Global Market Report – South East Asia
Paul Anderson, General Manager South East Asia
Pig farming is growing fast in Vietnam, and pig prices in the market are still in serious decline. One of the main reason for the decline in pig price is the enforced closure of the Chinese/Vietnam border vastly reducing the supplies entering China, and the Chinese traders are taking advantage of the current situation by reducing purchase prices. With the break-even point for commercial farmers around 38-39.000 VND/Kg, most farmers are now losing money. We are waiting to see what influence the Merry Christmas, Happy New Year and Tet holiday (Lunar New Year) has on the pig price, not as much as if China returns to a flexible border control in order to benefit from its neighbour Vietnam’s plentiful supply of pork meat.
Consumption is growing by an average of 4.9% per year and has now reached 38.3kg per capita. Around 99.6% of Vietnamese people consume pork, by far the favourite meat. Imports are rising faster than production, 15.2% per year against 1.9%. The Vietnamese prefer warm meat from wet markets which, in some way, protects the local industry, while imported pork is often used for processed meat or frozen in modern retailing.
With the new large scale commercial companies coming into pig production the total number of pigs now stands at 29.1 million, increased 4.8% from the same period last year, and will continue to increase as the fresh production comes on stream and the large commercial producers who import their advanced Genetics increase their output through genetic improvement by up to 0.75 pig per sow per year.
The Vietnamese market is split by region between the south, centre and north, as well as between urban and countryside consumers. The majority of people in the countryside, 72% of the overall population, are still employed in farming and fishing, meaning nearly 50% of the total Vietnamese population is employed in primary activities. Urbanites consume 30% more food in value than country people and have fast rising incomes, 16.1% against 6% in 2015 for country dwellers, the highest on record. Modern retailing is limited to the cities: highest in Ho Chi Minh City (18.6% of food sales) followed by Hanoi, Cantho and Danang. The food market is expected to grow by 14% in urban areas between 2015 and 2020 and by 34% in rural areas. Dairy products, increasingly local, are benefiting of this increase. As it is the case in other Asian markets, eating out in all forms is absolutely huge. Vietnam has a young and rising population: 93.4m people, 60% of which are under 35 years of age.
Meat quality and safety is an important topic, especially in the South of Vietnam, as more companies join Vietnamese Good Agricultural Practices, or VietGAP, to improve the food safety standard around Ho Chi Minh City. VietGAP is based on the Global G.A.P. standard. They are making a food safety code of practice for meat sold in the supermarket. Being from the UK, I am used to such schemes like the UK Red Tractor farm assurance scheme. What impressed me was that they have taken this a step further by the use of current technology and the meat you buy in the supermarket can be traced back to the processor, slaughterhouse and the farm where it was produced on your smartphone.
Premium pork launch by Le Porc du Mékong is a new venture involving meat processor Le Boucher and 600 pig farmers in the Mekong Delta. The initiative aims for 360,000 slaughter pigs in Year 1.
Thailand struggles to curb gluts, and is struggling to get rid of oversupplies of live pigs through boosting cross border trades with China and Cambodia. Oversupplies of live pigs in Thailand amounted to about 6000 heads/day in December. This is a result of slowdown in pork consumption due to falling chicken prices and shrinking cross border trades of live pigs with China and Cambodia. Output of live pigs was about 46,000 heads/day in the month. However, the consumption was only about 38,000 – 40,000 heads/day.
A sharp decline in pork consumption corresponded to dropping chicken price, which was below THB 35/kg or about USD 1/kg in December (down from around USD 1.5 a month earlier). The consumers switched to chicken and natural fish, which was abundant at the end of monsoon months.
Another reason is that Thailand’s exports of live pigs to China and Cambodia fell tremendously from about 5000 pigs/day earlier to only 1000 pigs/day. The Thai Swine Raisers Association is trying to boost the export by offering various incentives to pig farmers to ship their pigs across the border.
Anyway, the consumption and export is expected to rebound in the end of December to February. This is because of New Year festivals in Thailand and neighbouring countries would boost the consumption of pork during these months a great deal.
The Filipinos love pork! In the Philippines you can enjoy Pork cooked and presented in so many different ways and it tastes delicious but there is a willingness to improve the meat eating quality and further enhance the consumer’s pork meal experience. Recent USDA FAS data shows that pork consumption in recorded Asian countries (including the Philippines) accounts for no less than 59% of the world total. At Genesus, we are the drivers of high meat quality aimed at not only the premium market but the standard markets as well. With the data to back it up, we are serving many processors and other members of the pork supply chain.
