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Page 1: Poultry Sector in South East Asia - Iowa Economic ... Sector in South East Asia Iowa Economic Development Authority March 2017 Orissa International Pte. Ltd. | Market Research © 2017

Poultry Sector in South East Asia Iowa Economic Development Authority

March 2017

Orissa International Pte. Ltd. | Market Research © 2017

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Poultry Sector in South East Asia

© 2017 by Orissa International. All rights reserved. Permission to reproduce is required

Orissa International Pte. Ltd. 1003 Bukit Merah Central #05-06 Inno Center, Singapore 159836

Tel: +65 6225 8667 | Fax: +65 6271 9791 [email protected]

Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. Orissa International Pte Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Orissa International Pte Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.

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Poultry Sector in South East Asia

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Table of Contents

1. Introduction ............................................................................................................................ 1

2. Malaysia .................................................................................................................................. 4 2.1 Country Profile ........................................................................................................................ 4 2.2 Poultry Market ........................................................................................................................ 5

2.2.1 Key Developments ........................................................................................................... 6 2.2.2 Key Poultry Processing Areas ........................................................................................... 7

2.3 Useful Information .................................................................................................................. 9 2.3.1 Associations ...................................................................................................................... 9 2.3.2 Trade shows ..................................................................................................................... 9

3. Indonesia .............................................................................................................................. 10 3.1 Country Profile ...................................................................................................................... 10 3.2 Poultry Market ...................................................................................................................... 11

3.2.1 Key Developments ......................................................................................................... 12 3.2.2 Key Poultry Processing Areas ......................................................................................... 13

3.3 Useful Information ................................................................................................................ 15 3.3.1 Associations .................................................................................................................... 15 3.3.2 Trade shows ................................................................................................................... 16

4. Thailand ................................................................................................................................ 17 4.1 Country Profile ...................................................................................................................... 17 4.2 Poultry Market ...................................................................................................................... 18

4.2.1 Key Developments ......................................................................................................... 19 4.2.2 Key Poultry Processing Areas ......................................................................................... 21

4.3 Useful Information ................................................................................................................ 24 4.3.1 Associations .................................................................................................................... 24 4.3.2 Trade shows ................................................................................................................... 24

5. Philippines............................................................................................................................ 25 5.1 Country Profile ...................................................................................................................... 25 5.2 Poultry Market ...................................................................................................................... 26

5.2.1 Key Developments ......................................................................................................... 27 5.2.2 Key Poultry Processing Areas ......................................................................................... 28

5.3 Useful Information ................................................................................................................ 30 5.3.1 Associations .................................................................................................................... 30 5.3.2 Trade shows ................................................................................................................... 30

6. Vietnam ................................................................................................................................ 31 6.1 Country Profile ...................................................................................................................... 31 6.2 Poultry Market ...................................................................................................................... 32

6.2.1 Key Developments ......................................................................................................... 33 6.2.2 Key Poultry Processing Areas ......................................................................................... 34

6.3 Useful Information ................................................................................................................ 35 6.3.1 Associations .................................................................................................................... 35

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Poultry Sector in South East Asia

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6.3.2 Trade shows ................................................................................................................... 35

7. References ........................................................................................................................... 36 7.1 Malaysia ............................................................................................................................ 36 7.2 Indonesia ........................................................................................................................... 36 7.3 Thailand ............................................................................................................................. 36 7.4 Philippines ......................................................................................................................... 37 7.5 Vietnam ............................................................................................................................. 37

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Poultry Sector in South East Asia

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1. Introduction

This report provides information on the poultry sector for the five key markets of South East

Asia, namely Malaysia, Indonesia, Thailand, Vietnam and the Philippines.

These 5 key countries, together with Singapore, Brunei, Myanmar, Laos and Cambodia, have

joined forces to form the ASEAN Economic Community (AEC), which aims to create a common

market and production base. The AEC promotes the flow of goods, services, investments, skilled

labor, and capital across the region – with a view to creating single market, and offers

opportunities in the form of a huge market of US$ 2.5 trillion and over 625 million people. The

region is the third largest economy in Asia and the seventh largest in the world. Despite the

backdrop of weak external demand, South East Asia saw a steady growth of 4.7% in 2016, a

slight pick-up from 2015’s 4.5%.

Figure 1: ASEAN Economic Community

Asia will be the driver of increasing global poultry consumption in the future. Poultry

consumption around the world is predicted to grow by 27% to 28 million tons by 2023 - with 40%

of that growth in Asia. In Southeast Asia, the combination of growing per capita incomes,

population growth and urbanization translated into a growth of demand for animal products.

The surge in demand for animal protein resulted in a significant increase of meat – mainly

poultry and pork. Poultry is the largest livestock sector in Malaysia, Thailand, and Indonesia.

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The expansion of poultry production in South East Asia (SE Asia) is occurring within a framework

of large-scale commercial farms and intensive livestock operations. Contracting between

producers and private industry, particularly feed companies, is now an extremely important

element of the broiler industry.

However, poultry production cost in the region are high due to imported feeds and lack of

efficiency and technology in production. Experts have noted that future success of the poultry

industry in the South East Asia will depend on its ability to manage costs in addition to controlling

avian influenza, and boosting consumer confidence in the safety and benefits of poultry meat.

Figure 2 Iowa Poultry Export to SE Asia Source: census.gov

Poultry imports in South East Asia predominantly come from the US, EU, Australia and Brazil.

For most exporters, there is still a learning process to go through in terms of maximizing both

market access and price for products in the Asian market. Responding to local importer

specifications (packaging, trimming, presentation, etc.) is important in gaining repeat trade at

the best prices, especially with an increasing number of players competing in the markets.

Report Content & Structure

This report has been created by Orissa International Pte Ltd for Iowa Economic Development

Authority (IEDA). The report aims to discuss the current trends and issues that dominate the

poultry industry of Malaysia, Indonesia, Thailand, Vietnam, and the Philippines. For each market,

we offer a country profile and general overview of the poultry sector followed by key topics

686,385

1,083,634

674,732

879,408

1,458,049

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2012 2013 2014 2015 2016

Values in USD

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Poultry Sector in South East Asia

© 2017 by Orissa International. All rights reserved. Permission to reproduce is required

affecting the country’s poultry production. It is then followed by a list of associations and

tradeshows for each market.

Research Methodology

Orissa International’s research in each country is managed by an in-country Trade and/or

Research Manager. Our on the ground research teams bring fluency in local languages, physical

proximity to the best sources, an ability to engage directly with local industry contacts, and an

awareness of commercial opportunities in the market.

Orissa International undertakes desk research to gather as much secondary data and

information from a variety of available and credible sources including but not limited to our

proprietary databases, specialist trade press, business and mainstream press, industry news and

events, market studies, financial reports, regulatory filings, trade associations, as well as

company profiles, publications, and annual reports. Orissa International applies processes and

series of quality checks to validate data and information to ensure the accuracy and integrity of

the report.

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2. Malaysia

2.1 Country Profile

Malaysia is a South East Asian country

made up of a land area of 330,290 sq. km

and is home to over 30.5 million people.

West Malaysia, consists of eleven states

and two federal territories, while East

Malaysia consists of the states of Sabah

and Sarawak, and a federal territory.

