ANIMAL FEED MARKET IN 2023 – POSITIVE SIGNAL AFTER 2 YEARS

According to the animal feed market report of VIRAC, the total import volume of animal feed and raw materials in July 2023 to Vietnam reached USD 515.78 million, an increase of 27.2% compared to the last June and increased 12.3% over the same period in July 2022.

 

In general, the supply of raw materials for the animal feed industry in Vietnam is currently largely dependent on imports from abroad. In particular, commodities such as corn, wheat or soybean must be imported up to 70-80% to meet the domestic production demand.

 

Learn more about the animal feed market.

 

I. Overview of Vietnam’s animal feed market in 2023

1. Vietnam’s animal feed market in 2023 depends mainly on imports from abroad

 

In recent years, Vietnam’s animal feed market has achieved many milestones and great achievements, making Vietnam a country with a fast-growing animal feed market in the region, reaching average growth rates from 13% to 15% per year. Since then, Vietnam has become the 10th country in the world and number 1 in Southeast Asia in terms of industrial animal feed production.

 

However, at present, the animal feed market in Vietnam is significantly dependent on imported raw materials.

 

Image 1: The animal feed market in Vietnam is significantly dependent on imported raw materials
Image 1: The animal feed market in Vietnam is significantly dependent on imported raw materials

 

The total demand for concentrates (corn, soybean meal, fishmeal, bran, etc.) of the entire Vietnamese livestock industry reaches about 33 million tons/year. To meet demand, Vietnam needs a huge amount of concentrate feed ingredients, but domestic production can only provide about 13 million tons/year (accounting for about 35% of total demand). The rest, the industry is dependent on mainly from imported sources (accounting for about 65% of total demand).

 

This has led to the close dependence of the domestic livestock industry on the world agricultural market.

 

According to VIRAC, imports of animal feed and raw materials to Vietnam in July 2023 reached 515.78 million USD, up 27.2% compared to June 2023 and up 12.3% compared to July 2022.

 

In the first 7 months of 2023, the import turnover of this product group has reached over 2.85 billion USD, down 8.4% compared to the same period in 2022.

 

Image 2: Import turnover of animal feed and raw materials in 6M/2023
                   Image 2: Import turnover of animal feed and raw materials in 6M/2023

Source: According to VIRAC report

 

Also according to VIRAC, in the first 6 months of 2023, Vietnam imported 8.2 million tons of animal feed and feed ingredients (equivalent to 3.4 billion USD), down 3.3% in volume and 7 .9% in value compared to the same period in 2022.

 

According to the Vietnam Commodity Exchange (MXV), among the four groups of raw materials and commodities, agricultural products are the items that have recorded the strongest decline in recent months. The prices of most of the important feed market ingredients, such as corn, soybean meal and wheat, all fell by 15-30% compared to the beginning of this year.

 

The price of feed ingredients in the world market has cooled down, and transportation costs are also falling due to the recent sharp drop in crude oil prices. This is a very good signal for the animal feed market, which is dependent on the supply of imported raw materials, especially after 2 years in a row, businesses and livestock households have to strain themselves due to pressure from both input and output costs.

 

2. Import situation of some types of animal feed ingredients in Vietnam in 2023

 

According to VIRAC, the import situation of some main raw materials of the animal feed market in the first 2 quarters of 2023 includes: Corn grain imported 3.3 million tons; all kinds of oil drying reached 2.3 million tons; wheat and barley 978,000 tons. In addition, dry wine residue imported 450,000 tons, bran of all kinds imported 285,000 tons, rice and broken rice imported 237,000 tons, supplementary feed imported 190,000 tons…

 

Image 3: Some raw materials for animal feed production in Vietnam
                    Image 3: Some raw materials for animal feed production in Vietnam

 

Regarding the price of animal feed ingredients, in the first 6 months of 2023, the price of corn kernels decreased the most by 5.7%, the price of dry wine residue decreased by 3.8%; Rice bran prices increased by 4.7%.

 

  • According to VIRAC, corn grain import output in the first 6 months of the year is estimated at 3.3 million tons, down x% compared to the same period in 2022.

 

Image 4: Corn grain import output by month
                                      Image 4: Corn grain import output by month

Source: According to VIRAC report

 

  • Also according to VIRAC, soybean meal import output in the first 6 months of the year is estimated to reach x tons, down x% compared to the same period in 2022.

