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Vietnam looks for price controlls on feed ingredients

Vietnam's Ministry of Agriculture and Rural Development (MARD) is calling on the government to control the price of several categories of imported feed materials, including soybeanmeal

March 26, 2009


Vietnam looks for price controlls on feed ingredients

Vietnam's Ministry of Agriculture and Rural Development (MARD) is calling on the government to control the price of several categories of imported feed materials, including soybeanmeal (SBM).

Vietnam relies entirely on imported SBM to meet domestic feed demand: between 2 - 2.5million tones a year, valued at some US $1 billion ast 2008 prices.

According to Le Ba Lich, Chairman of Vietnam's Animal Feed Association, the country imports between 45 - 92% of the total value of feed materials. Besides SBM, 500,000 - 1million tonnes of maize and 2.5 - 3 million tons of rice bran areamong other feed raw materials brought into the country.

MARD has also suggested the state apply import duties and assist enterprises in buying commodities when the world’s prices are low. In the long term, the ministry said that it is necessary to establish reasonable prices to boost the production of feed materials domestically.

Nguyen Xuan Duong, Deputy Director of the Livestock Husbandry Department under MARD said that Vietnam’s small enterprises need to cooperate with each other, so as to be able to import feed materials in large quantities and at low prices. Duong related a story to VietNamNet Bridge that a Vietnamese company had signed a contract to import SBM at $320/ton only.  As the price unexpectedly rose to over US $400/ton, the exporter ‘escaped’ the agreement. The Vietnamese company could not take legal proceedings against the foreign partner in this case because of  weak financial and legal capability. Meanwhile, no partner would dare escape from the contracts made with big groups like Cargill or CP Group.

In response to suspicions that a monpoly was behind the reason that domestic feed prices have not decreased despite the sharp falls in the prices of feed materials in world’s market, Duong affirmed that a monopoly could not exist in Vietnam, as no feed producer can hold more than 30% of the market share.

“There has been no sign that big feed producers dominate the domestic market,” Duong said.The biggest market share holder in the feed market, the CP Group, holds only 20% of the market share, he said.

He added that that the feed material prices in the world have increased again since the end of February and early March (rice bran up by 15%, cassava up between 15-20%, soya oil cake up between 20-25%). However, feed producers have not raised the sale prices of finished products as they have stored materials, which is enough for a two or three month production.

[Source:VietNamNet Bridge]

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