FDI firms accused of animal feed ‘monopoly’

March 18, 2015 | 11:00
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The Ministry of Industry and Trade have called on domestic companies to take measures to break the dominance of foreign-invested firms over the local husbandry sector.

Accusations of an FDI-monopoly in livestock and animal feed have been bandied about
Photo: Le Toan

Foreign-invested firms hold up to 70 per cent of the animal feed market, with retail prices for animal feed products that are an abnormally 20 per cent higher than in Vietnam’s regional neighbours.

The latest figures from the Vietnam Feed Association showed that while less than 25 per cent of 239 feed factories across the country were currently run by joint ventures and foreign invested businesses, their capacities, outputs and market shares outweighed locally-owned firms. Thailand’s CP Vietnam and the US’ Cargill hold a combined 30 per cent of local animal feed market alone.

According to a recent study by the Agricultural Alliance, a coalition for the interest of farmers and agricultural efficiency founded by a group of Vietnamese researchers, the Vietnamese animal feed market is now being controlled by several foreign invested firms which hold a large share and “unhealthily” compete with local companies by jointly fixing prices, and using exclusive distributors and huge discounts. These facts were attributed to being the reason why Vietnamese animal feed prices have always been 20 per cent higher than those of other Southeast Asian countries.

Officials from the Ministry of Agriculture and Rural Development (MARD) recently admitted they were aware of the issue and said the government was keen to see a healthy, competitive environment which allowed no space for monopolies.

Foreign invested firms also dominate the local husbandry sector, from the supply of animals, veterinary medicines, slaughterhouses to the distribution of meat products. Many foreign invested firms in Vietnam have followed CP’s model that ranges from producing animal feed, supplying livestock, developing satellite farms, and slaughtering and distributing products. In such a closed chain, Vietnamese farmers and firms just act as vendors.

Agricultural experts warned that the more foreign invested firms develop monopoly positions, the bigger losses the Vietnamese economy will suffer. The total value of Vietnam’s husbandry industry is estimated at $8 billion, with animal feed costs accounting for two-thirds of that total. With increasing animal feed costs, the local economy faces an annual loss of trillions of dong.

In addition, local husbandry firms and farmers are facing high risk of bankruptcy due to high input costs and lack of competitiveness.

The number of farms going out of business will continue rising if the claimed monopoly in the animal feed market is not broken.

The participation of local firms such as Hoa Phat Group, Masan, An Giang Plant Protection and Hung Vuong Seafood are expected to help break the monopoly and enable domestic firms to regain market share.

By By Ha Tam

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