 

Image 5: Soybean meal import volume by month
                                     Image 5: Soybean meal import volume by month

Source: According to VIRAC report

 

  • Along with that, according to VIRAC’s report on the animal feed market, wheat import output in the first 6 months of the year is estimated to reach x tons, down x% compared to the same period in 2022.

 

Image 6: Wheat import volume by month
                                               Image 6: Wheat import volume by month

Source: According to VIRAC report

 

3. Import situation of Vietnam’s feed market from some specific countries

 

According to VIRAC, imports of raw materials for the animal feed market are the largest from the Argentine market, accounting for 25.4% of the country’s total import turnover of commodity groups. Import volume reached about x million USD, down 20.9% over the same period in the second quarter of 2022; in which, in June 2023 alone, the import volume reached x million USD, increased by 37.5% compared to May 2023 but decreased by 43% compared to June 2022.

 

The second largest importer of raw materials in Vietnam is India, accounting for 15%, reaching about x million USD, a sharp increase of 111% over the same period in 2022. Particularly in June 2023, imports from this market reached more than x million USD, down 70.6% compared to May 2023 and also down about 22.5% compared to June 2022.

 

Image 7: India is the second largest importer of animal feed ingredients in Vietnam
Image 7: India is the second largest importer of animal feed ingredients in Vietnam

 

Next is the US market, in June 2023, import volume increased by 33.7% compared to May 2023 and increased by 39.3% compared to June 2022, reaching nearly x million USD. In total, in the first 6 months of 2023, imports from the US market reached x million USD, a slight increase of 6.4% over the same period last year, accounting for 14.7% of the total turnover.

 

In addition, imports of raw materials and animal feed from the Southeast Asian market in the first 6 months of this year decreased by 19.7% compared to the first 6 months of 2022, reaching about x million USD.

 

Faced with potential supply risks, finding cheap alternative raw materials and supply sources is considered a short-term solution for the animal feed market in Vietnam. Therefore, currently, instead of importing corn seeds mainly from South America as before, India is an alternative with a cheaper and more suitable price.

 

It can be seen that diversifying raw material supplies from India and Pakistan and replacing cheaper raw materials is effective in helping Vietnamese animal feed market businesses offset rising import costs, increased from traditional suppliers such as Argentina and Brazil, and exploiting the potential of geographical advantages is also helping businesses reduce transportation costs in a context where they are still not self-sufficient in supply.

 

Image 8: Import share of animal feed and ingredients by country, 6M/2023
                Image 8: Import share of animal feed and ingredients by country, 6M/2023

Source: According to VIRAC report

 

II. PRODUCTION AND BUSINESS SITUATION OF SOME ENTERPRISES IN THE DOMESTIC ANIMAL FEED MARKET

1. Domestic animal feed market enterprises simultaneously adjusted product prices

 

From July 10, 2023, prices of all types of products on the animal feed market will decrease from 100 – 400 VND/kg. This is the third price reduction this year.

 

CJ Vina Agri announced to apply a reduction of 80 VND/kg for food products for cows and goats; 120 VND/kg for poultry feed products, meat and eggs. In addition, products for piglets and concentrated feed are reduced by 300 VND/kg and 160 VND/kg for the remaining pig products.

 

Hoa Phat Dong Nai Industrial Feed Co., Ltd. reduces from 100 – 400 VND/kg for animal feed products produced by the company, applicable to business areas from Da Nang to Ca Mau.

 

Image 9: From July 10, animal feed prices on the market decreased from 100 - 400 VND/kg
Image 9: From July 10, animal feed prices on the market decreased from 100 – 400 VND/kg

 

For products under the VINA HAPPY brand of Vina Company Limited, a discount of 100 – 300 VND/kg applies.

 

Uni President Vietnam Company also reduced 100 VND/kg for food products for free-range chickens, broiler chickens, meat ducks, rabbits, cows, and goats. At the same time, a reduction of 160 VND/kg for all types of pig feed and for concentrated piglet feed, a reduction of 300 VND/kg is applied.

 

Proconco and Anco animal feed factory systems have a reduced adjustment of 400 VND/kg for products for piglets; 160 VND/kg for pork feed; 120 VND/kg for poultry and meat feed; The remaining products are reduced by 100 VND/kg.

 

The adjustment to reduce product selling prices of businesses in the animal feed market is at a good level, contributing to supporting livestock farmers to recover economically after a period of continuous decline in selling prices of livestock products, low and elongated.

 

Find out more information: Vietnamese animal feed market enterprises.

