imports, Vietnam could not sell pigs, resulting in a sharp decline in prices.

The core reason to pig consumption deadlock came from inflated farming scale in a bid to boost exports to the Chinese market, despite risk warnings from the Ministry of Industry and Trade. When China intensified surveillance and prevention of illegal imports of hogs across the land border, Vietnam’s live pig shipments to the neighbouring market were immediately affected, and prices of live pigs were placed under heavy downward pressures.

According to the Ministry of Industry and Trade, Vietnam’s livestock planning is also inadequate. Like many other agricultural commodities, pig farming is relatively scattered in small scale (a long-standing farming model, accounting for 65-70 per cent of headcounts) and consumption depends on individual merchants who purchase and slaughter pigs to sell pork to retailers in markets. This reality gives rise to hardships in organising distribution flows and manages intermediate activities of small traders.

Most livestock farmers do not follow farming standards. Thus, when they face excess supply, it will be extremely hard for them to connect to large consumption channels such as processors, slaughtering centres and supermarkets. Spontaneous production also adds to price uncertainty. Besides, a majority of small-scale breeding is spontaneous, unplanned and unorganised from production to consumption.

Deploying solutions
In recent days, seeing that the price of live hogs falls deeply and consumption is still sluggish, the Ministry of Industry and Trade issued Official Dispatch 3484 to pig processors, slaughterers and traders, urging them to cooperate with Departments of Industry and Trade, and Departments of Agriculture and Rural Development to connect pork consumption and increase purchase, slaughtering, processing and freezing.

The Ministry of Industry and Trade also adopted four groups of solutions: Reducing intermediate costs and narrowing the gap between ex-farm purchasing price and retailing price; calling for businesses to participate in the Market Stabilisation Programme by signing pig consumption contracts with livestock farms; considering proposing the Government to direct the State Bank of Vietnam to adopt enterprise credit support policies; and proposing coordination with relevant bodies to carry out effective communications.

The Ministry of Agriculture and Rural Development shall direct market-based animal husbandry production and urge increased cooperation of producers with processors and distributors through bonding contracts.

The Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade will continue to accelerate the expansion of live hog, dairy pig and frozen pork export markets to China, the Philippines, Singapore and other destinations. The Ministry of Agriculture and Rural Development also sent delegations to work with Chinese authorities to sign pork export cooperation contracts with Vietnam.

On May 4, Deputy Minister of Industry and Trade Ho Thi Kim Thoa and other ministry’s officials recently worked with LOTTE Mart and Big C supermarkets and pork suppliers for Ho Chi Minh City. Deputy Minister Thoa said that pork distributors and suppliers have engaged very positively. Most supermarkets have launched promotions and increased display areas for pork. Some even had up to 40 per cent of processed pork products in a bid to boost consumption. Others even accepted losses to share miseries with livestock farmers.

She added that, to ease pressures for loss-suffering farmers, HCM City-based wholesalers need to have more support by buying more, opening more selling channels, applying effective sale promotion policies, and particularly buying frozen reserves for later processing, to support the market regulation.

Huong Giang








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