Malaysia’s recorded a GDP of US$ 294.4

billion in 2015, with nominal GPD per

capita of US$ 9,657. Early estimates

indicate the economy grew by 4.2% in

2016, while projections for 2017 range

between 4 and 5%. The Malaysian

Ringgit fell for the fourth consecutive year, by 4.3% against the US$ in 2016 after an 18.5%

plunge in 2015.

The services sector contribution to GDP in 2015 was 56.1%, while industry contributed to 35%

to GDP, and agriculture 8.9%. The services sector employs 59% of the workforce.

The country’s total trade in 2015

decreased by 15.1% from 2014

as both its export and import

values fell. Malaysia recorded

an export value of US$ 199.87

billion in 2015, while imports in

2015 were valued at US$ 175.96

billion. However, the country’s

FDI net inflow increased to

US$ 11,290 million in 2015 from

US$ 10,877 in the previous year.

The World Bank has ranked Malaysia at the 23rd spot in the World Bank’s Doing Business Rank

for 2017, one spot lower than its position in 2016. The slip was primarily due to a drop in

performance in the ‘Starting A Business’ and ‘Paying Taxes’ categories. Nevertheless, Malaysia

remains among the top 20 most competitive economies worldwide. Among ASEAN countries it

is trailing only Singapore, which has been ranked 2nd in the same survey.

Total Land Area:

330,290 sq. km.GDP

USD 294,390 MillionForm of Government

Federal MonarchyHeaded by a Prime Minister

GNI per capita

USD 10,570 13 Agriculture

GDP per capita, nominal 28 Industry

USD 9,657 59 Services

GDP per capita, PPP

USD 26,515

Employment Distribution in Key Sectors

(% of total employment)

Agriculture

13 Industry

28

Services

59

Trade Overview (USD millions)Balance of Trade

2014

233,927 Export

208,850 Import USD 23,908 million2015

199,869 Export

175,961 Import

Foreign Direct Investment

USD 11,290 Million net inflow

23

3,9

27

20

8,8

50

19

9,8

69

17

5,9

61

Export Import

2014 2015

USD 11,290 Million

net inflow

USD 23,908

million

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Table 1: Ease of doing business in Malaysia

2017 Rank 2016 Rank Change in Rank

Starting a business 112 59 - 53

Dealing with construction permits 13 13 No change

Getting electricity 8 7 - 1

Registering property 40 39 - 1

Getting credit 20 29 +9

Protecting minority investors 3 3 No change

Paying taxes 61 59 -2

Trading across borders 60 58 - 2

Enforcing contracts 42 40 -2

Resolving insolvency 46 45 - 1

Source: World Bank

2.2 Poultry Market

The Malaysian poultry industry has undergone a transformation over the last decade. Chicken

production has increased, and small-scale producers have been largely replaced by integrators.

Output is expanding slowly, in line with expectations for domestic demand growth. As a major

producer of poultry in the Asia Pacific region, the country is self-sufficient. Currently, Malaysia

is exporting live birds and processed poultry products to Singapore and some Middle East

countries.

Although the industry has the capacity to grow further, rising costs of production are limiting

growth as almost all feed input such as soybean meal and corn, which account for 65% of the

production cost, are imported. A reduction in fuel subsidies, depreciation of Malaysian ringgit,

and implementation of minimum wages in 2013 were also factors that have led to higher

production costs in the country’s poultry industry.

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2.2.1 Key Developments

Consumption

Poultry meat is a stable protein in the Malaysian diet due to higher priced beef and a large

Muslim population. The country’s poultry meat per capita consumption is among the highest in

the world. Malaysians consume 1.8 million chickens and 2.8 million chicken eggs daily.

Table 2: Per Capita Consumption of Poultry Meat

Year Per Capita Consumption in

Kilogram

2010 43.3

2011 43.6

2012 44.4

2013 46.5

2014 49.8

2015 50.7 Source: Department of Veterinary Service

Broiler Production

Integrated broiler contract farming is one of the systems used to increase poultry production in

Malaysia. Broiler production is increasing every year due to higher demand by local consumers

and export markets. Integrated broiler contract farming also dominates as much as 75% of the

national broiler production in the country, without which shortage of chicken in the market

would be possible.

Table 3: Integrated Broiler Farms by State

Source: Department of Veterinary Service

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Development Strategies

The Federation of Livestock Farmers’ Association of Malaysia, whose role is to maintain good

agricultural practices and compliance in the country, has announced plans to raise poultry

production efficiency and technology in the country. The association also encourages

modernization of Malaysian farms that will include transformation into closed house system in

addition to improving hygiene standards. The association aims to make its poultry products that

are sold locally to be good enough for export and to build consumer confidence in local poultry.

Foreign Investments

Global companies such as Cobb Vantress and Big Dutchman continue to expand and strengthen

its position in Malaysia by constructing additional poultry farms that can increase production

capacity as well as building state-of-the-art facilities and imposing strict biosecurity standards.

These aims to meet the expected growth of the poultry industry not only of Malaysia, but of the

Southeast Asian region.

2.2.2 Key Poultry Processing Areas

Table 4: Key Processing State and Poultry Population

There are thirteen poultry-producing states in

Malaysia according to the Department of

Veterinary Service. Johor has one of the

densest chicken population in the country, with

more than 66 million birds. On the other hand,

Kedah, Pulau Pinang and Perak are the top

broiler producing states, which account for 60%

of total farmers involved in integrated broiler

contract farming in Peninsular Malaysia.

Almost 90% of production occurs in Peninsular

Malaysia, with the rest in East Malaysia. In

terms of bird numbers, commercially bred

broilers comprise 67% of the total, while layers

make up around 25% and breeders make up 8%

of the total.

Peninsular Malaysia consists of Perlis, Kedah,

Perak, Kelantan, Terrengganu, Pahang,

Selangor, N. Sembilan, and Johor.

State Poultry Population,

2015

Perlis 1,240,122

Kedah 53,862,440

Pulau Pinang 12,933,963

Perak 37,677,871

Selangor 21,552,281

N. Sembilan 21,361,940

Melaka 20,687,676

Johor 66,912,863

Pahang 15,721,309

Terrengganu 6,324,664

Kelantan 1,811,088

Sabah 5,691,950

Sarawak 42,346,698

Grand Total 308,124,865

Source: Department of Veterinary Services

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Peninsular Malaysia has about 3,200 broiler farms, including contract and independent farmers,

as well as large vertically integrated farms. Of all livestock products sold in Peninsular Malaysia,

broiler meat is the main type that is consumed for cultural and religious reasons. Almost all the

broilers are derived from Cobb and/or Ross breeding lines. Backyard and free-range poultry

production has declined significantly, and their commercial production is insignificant.

Table 5: Number of Farm Companies in Peninsular Malaysia

4 Grand Parent Stock Farm Companies

23 Broiler Parent Stock Farm Companies (79 farms)

5 Layer Parent Stock Farm Companies (20 farms)

approximately 340 Layer Farms

approximately 3,200 Broiler Farms

Source: Department of Veterinary Service

About 65 to 70% of the output of live broilers is sold directly to wholesalers, while the remaining

30 to 35% is channeled to processing plants which sell the dressed broilers directly to restaurants,

hypermarket chains or to wholesalers and retailers.