 

2. The domestic animal feed market is a potential market to attract investment from foreign enterprises

 

With strong development potential in recent years, Vietnam’s animal feed market has been attracting many businesses to participate, including many foreign-invested enterprises participating in expansion. manufacturing business. Such names can be mentioned as: Cargill Group (USA), Haid (China), C.P Group (Charoen Pokphand Group – Thailand), De Heus (Netherlands), BRF (Brazil), Mavin (Australia), Japfa (Singapore), CJ (Korea),…

 

Attracting big names in the world to invest in Vietnam’s animal feed market is creating strong competition between domestic enterprises as well as foreign-invested enterprises.

 

Currently, the whole country has 269 establishments producing complete mixed industrial animal feed with a total designed capacity of up to 43.2 million tons. Of which, 90 factories are owned by FDI enterprises and 179 factories are owned by domestic enterprises.

 

Image 10: Attracting big names in the world to invest in the Vietnamese animal feed market is creating strong competition
Image 10: Attracting big names in the world to invest in the Vietnamese animal feed market is creating strong competition

 

About 60% of establishments have invested in advanced technology and automatic production lines. In addition, 20% of facilities have reached the semi-automatic level, only about 20% of manual production facilities with a design capacity of less than 30 thousand tons/year. At the same time, over 80% of establishments have applied at least one quality management system such as: ISO, GMP, HACCP or equivalent.

 

Find out more information: Vietnamese animal feed market enterprises.

 

III. FORECAST FOR ANIMAL FEED MARKET FOR THE LAST HOL OF 2023

 

Vietnam is one of the two countries with the fastest growing corn import volume in Southeast Asia and is also the largest corn importer in the region since the 2018 – 2019 crop year. Since 2012, Vietnam has transformed from the 19th largest corn importer to the 5th position in the world. This year, the US Department of Agriculture (USDA) has forecast that our country’s corn grain consumption in the 2023-2024 crop year will increase to 14.5 million tons, driven by the needs of the livestock industry in the 2023-2024 crop year.

 

Because it is still heavily dependent on imported raw materials, the domestic animal feed market easily falls into a passive position, and is greatly affected by fluctuations in the international raw material market. In addition, the effects of climate change can also cause the output of some major cereals in major exporting countries to decrease, thereby increasing input costs for production in the animal feed market.

 

Image 11: Highly dependent on imported sources, the domestic animal feed market easily falls into a passive position
Image 11: Highly dependent on imported sources, the domestic animal feed market easily falls into a passive position

 

It can be seen that diversifying the sources of raw materials from India or Pakistan and replacing them with cheaper materials can help businesses in the Vietnamese animal feed market offset the cost of imported food. increased from traditional suppliers such as: Argentina and Brazil.

 

At the same time, exploiting the potential of geographical advantages is also helping domestic enterprises reduce transportation costs in the context of not being able to supply themselves.

 

In addition to short-term solutions, businesses in the animal feed market also need to actively promote the maximum use of domestically produced feed materials, and look for alternative products. Thereby diversifying the supply, reducing dependence on some traditional materials and on certain markets.

 

Image 12: Businesses also need to actively promote making the most of domestically produced animal feed raw materials
Image 12: Businesses also need to actively promote making the most of domestically produced animal feed raw materials

 

In the long term, domestic animal feed businesses need to promote their production development plans in a sustainable way, promote self-reliance in raw materials in animal feed production with a focus on solution like:

 

  • First, perfect the land according to the orientation of the Livestock Development Strategy for the period 2021 – 2030, vision to 2045.

 

  • Second, to increase domestic animal feed production by increasing the area planted to maize and other specialized crops. Developing organic food products that meet biosafety quality standards.

 

  • Third, manufacturers of the Vietnamese animal feed market need to promote research activities in order to improve nutritional value, use economically and effectively feed raw materials. In addition, it is necessary to invest in applying advanced technology and biotechnology to quickly produce biological products as raw materials for animal feed, replacing imported raw materials. At the same time, conducting digital transformation in the production and management process helps to reduce costs and save time in animal feed production.

 

  • Fourth, it is necessary to review and rationally adjust the network of industrial animal feed production facilities to suit the needs of the domestic consumption market and export capacity.

 

  • Fifth, to encourage investment and perfect the system of seaport infrastructure and specialized warehouses to serve the import and export of raw materials for the animal feed market.

 

 

 

 

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The information is summarized in the “Animal feed market report Q2/2023”. The report provides full information on macroeconomics, commercial supply and demand of the animal feed market, related information and forecasts from the latest updated data. The report also features forecasts and prospects of the animal feed market with the most up-to-date information.

 

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