The demand for livestock in Vietnam is decreasing while the supply is abundant.
Mr. Nguyen Quoc Dat of the Vietnam Livestock Association assessed that Vietnam’s livestock industry faced many challenges in 2022, with low efficiency for farmers. While the prices were not favorable for farmers, the supply reserves for the end of 2022 were stable.
It is predicted that food demand during the 2023 Lunar New Year will decrease compared to previous years.
The price of poultry products tends to decrease due to abundant supply, while the demand for this item in restaurants, collective kitchens, schools, etc., is still weak.
The demand for pork usually surges during the Lunar New Year in Vietnam. Hog prices would rise from the second half of November until before the Lunar New Year due to processing companies increasing their purchases in preparation for Tet. It had not been the case in the final months of 2022. Meanwhile, livestock prices are still high at an average of 60,000 VND/kg, and farmers still suffer losses.
While demand fell, meat production increased sharply. Director of the Department of Livestock Production Duong Tat Thang said that the total production value of the livestock industry in 2022 is estimated at over 506,000 billion VND, an increase of 5.5% compared to 2021.
After 3 years of implementing strict anti-pandemic policies, China has recently officially announced the easing of COVID-19 prevention measures.
According to Agribank Securities (Agresco), the world’s second-largest economy easing its restrictions will affect ASEAN countries’ economies. Vietnam, China's largest trading partner in ASEAN since 2016, is assessed to be the most affected.
Experts from SSI stated that China's reopening would be a catalyst for the livestock industry. The securities firm forecasts cross-border trade will support hog prices in 2023. However, Vietnam's livestock companies must adhere to many origin traceability and food safety regulations to export pork to China. Commercial farms with a fully integrated 3F model (Feed-Farm-Food) will be the primary beneficiaries if this is adopted.
Although the outbreak of African swine fever has not been fully controlled among household farms, it will not affect the total pork supply. This outbreak is not as severe as it has been in the past, and the vaccination deployment is expected to begin in 2023 upon completing the trial phase.
Analysts at VNDirect Securities Joint Stock Company also believe that the difficulties of pork producers will ease from 2023, thanks to the forecasted pork price increase of 5% when the demand for eating outside recovers.
In addition, grain prices are likely to reduce as exporting countries increase supplies, Ukraine's grain goods can be shipped again after the agreement to end the blockade of its ports, and fertilizer prices cool down.
According to VNDIRECT, although Vietnam’s animal feed prices are lagging behind world agricultural prices, feed costs will still decrease gradually in 2023.
An expert from VNDIRECT said that another factor supporting pork breeding and processing enterprises is the positive increase in consumption demand when the real income of consumers increases. Meanwhile, international tourists are expected to recover 84% in the second quarter of 2023 and 100% in the fourth quarter of 2023, leading to a strong recovery of entertainment, accommodation, and food services.
Therefore, experts at VNDIRECT believe that pig farming and processing companies will record positive revenue growth in 2023. Besides, the gross profit margin of companies such as Dabaco Vietnam Group Joint Stock Company (Dabaco); Masan Joint Stock Company; BaF Vietnam Agriculture Joint Stock Company; Hoang Anh Gia Lai Group Joint Stock Company, etc., will recover positively.
However, according to analysts, the risk for the pig farming group is that the prolonged tension between Russia and Ukraine may affect shipping activities in the Black Sea, thereby putting upward pressure on global grain prices.
Besides, about 80% of Vietnam's input materials for animal feed production are imported goods, so the increase in USD/VND exchange rate also leads to a rise in the cost of animal feed production.
Source: vietnamplus
Compiled by VietnamCredit