Major Malaysian poultry companies have processing plants located in cities such as Negeri

Simbalan, Perak, Port Klang, Penang, Johor, and Selangor. The Ayamas plant in Port Klang,

Malaysia, is the largest poultry processing plant in the country. It is equipped with modern

equipment which processes more than 80,000 birds per day and 2,000 metric tonnes of further

processed poultry products per month.

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2.3 Useful Information

2.3.1 Associations

Department of Veterinary Services Malaysia Address: Wisma Tani, Block Podium, Lot 4G1, Precinct 4 Federal Government Administrative Center, 62624 Putrajaya Malaysia Website: www.dvs.gov.my Phone: +60 38870 2000 Email: [email protected]

The Department of Veterinary Services Malaysia was created to expand livestock production

and animal health. It also does research on animal diseases and animal genetic sources in

addition to controlling animal welfare and animal genetic materials. The Department also

inspects meat, milk, eggs, animal feed, abattoirs, and veterinary product processing plants.

Federation of Livestock Farmers' Associations of Malaysia Address: 93 A Jalan SS 15/5A, Subang Jaya, 47500, Petaling Jaya, Selangor, 47500, Malaysia Website: NA Phone: +60 5633 6955 Email: [email protected]

The Federation of Livestock Farmers' Associations of Malaysia (FLFAM) exists as a registered

body in Malaysia with the aim to safeguard the welfare and interest of farmers, livestock

producers and consumers. By liaising with regional livestock associations varying in types of

livestock and supply chain steps and communicating regularly with the government agencies,

FLFAM ensures the interest of the industry is considered in policy making with in tandem with

the quality of its final products for consumption.

2.3.2 Trade shows

Livestock ASIA Date: 19-21 April 2018 Venue: Kuala Lumpur Convention Center, Malaysia Website: www.livestockasia.com

Livestock ASIA is the leading event for the feed, livestock and meat industries in the region. The

event is expected to attract more than 7,000 local, regional and international trade visitors and

delegates, representing integrators, veterinarians, livestock farmers, feed millers, wholesaler,

retailers, and food processors.

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3. Indonesia

3.1 Country Profile

Indonesia, South East Asia’s largest

economy, has an estimated total

population of 255.5 million, making it

the world’s fourth most populous

country. Spread across a chain of

thousands of islands, its total territory

includes 1.9 million square km of land

and 5.8 million square km of water.

Indonesia recorded a GDP of US$ 857.6

billion in 2015, representing 1.3% of the

world’s economy. Indonesia’s economy

alone makes up nearly half of ASEAN’s

total economic output. Early estimates indicate that its GDP grew by an approximately 5% in

2016 and the country’s central bank forecasts growth in 2017 to range between 5.1 and 5.2%.

Indonesia has a young, growing and rapidly urbanizing population that makes the country one

of the fastest growing consumer markets in the world. Its gross National income (GNI) per capita

is US$ 3,440. The Services sector employs 43% of its workforce, while Agriculture employs 35%

of it, and Industry 1%.

Indonesia recorded a US$ 7.6 billion

trade surplus in 2015, a significant

improvement from the US$ 1.9 billion

trade deficit in the preceding year. 2016

saw imports decrease by 19.9% to

US$ 142.7 billion (from US$ 178.2 billion

in 2014) while exports also fell by 14.8%

from US$ 176.3 billion in 2014 to

US$ 150.3 billion in 2015.

Total FDI in 2016 was US$ 28.9 billion, slightly lower than the US$ 29.3 billion recorded a year

earlier.

Indonesia ranks 106th in the latest Doing Business Rank report of the World Bank for 2017. The

country went up by 15 places from 106 to 91, and is among the top 10 biggest climbers.

Indonesia’s overall improved performance in the 2017 report is attributed to the government’s

efforts to simplify and remove unnecessary regulations.

Total Land Area:

1,913,579 sq. km.GDP

USD 857,603 MillionForm of Government

DemocraticHeaded by a President

GNI per capita

USD 3,440 35 Agriculture

GDP per capita, nominal 22 Industry

USD 3,357 43 Services

GDP per capita, PPP

USD 11,108

Employment Distribution in Key Sectors

(% of total employment)

Agriculture

35

Industry

22

Services

43

Trade Overview (USD millions)Balance of Trade

2014

176,293 Export

178,179 Import USD 7,587 million2015

150,282 Export

142,695 Import

Foreign Direct Investment

USD 16,073 Million net inflow

17

6,2

93

17

8,1

79

15

0,2

82

14

2,6

95

Export Import

2014 2015

USD 16,073 Million

net inflow

USD 7,587

million

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Table 6: Ease of doing business in Indonesia

2017 Rank 2016 Rank Change in Rank

Starting a business 151 167 +16

Dealing with construction permits 116 113 -3

Getting electricity 49 61 +12

Registering property 118 123 +5

Getting credit 62 70 +8

Protecting minority investors 70 69 -1

Paying taxes 104 115 +11

Trading across borders 108 113 +5

Enforcing contracts 166 171 +5

Resolving insolvency 76 74 - 2

Source: World Bank

3.2 Poultry Market

Indonesia’s demand for poultry meat is expected to continue growing, primarily driven by the

growing purchasing power of the country’s expanding middle class. Poultry production in the

country has been increasing and, according to public private partnership FoodTechIndonesia,

Indonesian poultry production is estimated to have been worth EUR10 billion (US$11 billion) in

2015 with broiler meat accounting for approximately three-quarters of the total. The poultry

meat sector is projected to grow 70 to 90% by 2020 if GDP increases by 6% per annum. The layer

industry is also projected to grow at around 50 to 60% of the broiler sector.

Indonesia’s commercial chicken flock is estimated at 3.5 billion broilers, 200 million layers, and

24.8 million breeders in 2015. Per capita poultry meat and egg consumption in Indonesia remain

low compared with neighboring countries such as Thailand and Malaysia. Additionally, there is

still a strong demand among Indonesia’s consumers for live, rather than processed poultry.

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3.2.1 Key Developments

Consumption

Indonesia still has relatively lower meat consumption per capita compared to other Southeast

Asian countries. However, demand is rapidly increasing and poultry meat is the leading source

of protein in the country, accounting for approximately 87% of total meat consumption. In

addition, key drivers of growth in the country’s poultry market are population growth and

urbanization level.

Poultry Oversupply

Over the past few years, supply has outpaced demand, causing day-old chick (DOC) prices to

plummet. A combination of over-investment (i.e. over-importation of grandparent stock (GPS),

despite being regulated by the government’s quota system) and weaker purchasing power

(lower commodity prices, higher cost of living due to subsidy removal, and a weaker rupiah) led

to an oversupply of DOC by 20-30% in 2014. To address the oversupply, the Indonesian

government coordinated a mass culling of six million parent stock which account for half of the

country’s broiler replenishment. Four million grandparent stock were culled in Q4 2015, with

another two million eliminated in Q1 2016.

Figure 3: Poultry per capita consumption Source: Rabobank

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Table 7: Annual Broiler DOC (million heads)

Year Demand Supply

2012 1,660 1,800

2013 1,970 2,200

2014 2,100 2,500

2015 2,500 3,000

2016 2,650 3,250

Source: USDA FAS

Poultry Farming System

Indonesia’s poultry farming system is slowly transitioning from intensive, open-housed system

farms to closed-house, automated housing system farms. This change is the result of increasing

poultry market competitiveness, characterized by increasing labor costs, the quest for higher

yields, and disease pressures such as highly pathogenic avian influenza (HPAI).

