Livestock a bridge too far

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Pumping money into livestock breeding was risky currently despite its exceptional profit margins of 20-25 per cent, said Nghe An Animal Breed Centre director Luu Cong Hoa.

“Besides, the [animal husbandry] sector is always threatened by epidemic outbreaks. Once an outbreak took place, we need to kill all affected animals, causing production standstill and badly influencing breeders’ sentiments,” said Hoa.

Director Le Van Me at Phu Son Husbandry Joint Stock Company based in southern Dong Nai province, said hiking meat prices stemmed from spontaneous livestock breeding development.

Besides epidemics, high lending rates are another hurdle. “Overly high [lending] rates of 25-26 per cent per year and restricted access to loans has scared away any investors who wish to jump into the sector despite its current high margins,” said Hanoi-based Co Dong pig breeding cooperative chairman Tran Van Chien.

High margin rates and meat price upsurges have not yet translated into an easier life for businesses active in the sector. For instance, the Saigon Food Industry Joint Stock Company invested extensively in hundreds of slaughter houses and processing plants and signed purchase contracts with local farmers. Its factories, however, currently operate under capacity on the back of soaring breed and animal feeding costs.

In fact, in 2010 the government enacted Decree 61/2010/ND-CP stimulating businesses to invest in agriculture and rural development. In June, the Ministry of Finance made public Ordinance 84/2011/TT-BTC guiding the implementation of the decree.

Accordingly, businesses operating in agriculture will benefit from land rent reductions/exemptions, preferred loans and be supported in epidemic prevention and brand promotion.

Not only farmers, big breeding farms also found hard to get bank loans, according to the Department of Agriculture and Rural Development in central Thanh Hoa province.

Head of Ministry of Agriculture and Rural Development’s (MARD) Animal Husbandry Department Hoang Kim Giao said the department had proposed government agencies allow breeding businesses and cooperatives to benefit from Decree 61 incentives, particularly loan incentives.

In this respect, deputy head of State Bank’s Credit and Banking Department Cat Quang Duong said the interest of each loan was based on each production sector’s risk degree. Duong, however, pledged to scale up support to animal breeding businesses through suitable loaning schemes.