Free trade threatens local producers

Thai-backed CP Vietnam Corporation representative Kieu Minh Luc told VIR that many livestock firms in Vietnam would be affected by an influx of imported livestock products from the agreement’s (TPP) members, especially the US, Canada, Australia and New Zealand, whose livestock products like chicken, beef and pork are already common in Vietnam.

Under the TPP expected to be inked by late 2013, the 12 member nations must instigate import tax rate reductions in the livestock sector. The final reduction levels have yet to be clarified.

“Recently, large volumes of chicken imported from these nations has remarkably affected CP Vietnam’s chicken sales. Imported products often have lower prices. Many other enterprises have also suffered from the same problem,” Luc said. “The situation may become more difficult for enterprises from next year. Farmers will gradually stop production and enterprises will lose their feed market.”

“Still, farmers will suffer the most, because their products will not be able to compete with imported products,” he added. “Chicken, beef, pork and fish will be increasingly imported into Vietnam from these markets in the near future.”

A government report on socio-economic development delivered at a recent National Assembly Standing Committee meeting stated that the local livestock production sector “will suffer the most when the TPP takes effect, because many TPP members, especially the US, Canada, Australia and New Zealand are net exporters of livestock products. Meanwhile, comparable Vietnamese products are of poor quality and the country’s technical barriers for imported livestock products remain limited.”

Van Duc Muoi, general director of locally-owned Vissan processing and trading frozen meat and meat-related foods, said that import tax rate reductions within TPP and other free trade agreements “will be a huge challenge for Vietnamese livestock enterprises, because the US, New Zealand and the US are the world’s top producers of livestock products. Meanwhile, similar Vietnamese products are rarely found in these nations where there are technical barriers.”

Nguyen Do Anh Tuan, vice head of Vietnam’s Institute of Policy and Strategy for Agricultural and Rural Development, told VIR that a kilo of Australian, American or New Zealand pork was 1.5 times cheaper than locally-made products.

“Foreign imported products are often considered to be better quality due to ever-increasing concerns over the food safety of locally sourced products,” Tuan said. “People tend to increasingly use frozen products and this offers an advantage for imports.”

Tuan added that the TPP agreement would create a more bustling investment environment in the livestock production sector. The agreement included a clause allowing companies to make trans-national investments in livestock production between member nations. Thus the number of investors in livestock production in Vietnam would surely increase, due to Vietnam’s great potential.

“I think not only CP Vietnam and Cargill, but also many other companies in Vietnam are likely to have to change their business strategies,” he said.