The processed meat industry outlook is relatively clear with ample supply. The outlook for milk and dairy products is not so positive…
Overview of the meat and dairy processing industry in the first months of 2023
Meat processing industry
In the meat processing industry, the domestic live meat supply is at a well-developed level. The African swine fever epidemic has been partly controlled, the weather helps pigs to grow smoothly, so the number of pigs released from slaughter in the first quarter of 2023 remains stable. The supply of beef, buffalo, and poultry meat is also at a similar level of development.
According to VIRAC’s report, live pork production increased by about 7% over the same period last year, estimated at more than 1800 thousand tons. This is a good sign for the meat processing industry because the input supply is cheap while the price of finished pork remains high, ranging from 120 to 180 thousand VND/kg.
Source: VIRAC’s Report
Processed meat production also increased 2% y/y in 2022. Thanks to stable inputs, disease problems were resolved, and processed meat production stabilized in Q1/2023.
Export of meat and meat products increased sharply in the first 2 months of 2023. China is Vietnam’s No. 1 pork import market. When China relaxes measures to prevent the Covid-19 epidemic, people’s demand increases sharply. According to the US Department of Agriculture (USDA) Report, China’s 2023 pig production is forecast to decrease 2% from 2022, to 700 million head, which is a very favorable point for exports. meat to China of Vietnam. Therefore, the output of meat and meat products exported to China in the first two months of 2023 increased by more than 58% and export turnover increased by nearly 50% over the same period.
Source: VIRAC’s Report
Dairy and dairy products industry
In the dairy and dairy products industry, it is also a good sign that Vietnamese businesses expand the scale of their cow herds to reduce dependence on imported raw milk supplies. Enterprises are gradually determined to take a longer-term path, no longer depending on the products of other industries. Therefore, the output of raw milk in the first quarter also increased slightly compared to the same period last year, although decreased. compared to the fourth quarter of 2022.
Stable milk production has provided a source of raw materials, creating leverage for some dairy companies to achieve revenue as expected. Typical in Vietnam’s dairy industry is Vietnam Dairy Products Joint Stock Company (Vinamilk) with total revenue of 13,954 billion VND, an increase compared to the same period in 2022 and pre-tax profit of 2,312 billion VND. This revenue and profit helps Vinamilk complete 22% and 22.1% of the 2023 plan, respectively.
Source: general reports
Difficulties of the meat and dairy processing market
Despite many bright spots, the food processing industry markets in the first months of 2023 also faced many difficulties.
The first is because GDP in the first months of this year increased slowly.
Vietnam posted GDP growth in the first quarter of 2023 at 3,323% compared to the same period in 2022. This is the second lowest growth rate since 2011, only after the deep decline of Covid-19 in 2020.
Second, the increase in the consumer price index has not reached the target.
The average CPI in the first quarter of 2023 has increased by 4.18% over the same period in 2022 but is still below the target set by the National Assembly. This will directly affect the retail market, causing the growth of the retail market to increase slower than the same period of 2022. Therefore, the supply of food processing industries such as meat and dairy is low. abundant and stable but in the face of inflation and economic difficulties, people become more thoughtful before their purchasing decisions. This is the reason why product output is still very worrying.
Outlook for the meat and dairy processing industry in the last months of the year
Outlook for the meat processing industry
The prospects of the processed meat industry in the last months of 2023 are relatively clear given the abundant supply and demand for processed pork imports of the open Chinese market. Although at the present time, the price of animal feed is still at a high level, the world price of raw materials for animal feed processing tends to decrease. This will help feed prices in Vietnam gradually decrease in the following quarters. African swine fever has been controlled, so the risk of disease in livestock has been somewhat reduced.
Meanwhile, the demand for processed meat is also expected to increase in the last months of the year. For the domestic market, when people’s real income increases thanks to the government’s basic salary increase plan, it also helps people to be more comfortable in spending. In addition, the increase in tourist arrivals in this summer and winter also helps promote entertainment and dining services. This helps increase demand for processed meat products. Not to mention the increased demand for pork in the Chinese market, promising a lot of profit for meat processing enterprises.
Outlook for the dairy and dairy products industry
The outlook for milk and dairy products is not too optimistic in 2023. After years of fighting the Covid-19 epidemic causing disruptions to the global supply chain, the cost of animal feed supplies increased, leading to an increase in the cost of animal feed. price. Combined with that is the influence of the Russian-Ukrainian war, making the input materials of the dairy industry increase sharply.
The supply is facing many difficulties when the global milk demand is forecasted to be weak in the short term as many economies are facing inflation. In Vietnam, people still do not consider milk as an essential item, so consumers are willing to remove milk from their shopping carts to tighten their spending. These forecasts paint a negative picture of the milk and dairy products market from now to the end of 2023.
The above information is updated from the “Report on Vietnam’s food processing industry in the first quarter of 2023“. The report not only provides full information on macroeconomics, trade supply and demand of the meat and dairy industry, but also information on processed seafood, processed vegetables, and starch. The report also provides a full range of relevant information and forecasts from the latest updated data.
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