3.2.2 Key Poultry Processing Areas

The poultry industry is spread throughout Indonesia, with significant egg production in East Java,

a reflection of the availability of locally grown corn and the ease of transporting eggs from to

the markets in West Java. Broiler production is countrywide but focused in West Java (Bandung),

close to its fresh bird markets that lack an adequate cold chain. Village poultry exists across

Indonesia.

Figure 4: Relationship between Broiler, Egg, and Wet Corn Production by Region Source: USAID

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Broiler and egg production, by region, is highly correlated to the population. This has evolved

due to the historical demand for live birds—which cannot be transported efficiently over even

medium distances in Indonesia due to high temperatures and poor road infrastructure—and

high demand for fresh eggs. The development of the industry therefore follows the

development of the wet markets around the large populations of West, East and Central Java.

Table 8: Broiler Population in Key Cities (heads)

Province 2012 2013 2014 2015 2016

West Java 610.436.303 645.229.707 643.321.729 631.154.917 644.923.995

East Java 155.945.927 162.296.157 179.830.682 194.064.874 196.393.653

Central Java 76.906.291 103.964.760 108.195.894 126.102.735 128.105.648

South Kalimantan

40.603.189 51.860.699 57.727.521 64.657.853 82.731.607

Banten 54.151.644 61.230.844 63.324.448 74.903.983 75.342.281

Source: Director General of Livestock Services

Java is the largest producer of chicken meat in Indonesia. The poultry farms in Java are

supported by 25 animal feed factories or the largest in the country located in Banten, Jakarta,

West Java and East Java. The fact that Java is the largest market for chicken meat has boosted

the growth of chicken farms and production in the island. The largest chicken meat production

center is West Java, accounting for 40% of the total production in Java, followed by East Java

accounting for 37% and Central Java for 21%.

West Java is the largest producer of pure bred chickens, but the largest producer of free range

chickens is East Java mainly the districts of Lamongan, Malang, Blitar, Probolinggo, Tulungagung

and Trenggalek.

Table 9: Broiler Meat Production in Key Cities (in tons)

Province 2012 2013 2014 2015 2016

West Java 498.862 563.529 543.765 530.423 529.932

East Java 162.845 162.892 198.016 203.139 208.218

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Central Java 114.178 123.726 130.357 158.673 163.252

South Kalimantan 36.177 55.032 46.511 60.952 81.092

Banten 111.159 109.029 96.554 73.488 73.918

Source: Director General of Livestock Services

Production and supplies of DOCs are dominated by a few big players that control integrated

industry like Charoen Pokphand and Japfa Comfeed. The big players control the business from

the upstream sector (animal feed production and breeding), to the midstream sector

(commercial poultry farms) and downstream sector (chicken slaughterhouse and chicken meat

processing). In the commercial poultry farming, they are involved in partnerships so that they

do not have to own lands and build chicken coops themselves.

According to the Indonesian Poultry Slaughterhouses Association, there are a total of 130

chicken processing plants and slaughterhouses in the country. Of the figure, the number of

chicken processing plant is less than 100, with the number of grade A and B plants no more than

30. Major poultry integrators in the country such as Charoen Pokphand and Japfa Comfeed have

processing plants in the cities of Banten, Medan, Sidoarjo, Surabaya, Pekanbaru, Banjarbaru,

Lampung, Bogor, Pabelan, Grobogan, and Bali.

3.3 Useful Information

3.3.1 Associations

Perhimpunan Insan Perunggasan Rakyat Indonesia (PINSAR) Address: Jl. Raya Imam Bonjol 34 G, Tangerang 15115, Indonesia Website: www.pinsarindonesia.com Phone: +62 21 5366 1847 Fax: +62 621 5520 753 Email: NA

Perhimpunan Insan Perunggasan Rakyat Indonesia is the biggest poultry association in

Indonesia. It is a partner of the government in deciding policies for the poultry industry. The

association includes some of the major poultry companies in Indonesia, namely Chaoren

Pokphand and JAPFA Comfeed.

Perhimpunan Peternak Unggas Nusanatara (PPUN) Address: BSD City Golden Vienna I, Blok B - 4 No. 10, Kencana Loka, Tangerang, Indonesia

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Website: www.ppunbogor.blogspot.co.id Phone: +62 21 9286 5709 / +62 21 7424 713 Fax: +62 21 7587 5513 / +62 21 7424 713 Email: NA

Established in 2001, this association's purpose is to be a platform of communication for small-

medium sized poultry farmers. The association arranges meeting to discuss poultry issues in the

country. It also organizes activities that campaigns for poultry nutrition.

3.3.2 Trade shows

ILDEX Date: 18-20 May 2017 Venue: JIEXPO, Jakarta, Indonesia Website: www.ildex-indonesia.com

ILDEX Indonesia is a trade fair for livestock, dairy products, meat processing and aquaculture.

This event also brings international expertise to satisfy the needs of the local livestock industry.

Exhibitors in this tradeshow are involved in animal feed and animal health, genetics and

breeding, and traders, among others.

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4. Thailand

4.1 Country Profile

Thailand sits on South East Asia’s

Indochina Peninsula, and borders by

Myanmar, Laos, Cambodia, and

Malaysia. The country has an

estimated population of around 68.8

million and GDP of US$ 395.7 billion in

2015. Its nominal GPD per capita in

2015 was US$ 5,737 or US$ 16,074

GDP per capita at PPP.

Thailand, the world’s 32nd largest

economy and the second largest

economy in ASEAN, accounts for 17%

of ASEAN’s GDP. Its economy is estimated to have expanded by 3.2 – 3.3% in 2016, and for now,

the government estimates that growth will be 3.4% in 2017.

The country’s Agricultural sector is the largest employing sector, employing 40% of the total

workforce, followed by Services (39%), and the Industrial sector (21%).

Thailand’s trade balance reached

US$ 11.645 billion in 2015, its first surplus

after four straight years of deficit. The

country’s overall exports were US$ 214.396

billion in 2015, with the US as its top export

market. Exports grew only marginally, by

0.45% in 2016.

Imports fell by 11.1% in 2015, the highest

contraction since 2009. The country’s FDI

inflow in 2015 increased to US$ 8,027.5 million from US$ 3,720.2 million in the previous year.

Thailand currently ranks 46th in the World Bank’s latest Doing Business Rank for 2017. The

country’s ranks 3rd among the ASEAN countries, behind Singapore and Malaysia. According to

the World Bank, Thailand is steadily making progress to ease the process of doing business and

it continues to focus on reforms to promote a better business environment, in addition to

implementing public infrastructure investments, developing skilled-workers through quality

education, and promoting innovations.

