Foreign players’ feed appetite

September 12, 2011 | 22:19
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The local animal feed market is being eaten into by foreign players.
illustration photo

Statistics show that though Vietnam just accommodated around 20-30 foreign-invested businesses producing animal feed, their market share accounted for around 70 per cent.

In the fisheries field, except for Tra fish, the market is almost in the hands of foreign players such as Cargill, Tomboy, Uni-President and Green Feed.

Financially capable foreign firms have pushed scores of local small players to the verge of bankruptcy.

Vietnam Animal Feed Association (VFA) figures show that local firms active in animal feed production shed by half within the past three years. Of them, 30 per cent were bankrupt and the remainder shifted into importing materials.

According to Vietnam Association of Seafood Exporters and Producers (VASEP), over 30 per cent of local firms processing fish and shrimp meals shut their doors in the first quarter of 2011 alone.

VFA’s chairman Le Ba Lich attributed local players’ dwindling share to the jump of foreign players in Vietnam’s animal feed market.

In June 2011 C.P. Pokphand Company Limited, the Hong Kong-listed affiliate of Thailand's Charoen Pokphand Group, announced it would buy Modern State Investments Limited for $608 million, gaining livestock feed and production facilities in Vietnam.

Modern State, registered in the British Virgin Islands, controls 70.8 per cent of CP Vietnam which currently holds a 20 per cent market share in the commercial feed and industrial farming markets in Vietnam. In 2010, CP Vietnam earned over VND20 trillion ($1 billion) in revenue and posted a net profit of VND964.6 billion ($50.3 million).

Later two Japanese groups Sojitz Group and Kyodo Shiryo Company (Japan’s leading animal feed producer) aired plans to inject JPY2 billion ($26 million) into building an animal feed plant in Vietnam to obtain a 10 per cent market share by 2020.

“One French firm also plans to set up one such factory in Ho Chi Minh City,” said Vietnamese Entrepreneurs Association in France chairman Nguyen Hai Nam.

“Small firms in the [animal feed production] industry face losing their market share to foreign players,” said VFA chairman Lich.

Lich assumed Vietnam’s easy policies relative to foreign investment in animal feed production were key reason why foreign firms leaped into this area in the country. “In some regional countries like China, Malaysia and Thailand such policies towards foreign investors are strict,” Lich said.

“The animal feed market would be controlled by foreign players if current relevant policies remain unchanged,” said Aprocimex chairman and general director Doan Trong Ly.

By Ha Tam

vir.com.vn

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