New import complications, meat importers have warned against the return of congestion at the country’s ports following the Department of Agriculture’s decision to cancel all import permits on agricultural products. The delivery of electronic import permits are being suspended, meaning delays in the delivery of import licenses. Both importers and exporters suspect that the new procedure aims at protecting domestic production, thanks to red tape and an administrative burden. Agriculture Secretary Emmanuel F Piñol said he intended to issue “immediately” a special order recalling all permits issued, in an effort to curb smuggling by the repeated use or “recycling” of import papers. Jesus Cham, President of the Meat Importers’ and Traders’ Association, said there was a lot of confusion following Piñol’s statement. In a separate development, the Department of Agriculture pledged to increase the duty on offal from the current 5% to 30%, the rate for meat, “in order to combat smuggling”.
High imports during the first eight months of the year, the Philippines imported 185,000 tonnes of pork with Spain and Germany providing half the volume. They were followed by France, Canada, the USA and Belgium.
Canadian pigs making their way into the European market
By: Kees van Dooren, Pig Progress
Genesus breeding material has become available for almost the whole of Europe exclusively through the Danish company Porc-Ex Breeding.
Only in Germany and Spain Porc-Ex is not a distributor; nevertheless sales of Genesus genetics can happen in these countries. Porc-Ex is also distributor for Ukraine and Belarus. Speaking to Boerderij, a sister title to Pig Progress, Porc Ex-Breeding director Holger Bøgebjerg Sørensen stated that he is happy with having become the distributor. As the result of a reorganisation of the sales structure of Danish DanAvl, all that would’ve been left for Porc-Ex would be sales agent. For that reason, he has started offering the Canadian genetics line.
Are Canadian genetics already available to European pig producers?
Bøgebjerg Sørensen: “Most certainly. At Yxia, the French cooperative AI organisation, there are already 25 boars, Landrace and Yorkshire for sow breeding purposes and Duroc terminal sires. Semen production started late last year. I expect that a 2nd shipment of 25 boars will be travelling from Canada to France in early 2017. These boars will be free from Actinobacillus pleuropneumoniae (App), Porcine Reproductive and Respiratory Syndrome (PRRS) and mycoplasma. Pig producers can therefore also replace their own sows using Genesus pigs.”
Will you also start breeding F1 sows?
“Sure, we aim to start selling Genesus F1 sows early 2017. We do consider starting a sub-breeding farm in Denmark.”
What is the added value of Genesus pigs?
“In comparison to Danish sows the birth weight is higher; piglets under 800g are rare. This leads to a lower piglet mortality. Piglet mortality is an important social theme which the industry cannot ignore. I think DanAvl continues to focus on litter size without taking the ethical side into account.
“In addition, the gestation time of the Canadian sow is 2-3 days shorter than the Danish DanAvl sows. The advantage is that the lactation period takes longer and that the need for nurse sows is reduced. Nurse sows usually make it difficult to work with a more week system.”
“Meat quality of the boars is also fine. Without a doubt, the Duroc terminal sire has proved that at global pork markets all over the world.”
Holger Bøgebjerg Sørensen, director of Porc-Ex Breeding, Denmark.
The number of piglets per litter must be lower then?
“True. The piglets of the Canadian sows, however, are more vital and mortality is lower. The sows’ good milk quality have added to significantly higher weaning weights. We have observed this at pig farms all over the globe, including Russia. In that country there are various large farms using these genetics.”
It doesn’t sound like an easy job – obtaining market share in a shrinking market.
“I agree. Nevertheless, I am convinced that it is possible to acquire that share on the European market for pig genetics, having a good product and knowledge of the local market and culture. To be a local partner, we cooperate with daughter companies in various countries. From Canada we receive a lot of support to acquire this position on the European market. In addition, aftersales is well arranged at Genesus. On top, we have experience with finding new markets, that is what we did before with Danish sows.”
What market share for sows is your aim?
“I couldn’t tell you. It’s just too early to say anything about that. We have just begun with Genesus pigs in Europe.”
Almost 1 million piglets for export
The Danish company Porc-Ex consists of 2 parts. Porc-Ex Breeding is the section selling pig genetics, with subsidiaries in various European countries. In addition, there is just plain Porc-Ex, which is a trading business focused on exporting piglets from Denmark. In 2016, the company exported almost 1 million piglets. Most important destinations are Poland, Germany and Italy.