Total Land Area:

513,120 sq. km.GDP

USD 395,726 MillionForm of Government

Constitutional MonarchyHeaded by a Prime Minister

GNI per capita

USD 5,620 40 Agriculture

GDP per capita, nominal 21 Industry

USD 5,737 39 Services

GDP per capita, PPP

USD 16,064

Employment Distribution in Key Sectors

(% of total employment)

Agriculture

40

Industry

21

Services

39

Trade Overview (USD millions)Balance of Trade

2014

227,574 Export

227,952 Import USD 11,645 million2015

214,396 Export

202,751 Import

Foreign Direct Investment

USD 8,027 Million net inflow

22

7,5

74

22

7,9

52

21

4,3

96

20

2,7

51

Export Import

2014 2015

USD 8,027 Million

net inflow

USD 11,645

million

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Table 10: Ease of doing business in Thailand

2017 Rank 2016 Rank Change in Rank

Starting a business 78 93 +15

Dealing with construction permits 42 38 -4

Getting electricity 37 34 -3

Registering property 68 67 -1

Getting credit 82 97 +15

Protecting minority investors 27 25 - 2

Paying taxes 109 106 - 3

Trading across borders 56 54 - 2

Enforcing contracts 51 51 No change

Resolving insolvency 23 26 +3

Source: World Bank

4.2 Poultry Market

Thailand is one of the world’s leading producers of agricultural commodities. Its poultry industry

is the largest in Southeast Asia and is home to major local and foreign players. Over the past four

decades, Thailand’s poultry sector has transformed itself from backyard farming into a leading

poultry exporter. Due to the potential growth in export demand, driven by the robust prices for

live broilers and chicken meat, as well as the anticipated increase in chick production capacity,

Thai chicken meat production is forecast to increase by 5-7% in 2017.

Thailand's poultry industry has successfully recovered from the avian flu outbreak in 2004 and

has returned to dynamic growth. A positive outcome from the outbreak was that it forced the

Thai poultry industry to adopt new farming practices and farming facilities. With its new industry

structures, Thailand is expected to increase its production capacity and remain a recognized

leader in global poultry exports.

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4.2.1 Key Developments

Domestic Consumption

Reflecting trends in the tourism industry and an anticipated recovery of the Thai economy,

domestic consumption of chicken meat is forecasted to increase by 4-5% in 2017. Although

recent trends have shown Thais moving toward a big-city lifestyle and away from traditional

practices, most Thais still buy fresh chicken meat from traditional markets. This accounts for

about 60-70% of the total domestic chicken meat sales. In addition, trade sources also expect

chicken meat consumption in the ready-to-eat and quick service restaurant sectors to continue

to grow annually for the next few years.

Table 11: Thailand Broiler Meat (Poultry) Domestic Consumption by Year

Market Year Domestic Consumption (in 1000 MT) Growth Rate

2012 932 7.87%

2013 1,039 11.48%

2014 1,050 1.06%

2015 1,080 2.86%

2016 1,117 3.43%

2017E 1,167 4.48% Source: Index Mundi

Export Trends

Global chicken consumption continues to grow as chicken is cheaper than other meats. The

prospect of the Thai frozen and processed chicken industry in the next 1-3 years is promising,

underpinned by the country’s continuing export market growth of 10-15% per year. The

outbreak of the avian flu in many countries will also enhance the export opportunity for Thai

chick chickens to continue to expand, especially to Japan, a major export country for Thai poultry

together with the European Union.

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Source: Thai Broiler Processing Export Association Technology

In recent years, animal welfare practices and technology have become extremely important in

many western countries. As a major poultry exporter, Thailand has been moving away from

contract farming and towards vertical integration in order to ensure compliance with European

importers’ more stringent requirement. This opens up opportunities for equipment and

technology used in the whole chain process such as automated systems, food safety, and animal

well-being.

Trade Development

Thailand’s poultry prospects are looking more promising due to the resumption of fresh poultry

imports by many countries, after Thailand’s bird flu outbreak was brought under control. South

Korea, in particular, has already lifted a 12-year ban on Thai chicken imports that is expected to

increase Thai’s poultry trade by 3% in 2017.

Table 12: Expected Chicken Meat Exports of Thailand 2016

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4.2.2 Key Poultry Processing Areas

The major broiler producing provinces can be divided into different groups. The first group

include the key provinces Nakorn Ratchasima (or Korat), Burirum, Surin, Prachinburi and Lopburi.

The second group includes Chonburi, Chachoengsao and Ayudhaya in the Central and East

region. Recently, broiler production has been expanded to the eastern provinces Saraburi and

Suphanburi in the Central West. Moreover, Chachoengsao, Ayudhaya and Nakorn Nayok are also

the major producing provinces on layer for hen egg production.

Table 13: Broiler production in Thailand by region

Source: IPSOS Business Consulting

There are two main species of poultry produced in Thailand, chicken and duck. Poultry

population and production are highly concentrated in central Thailand as broiler producers need

to be located near certified slaughterhouses, feed mills and food processing plants. These

facilities are also concentrated in central Thailand. Large-size farms, with an average 70,000

chickens per farm account for 90% of chicken broilers in the central region.

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Figure 5: Chicken Population Density in Thailand Source: IPSOS Business Consulting

Integrated commercial farms set very high biosecurity standards, and currently cover 80-90% of

national production. Traditional poultry farms are spread across the country and account for 10%

of national production with most of their produce being consumed locally.

Table 14: Commercial broiler holding by farm size

Source: IPSOS Business Consulting

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There are 128 poultry processing establishments across 29 provinces that were approved for

export manufacturing by the country’s Department of Livestock Development as of July 2016.

The majority of the processing plants can be found in Samutsakhon which is located in the

central area of Thailand.

Table 15: Key Locations of Poultry Processing Plants

Province Number of Processing Plants

SAMUTSAKHON 22

SAMUT PRAKAN 13

CHON BURI 10

LOPBURI 10

SARABURI 8

BANGKOK 8

PATHUMTHANI 7

Source: Department of Livestock Development

There are more than 40 players active in the Thai poultry industry. Integrated commercial farms

or large to medium commercial farms make up only around 20% of these market players. In

terms of production volume, Charoen Pokphand Foods (CPF) Thailand is the largest company,

accounting for 29% of total production, followed by Betagro, Saha Farm, Laemthong, Thai Foods

Group, and GFPT.

Thailand’s poultry export production is dominated by five companies which are responsible for

70-75% of the total export production. According to the Thai Broiler Processing Exporters

Association, the largest are CP, Betagro, Saha Farm, GFPT and Cargill. Moreover, most of these

companies have implemented fully vertically integration farming.

Increasing scale of production by industrializing farms was a key structural reform that aimed to

meet growing demand for poultry while controlling costs. The reform led to consolidation within

the industry, which saw the average size of commercial farms increase while the number of

producers declined. Major producers, such as Charoen Pokphand Foods and Betagro, have not

only adopted advanced technology, they have also helped transfer this technology to smaller

farms. Such technology has shortened the broiler period from 60 days to 40-49 days as well as

improved the feed conversion ratio, and reduced costs.

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4.3 Useful Information

4.3.1 Associations

Department of Livestock Development

Address: Khwaeng Thanon Phaya Thai, Khet Ratchathewi, Krung Thep Maha Nakhon 10400, Thailand Website: www.dld.go.th Phone: +66 2653 4444 Email: [email protected]

The Department of Livestock Development is responsible for animal health, animal production

and livestock extension, food safety of animal-derived products, veterinary public health, animal

welfare, environmental impact of livestock farms and international animal health matters

including disease control and eradication, quarantine, disease reporting, import-export controls,

health certification, and monitoring of animal farms and slaughterhouses in Thailand.

