December 30, 2024

 

Vietnamese pig farmers enjoy surge in price - but bigger problems lie ahead

This year, pig farmers in Vietnam have experienced a price surge, signaling a potential turning point for the industry.

 

While this progress is encouraging, an ongoing concern is the significant impact of pork consumption, given the uncertainty surrounding the economy's recovery and the incomes of residents.

 

The surge is attributed to decreased production and limited supply, along with reduced feed costs, leading to a significant increase in profits. Experts anticipated that prices may remain high until the second half of next year, with a further 10% increase expected in the months leading up to Tet next January.

 

The recent outbreak of African swine fever (ASF) has also affected the supply of piglets, prompting large livestock enterprises to import breeding pigs at high costs.

 

Around early October, the average price for live pigs in Vietnam was at approximately US$2.58/kg, marking the highest price since early July 2023 and reflecting a 16% increase compared to the same period last year.

 

Vietnam's livestock industry is rebuilding its breeding herd, and new supply is expected to enter the market not until at least December 2024.

 

For now, many farms are hesitant to replenish their stock. Particularly, in the country's northern region, there is a shortage of pigs, particularly big-sized ones.

 

Vietnam's ASF outbreak in the first half of 2024 has possibly affected up to one million pigs nationwide, resulting in a scarcity of breeding or weaned pigs for herd rebuilding. Furthermore, the demand for breeding stock has significantly dropped.

 

Last year, the swine industry only imported 5,457 breeding pigs, marking a 31% decrease from 2022. In the first quarter of 2024, only 565 pigs were imported, an 82% decline compared to the same period in 2023.

 

The impact of live pig import and export activities on pig prices could be insignificant in 2025 as production in the region stabilises, leading to a slight difference in pig prices.

 

In Northern Vietnam's bordering provinces where 'unofficial' pork exports from the country to China often take place, trading activities have been slow in the first six months of 2024.

 

In China, the pig production situation is improving as farmers are increasing their herds. There may be an expansion in sow supply (or even over-supply) in the preceding months following October, hence affecting the pig market next year. This also means China's demand for pig imports will not be significant.

 

In another development, pigs from Thailand were delivered to Cambodia in large quantities, with these likely to be sent to Vietnam as the price difference between Vietnam and Thailand in mid-March reached US$0.8/kg. However, border authorities in Vietnam's central region tightened quarantine after Thailand recorded anthrax outbreaks in livestock and as the price difference between Vietnam and Thailand gradually narrowed to only US$0.5/kg.

 

Meanwhile — other than the uncertain situation with ASF — the suspension of small-scale farms is expected to increase further next year, which will create a gap in the market to fill.

 

Additionally, farms that have not met environmental standards are becoming more vulnerable to credit downgrades triggered by environmental regulations set in the Law on Animal Husbandry, which will come into force from January 1, 2025. Based on these regulations livestock farms in areas where their operations are not permitted in cities, towns, townships, and residential areas, will be forced to relocate. This will cause tens of thousands of livestock farms across the country to stop operating.

 

Experts have warned that small-scale farming is no longer suitable due to the environment-linked downgrade risks in recent years. However, such developments typically do not translate into direct impacts on the industry.

 

As for pork consumption in Vietnam, this has been on a downward trend in recent years due to changing diets. This trend is expected to continue into 2025. A part of this issue has to do with the weaker spending power of residents.

 

This trend has been seen in China, most notably after the outbreak of ASF and as the Chinese government encouraged people to switch to other proteins to avoid over-reliance on pork.

 

Moreover, pork's share of China's meat consumption has been falling and this trend is expected to persist through 2025.

- Ha Thu, EFL AG DATA