Profits still out of reach for pig farming companies

February 01, 2024 | 16:04
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Despite the total herd increasing to a new high, 2023 has been called a poor year for the pig farming industry, with businesses and farmers failing to make a profit.
Profits still out of reach for pig farming companies
Disease, consumption, and shady practices are among the reasons why some firms are struggling

At a 2023 summary conference by the Ministry of Agriculture and Rural Development (MARD) in early January, leaders said that the pig farming industry was likely to have incurred losses over the past year, greatly affecting the profit plans of each enterprise and the entire industry.

The results of listed husbandry businesses in the first nine months of 2023 just released echo the results. In the first three quarters of 2023, the after-tax profits of Dabaco Group were $780,000, equalling only 3 per cent of the yearly plan.

Vissan JSC earned $5 million in pre-tax profit as of end-October, equalling 66 per cent of the yearly plan. The company has adjusted its plan 24 per cent lower compared to last year.

Hoang Anh Gia Lai JSC estimated profit for the whole year of 2023 to be $90.7 million, nearly double its projection, but most of this comes from liquidation and asset transfer activities.

Elsewhere, BaF Vietnam Agriculture JSC reported only $2.2 million in after-tax profit, equivalent to 17.6 per cent of the annual target.

BaF aims to expand the size of the pig herd to 800,000 by the end of this year and double the net profit compared to 2023. VNDirect Securities forecasts that BaF Vietnam’s revenue may increase by 7.4 per cent in 2024, enabling net profit to increase by an estimated 15.9 per cent compared to 2023.

Last week, BaF Vietnam acquired pig farming company Thanh Dat Gia Lai CNC in Gia Lai province. Last year, it invested in seven new farms in Tay Ninh province. In 2024, it plans to put two new farms into operation in the next month or so.

Meanwhile, Do Xuan Huy, vice president of C.P. Vietnam, said that the selling prices of live hogs in 2023 were low, on average $2.06 per kg.

“Both livestock households and major businesses are suffering losses in pig farming,” Huy said. “The price of live pigs was lower than in 2022, mainly because of weak consumption, increased domestic meat supply, and African swine fever issues.”

Local meat has had to compete with smuggled pigs from neighbouring countries with lower prices, despite the risk of disease infection and food insecurity (see above).

Since June 2023, there have been six reductions in animal feed prices in the country, but they are still around 45 per cent higher than before the coronavirus pandemic.

Tong Xuan Chinh, deputy director of the MARD’s Department of Livestock, said that the selling price of live hogs was lower than the production cost.

“The cost of breeding livestock is about $2.30-2.50 per kg. With the selling prices in 2023, farmers cannot earn any profit,” Chinh said.

In 2023, the country’s total pig herd was estimated to reach 30.3 million, an increase of 4.2 per cent compared to 2022; live pork output reached 4.68 million tons.

VNDirect said that the Vietnamese pork market still had growth potential and businesses covering the feed-farm-food model would benefit from the trend of clean meat in urban areas.

Some businesses expressed optimism about 2024. Dabaco has set a revenue target of $1.1 billion and after-tax profit of $30.8 million, an increase of 3 and 28 per cent compared to the 2023 plan.

Hoang Anh Gia Lai also expects that 2024 profits will be about 25 per cent higher than last year’s results.

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