Thai Broiler Processing Exporters Association

Address: 313 C.P. Tower, 22nd Floor, Silom Road, Bangrak, Bangkok, 10500 Thailand

Website: www.thaipoultry.org

Phone: +66 2638 219 Email: [email protected]

Thai Broiler Processing Exporters Association was established in 1991 to act as a regulating and

service agency for the large number of Thai chicken meat producers and exporters. All of the

association's members are leading Thai producers and exporters with decades of proven track

record in the chicken industry.

4.3.2 Trade shows

VIV Asia Date: 15-17 March 2017 Venue: BITEC Bangkok, Thailand Website: www.vivasia.nl

A biennial trade show that showcases companies involved in industrial feed processing

equipment, supplies and raw materials, animal feed, medicines and breeding tools, farm

equipment, slaughter equipment, meat processing and packaging products as well as systems,

dairy products, organic food items.

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5. Philippines

5.1 Country Profile

The Philippines, officially known as the

Republic of the Philippines, is a sovereign

island country in South East Asia situated

in the western Pacific Ocean with a total

land area of 300,00 square kilometers.

The Philippines’ recorded GDP in 2015 was

US$ 289.5 billion with the Services sector

contributing 59% to total GDP, followed by

Industrial (31%), and Agriculture (10%).

The economy grew by 6.8% in 2016, which

is among the fastest in Asia, and is

projected to grow by as much as 7-8% in

2017 as the government ramps up infrastructure spending. The Services sector employs more

than half of its workforce, while Industrial employs 15%, and Agriculture 32%. The Philippines is

classified as a low middle income nation with a GNI per capita of US$ 3,540.

The country’s total external trade in goods in 2015 was US$ 128.9 billion. Exports for Jan–Nov

2016 were $51.361 billion, a 5.2% decrease

from 2015’s $54.168 billion. The decline is

attributed to a fall in electronics exports. In

contrast, the Philippines saw an increase in

inbound shipments, with orders of capital

goods, raw materials and consumer goods

increased by double digits. For the year,

inbound shipments grew 13.7% to $73.724

billion, against the government’s 10% target

for 2016. The country’s net FDI inflow was at US$ 5,724 million in 2015.

The Philippines’ ranking in the latest Doing Business Rank report of the World Bank for 2017

remains unchanged at 99th place. The country has improved in various areas, from dealing with

construction permits, getting electricity, and paying taxes. Philippines has improved the

transparency of its building regulations, made paying taxes easier by introducing an online

system for filing and paying and by allowing for online corporate income tax and VAT returns to

be completed offline. The government’s launch of an online facility in paying other government

mandatory contributions such as health and social security also contributed to its improved

ranking in 2017.

Trade Overview (USD millions)Balance of Trade

2014

61,810 Export

67,757 Import -USD 11,647 million2015

58,648 Export

70,295 Import

Foreign Direct Investment

USD 5,724 Million net inflow

61

,81

0

67

,75

7

58

,64

8

70

,29

5

Export Import

2014 2015

USD 5,724 Million

net inflow

-USD 11,647

million

Total Land Area:

300,000 sq. km.GDP

USD 289,503 MillionForm of Government

RepublicHeaded by a President

GNI per capita

USD 3,540 32 Agriculture

GDP per capita, nominal 15 Industry

USD 2,850 53 Services

GDP per capita, PPP

USD 7,241

Employment Distribution in Key Sectors

(% of total employment)

Agriculture

32

Industry

15

Services

53

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Table 16: Ease of doing business in the Philippines

2017 Rank 2016 Rank Change in Rank

Starting a business 171 164 - 7

Dealing with construction permits 85 103 +18

Getting electricity 22 30 +8

Registering property 112 109 - 3

Getting credit 118 109 -9

Protecting minority investors 137 136 -1

Paying taxes 115 120 +5

Trading across borders 95 93 - 2

Enforcing contracts 136 136 No change

Resolving insolvency 56 54 - 2

Source: World Bank

5.2 Poultry Market

The Philippines is a producer of poultry products, and it is also self-sufficient for what concerns

domestic demand. About 800 million broilers are produced annually and in spite of rising

population, the country’s supply continues to meet consumer demands. The country’s poultry

production is likely expanded to 1.83 million metric tons (MMT), 10 % higher than the 1.66 MMT

recorded in 2015, according to the United Broiler Raisers Association (Ubra). The country’s

broiler production could expand by nearly 17% to 1.4 billion heads in 2017 on the back of

favorable weather and the entry of new industry players.

Chicken broiler and egg production are the most developed animal enterprises in the Philippines

today. The poultry industry in fact began as a backyard enterprise but has shifted to the

formation of very large integrated contract farming operations. Poultry production in the

Philippines is set to outperform the other sectors, as it will attract the majority of investment in

the coming years, both domestic and foreign.

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5.2.1 Key Developments

Consumption

In 2014, the Philippines’s population reached 100M inhabitants, making it the 12th most

populous country in the world. And with one of the highest population growth rate in the world,

it is estimated a corresponding 2% per annum increase in the consumption of meat and meat

products as a source of protein. Based on the Philippine Statistics Authority-Bureau of Statistics

(PSA-BSA), demand for meat reached 1,484,000,000 kg in 2014 for an estimated 50 million meat

eating Filipinos, 10 years old and above.

Poultry Import Bans

Import bans on poultry products including dressed and deboned chicken, duck and eggs,

following outbreaks of bird flu in Europe and Asia, are expected to benefit the local poultry

industry. The Philippines is one of the few countries in Southeast Asia that remains free from

the dreaded avian influenza virus mainly because it is isolated by the bodies of water which

surround its islands and it does not share borders with other countries. The country’s bird flu-

free status will allow local poultry producers to access major markets for poultry products such

as the Middle East.

Foreign Investments

The Philippine poultry industry is starting to attract investments from overseas, helping local

producers and workers source seeds, feed, grow and process chicken. Foreign investors

contribute in improving the system of hygiene, food safety, and quality by setting high level

partnerships with the poultry growers and farmers.

Source: National Meat Inspection Service

Table 17: Per Capita Consumption of Meat in kilogram/year

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5.2.2 Key Poultry Processing Areas

Broiler population as of July 2016 was 64.84

million birds. Region III (Central Luzon) had the

highest broiler inventory with a total share of

30.58% in the country’s total broiler inventory.

The inventory of layer poultry as of 2016, was

32.47 million birds. The top three regions in

terms of layer inventory were Region IV-A

(CALABARZON) with 35.8% share, Region III

(Central Luzon) with 24.34% share and Region

X (Northern Mindanao) with 10.13% share.

The total native/improved chicken inventory

as of July 2016 was 77.23 million birds. The

region with highest inventory for

native/improved chicken was Region X

(Northern Mindanao) with 10.91% share to the

total native chicken inventory.

The total volume of chicken production

increased from 1,571,762 metric tons in 2014

to 1,660,813 metric tons in 2015. This brought

a 5.67% growth in production compared to its

2014 level.

There are a total of 114 accredited poultry dressing plants in the Philippines as of February 2017.

Majority of the dressing plants are located in region III particularly in the provinces of Bulacan,

Nueva Ecija, and Pampanga. There are 10 dressing plants in this region that are class AAA

certified, the highest certification that the country’s National Meat Inspection Service gives to

dressing plants. Plants with this certification can export and distribute outside of the province.

The provinces in region IV-A where poultry dressing plants can be found are Rizal, Batangas,

Laguna, and Quezon. There are six dressing plants in this region that are class AAA certified.

Region X has the third highest number of poultry dressing plants in the country. Misamis Oriental,

Misamis Occidental, Cagayan de Oro, and Bukidnon are the provinces where these dressing

plants are located. There are 3 class AAA certified dressing plants in this region.

Source: Philippine Statistics Authority

Figure 6: Thematic Map of Chicken Production, 2015 Source: Philippine Statistics Authority

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Table 18: Dressing Plants in the Philippines

Eighteen accredited class AAA meat establishments

exported a volume of 4,542,063 kilograms of meat and meat

products to 9 foreign markets in 2014. The target markets of

Philippine meat exports were Japan, Brunei, South Korea,

Papua New Guinea, Australia, Dubai, Kuwait, Qatar, and

Saudi Arabia. Japan was the largest market for poultry with

11 meat establishments or 61% of exporters exporting 62%

of the total export of meat and meat products.

San Miguel is among the major players in the poultry

processing industry of the Philippines. Other major players

include Bounty Fresh, Universal Robina Corporation, and

Cargill Philippines. The country’s poultry industry has

commodity characteristics and is subject to frequent

changes in demand and supply. Most of the major integrated

producers employ contract-growing schemes for the

production of live broilers and have likewise engaged in

contract breeding and toll dressing arrangements.

Region Number of Poultry

Dressing Plants

I 14

II 5

III 20

IV-A 15

IV-B 2

V 7

VI 6

VII 8

VIII 7

IX 4

X 13

XI 7

XII 3

NIR 3

Total 114

Source: National Meat Inspection Service

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5.3 Useful Information

5.3.1 Associations

United Broilers Raisers Association Address: 124 General Luna St., Gitnang Bayan San Mateo, Rizal, 1850 Philippines Website NA Phone: +63 2941 5915 Email: [email protected]

The United Broiler Raisers Association is a non-stock and non-profit national association of

mainly small and medium scale poultry broiler raisers with chapters in all the major poultry

producing areas of the country. Aside from interfacing with government and other NGO’s, UBRA

seeks to promote the efficiency and competitiveness of the Philippine broiler industry.

Philippine College of Poultry Practitioners Address: Manila East Road, Tanay Rizal, 1980 Philippines Website www.rasterizedesigns.com/pcpporg/index.html Phone: +63 2654 5523 Email: [email protected]

The Philippine College of Poultry Practitioners, Inc. is an organization of poultry practitioners

that advocates the professional advancement of its members and is committed to the upliftment

of the Philippine poultry industry. It contributes to the development of the poultry industry

through the promotion of ethical poultry practice by providing an effective forum for the

professional veterinary expertise.

5.3.2 Trade shows

Livestock Philippines Date: 24-26 May 2017 Venue: SMX Convention Center Manila, Philippines Website: www.livestockphilippines.com Livestock Philippines is the country’s 1st International Livestock Nutrition, Health and Production, and Meat Industry Expo. It is the premier biennial event for the livestock, feed milling and meat industries in the country.

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6. Vietnam

6.1 Country Profile

Having an area of approximately

330,951 km2 and a coastline of 3,444

km, Vietnam comes with abundant

natural resources, such as natural

water resources, minerals, oil and gas,

fertile soil.

Vietnam’s average GDP growth rate

throughout the 2000s was 6.4% per

year. In 2015, the country recorded a

GDP of US$ 193.4 billion and it grew by

and estimated 6.21% in 2016, making

it one of the fastest growing markets in

the work. Its nominal GDP per capita in 2015 was US$ 2,109 or US$ 6,083 GDP per capita at PPP.

Vietnam’s Agricultural sector is the largest employing sector with 47% share of total

employment, followed by Services sector (32%), and the Industrial sector (21%).

Vietnam posted a trade surplus of US$ 2.52 billion in 2016, reversing from a US$ 3.55 billion

deficit a year earlier. Exports in 2016

expanded 9% to $176.6 billion, and while

imports rose 5.2% to US$ 174.1 billion.

Meanwhile, the country’s FDI net inflow in

2015 stands at US$ 11,800 million. It

received an estimated US$ 15.8 billion in

actual FDI in 2016, up 9% from 2015.

Vietnam has improved in its ranking in the latest 2017 report of World Bank’s Doing Business

Rank, going from to 82nd from 91st place. A review of the indicators shows that the country has

made great strides in protecting minority investors, paying taxes, and trading across borders, as

well as seen an improvement in resolving insolvency. However, Vietnam lost points in other

areas: starting a business, dealing with construction permits, registering property, getting credit,

and enforcing contracts.

Trade Overview (USD millions)Balance of Trade

2014

148,092 Export

145,686 Import -USD 3,716 million2015

162,014 Export

165,730 Import

Foreign Direct Investment

USD 11,800 Million net inflow

14

8,0

92

14

5,6

86

16

2,0

14

16

5,7

30

Export Import

2014 2015

USD 11,800 Million

net inflow

-USD 3,716

million

Total Land Area:

330,951 sq. km.GDP

USD 193,407 MillionForm of Government

Socialist RepublicHeaded by a President

GNI per capita

USD 1,980 47 Agriculture

GDP per capita, nominal 21 Industry

USD 2,109 32 Services

GDP per capita, PPP

USD 6,083

Employment Distribution in Key Sectors

(% of total employment)

Agriculture

47Industry

21

Services

32

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Table 19: Ease of doing business in Vietnam

2017 Rank 2016 Rank Change in Rank

Starting a business 121 111 -10

Dealing with construction permits 24 21 -3

Getting electricity 96 101 +5

Registering property 59 58 -1

Getting credit 32 29 -3

Protecting minority investors 87 118 +31

Paying taxes 167 178 +11

Trading across borders 93 108 +15

Enforcing contracts 69 68 -1

Resolving insolvency 125 126 +1

Source: World Bank

6.2 Poultry Market

Vietnam’s demand for poultry meat is expected to triple by 2020, while demand for eggs is set

to double. The forecast, released by the Agriculture Ministry’s Department of Livestock

Production, reflects Vietnam’s increasing population and rising living standards. Due to

urbanization, a rapidly growing population, and a desire for a healthy lifestyle, demand for the

latest innovations in the livestock industry is urgently needed.

After pork, poultry is the second most important meat for the Vietnamese people. Production

capacity in poultry is far less than that of pork and the poultry sector is not able to supply

sufficiently for local consumption. Currently, poultry production is mainly owned by small-scale

households. Among main constraints faced by these small-scale households are lack of

knowledge and access to production innovation due to weak capital investment, limited ability

in disease prevention and control. Thus, Vietnam has to rely on imports of frozen chicken parts

from countries such as the United States, Turkey, and Hong Kong. Over 85% of Vietnam’s

livestock is raised on small-scale farms. This arrangement leads to un-scalable production levels

and prices, as well as inconsistence in the quality of breeders.

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6.2.1 Key Developments

High Production Costs

Vietnamese poultry producers could lose their market to regional and international rivals if they

don’t improve their productivity and cut costs. Although local chicken production grew at a fast

pace between 2003-2012 -- 9.3% a year compared to the world rate at 3.7%, Vietnamese

productivity is lower.

In 2010, it took local big farms an average of 49 days to raise a 2.2-kilogram chicken, and it was

much longer for small farms. Elsewhere around the world, the time needed was 37-41 days and

it is expected to be shortened further to 31 days by 2020. In addition, most of chicken

production's inputs are imported, from breeds and veterinary drugs to animal feed. As a result,

Vietnamese chicken products' prices are 1.5 times higher, or even twice the world's.

In addition, the country’s trade agreements liberalize most of import tariffs and therefore pose

challenges for local producers in competing in prices.

Poultry Importation

The demand for poultry meat in Vietnam has increased over the past five years. As a result, local

poultry production has also increased. However, local production is not enough to meet the

country’s local demand hence poultry meat imports have also increased steadily.

Table 20: Vietnam Poultry Market

In 1,000 metric tons

2014 2015 2016E 2017E

Total Consumption 1,240 1,390 1,481 1,549

Total Local Production 875 908 945 985

Total Imports 613 662 662 690

Total Exports 0.2 0.2 0.2 0.2 Source: USDA FAS

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6.2.2 Key Poultry Processing Areas

Red River Delta, Mekong River Delta and North East regions are the agroecological regions with

the highest population of poultry in the country. The poultry production in Vietnam is mainly in

the hands of small holders, closed to habitant area. However, poultry production in farms of

medium to big size, in separated area is increasing.

Table 21: Number of Poultry by Region

in thousand heads

Region 2012 2013 2014 2015

Red River Delta 81,344

87,885

88,928

90,949

Northern midlands and mountain areas 62,526

63,230

66,970

70,567

Northern Central area and Central coastal area

66,175

65,813

67,990

71,135

Central Highlands 13,754

14,638

15,513

16,490

South East 23,335

27,428

30,049

34,306

Mekong River Delta 61,327

58,703

58,246

58,459

Total 308,461

317,697

327,696

341,906

Source: General Statistics Office of Vietnam

So far livestock processing in Vietnam has not been practiced in an advanced way with

technology or comprehensive equipment. For the livestock sector, the term “processing” is

understood as “slaughtering” because slaughtering is the main activity done after livestock is

taken from the farms and before it is sold at the wet markets. The vast majority of livestock

slaughtering in Vietnam is carried out under unhygienic backyard conditions by households who

specialized in this job.

Large commercial public owned plants or privately owned slaughtering plants buy from

commercial farms and sell mainly to supermarket and restaurants or hotels. Meat inspection

does not always take place and is best described as cursory. Yet, this fresh meat is sold right

after slaughtering at wet markets without any further processing like cutting, slicing, portioning,

forming nor packaging. Most of the meat after slaughtering is distributed to wet markets. Even

though urbanization is currently booming in Vietnam which encourages the establishment of

supermarkets, hypermarkets and many other convenient department stores, buying fresh food

including meat, fish, vegetable at wet markets is still daily practiced by majority of Vietnamʼs

consumers.

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6.3 Useful Information

6.3.1 Associations

General Department of Livestock

Address: 16 Thuy Khue Street, Tay Ho, Hanoi Vietnam Website: www.cucchannuoi.gov.vn Phone: +84 4372 86130 Email: [email protected] The General Department of Livestock directs the local planning associated with the processing of livestock and poultry in Vietnam. It also direct and implements plans for the regional development of livestock farms including poultry production.

6.3.2 Trade shows

ILDEX Vietnam Date: 14-16 March 2018 Venue: SECC, Ho Chi Minh City, Vietnam Website: www.ildex-vietnam.com ILDEX Vietnam is a trade fair for livestock, dairy products, meat processing and aquaculture. This event also brings international expertise to satisfy the needs of the local livestock industry. Exhibitors in this tradeshow are involved in animal feed and animal health, genetics and breeding, and traders, among others.

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7. References

7.1 Malaysia

“The Malaysian Poultry Industry: Our Vision of the Future, Advancing Poultry Production for Food Security”, 2013, The Federation of Livestock Farmers’ Association of Malaysia “Malaysia Broiler Meat Sector”, 2014, USDA Foreign Agricultural Service “Participation of Farmers in the Integrated Broiler Contract Farming in Malaysia”, 2016, International Journal of Current Multidisciplinary Studies “Review of Domestics Broiler Market: Final Report”, 2014, Malaysia Competition Commission “Cobb Extends Leong Hup Agreement in Malaysia”, 2016, The Poultry Site

7.2 Indonesia

“Indonesia Voluntary Poultry Report”, 2017, USDA Foreign Agricultural Services “Indonesia’s Poultry Value Chain”, 2013, United States Agency for International Development “Meeting the Challenge of Indonesia’s Growing Demand for Poultry”, 2014, WATTagNet “Foreign Firms Dominates Indonesian Broiler Production”, 2016, WATTagNet “Indonesia’s Growing Appetite for Animal Protein: An Overview of Business Models, Opportunities and Strategies”, 2016, DBS Asian Insights

7.3 Thailand

“The Poultry Sector in Thailand”, 2016, Netherlands Embassy in Bangkok “Thailand Industry Outlook 2016-18: Frozen & Processed Chicken Industry, 2016, Krungsri Research “2016 Top Markets Report Environmental Technologies Regional Supplement”, 2016, International Trade Administration “GAIN Report – Thailand Poultry and Products Annual 2016”, 2016, USDA Foreign Agricultural Services “Poultry export outlook solidly optimistic”, 2017, Bangkok Post “Thailand’s Poultry Industry”, 2013, IPSOS Business Consulting Group “Animal Health in Thailand”, 2012, Department of Livestock and Development

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7.4 Philippines

“How big is the Philippines Poultry Industry?”, 2014, Philippine Daily Inquirer “Broiler Output to Grow 17% This Year- Ubra”, 2017, BusinessMirror “Malaysian Firm Explores Ways to Help PH Poultry Sector”, 2015, Philippine Daily Inquirer “Accredited Poultry Dressing Plants”, 2017, National Meat Inspection Service “NMIS 2014 Annual Report of Accomplishment”, 2015, National Meat Inspection Service

7.5 Vietnam

“Food Processing in Vietnam: Where is the Potential for High Value Export?”, 2014, Trung Quan Dinh “Vietnam- Agribusiness”, 2017, Export.gov “Vietnam Meat Market”, 2016, IPSOS Business Consulting “Asian Livestock: Challenges, Opportunities and the Response”, 2012, International Livestock Research Institute “Heathy Outlook for Vietnam’s Poultry and Egg Production”, 2012, WATTAgNet

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ABOUT US

ORISSA INTERNATIONAL

Orissa International is a consulting firm serving government economic development agencies and companies seeking to grow their trade, exports or investments in new markets. We are the leader in trade and foreign investment promotion within South East Asia, based on the number of American and European trade and investment promotion agencies and foreign companies who have selected our firm to assist them in doing business in this region. They have recognized that our 20 years of experience, our direct presence in key markets within the region, and our long track record of success, offers them the opportunity to enter into these markets faster and more successfully than if they were to pursue this on their own. In recent years, our track record and global network covering 40 markets have also made us the consultant of choice among South East Asian companies and trade promotion agencies looking to expand internationally. From strategy through to implementation, Orissa International can be relied on to serve you whether you are a TPO, IPA or a company.

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