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Vietnam Animal Feed Market Review 2016
Prepared by StoxPlus
Hanoi, December 2016
@ 2016 StoxPlus Corporation.
All rights reserved. All information contained in this publication is copyrighted in the name of StoxPlus, and as such no part of this publication may be
reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including
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2
Vietnam Animal Feed Market 2016 Preview
Part Content Page
1 Market Structure 3
2 Historical and Development 4
3 Value chain analysis 5
4 Market size 7
5 Demand analysis 8
6 Competition landscape 10
About StoxPlus 11
3
Agribusiness is the business of agricultural production. It includes crop production
(farming and contract farming), seed supply, agrichemicals, farm machinery,
distribution, processing, marketing, and retail sales.
Figure 1: Agribusiness market structure in Vietnam
Source: StoxPlus
Agri
cult
ure
Farming
Livestock
Agriservice
Seed
Plantation
Processing
Feeds
Raising
Processing
Agrochemicals
Agriproduct
Retailing
Cattle feeds
Poultry feeds
Vietnam Animal Feed Market Preview | Market Structure
4
Historical of Animal feed sector
Proconco is the first
animal feed in
Vietnam, established
in Bien Hoa Dong Nai
CP Group, one of the
largest Asian animal
feed producer,
established CP
Vietnam Livestock Ltd
Cargill Vietnam , a
subsidiary of leading
agriculture enterprise
and ANT were founded
Anco was established
in Dong Nai province
while Greenfeed
opened in Long An
province
Masan participated in
the market, invest in
52% stock of Proconco
and have 70%
ownership of Anco
EastHope (Chinese
company) was
established East Hope
company Ltd
20151991 1993 1995 2003 2010 2013
Vietnam exported 895
tone animal feed, with
amount equivalent to
200mm USD
• Vietnam livestock industry appears and develops spontaneously. For the first stage of its development, farmers
mainly utilize by-products from agriculture to feed their livestock.
• By the early 20th century, the animal feed industry appears and grows rapidly along with the development of science
and technology. In 1991, Vietnamese-French joint venture Proconco, the first animal feed company in Vietnam,
established and built the factory located in Bien Hoa, Dong Nia. Up to 2003, there were 136 factories participating
in this sector with capacity of 3.5mm tones per year.
• Vietnam is listed as one of 20 biggest countries of feed producing. Vietnam started to export animal feed in 2013 and
in the year of 2014, Animal feed was exported to over 10 countries including US, Japan, Malaysia.
Vietnam Animal Feed Market Preview | Historical and Development
5
Value chain of Vietnam animal feed
Figure 2: Value chain of Vietnam animal feed, 2015
Source: StoxPlus
Raw materials
produced by
local farmers
Raw materials
imported
Collector
Warehouse/ Feed
mill/processing
agencies
ExportDistribution
agency
Animal feed
company
Trading company
Farmer
Foreign company
Livestock farming
Vietnam Animal Feed Market Preview | Value chain analysis
6
Roles for each participant in the business chain
Farmers
Warehouse/ Feed mill/processing agencies
Animal feed company
Trading company
Collector
Distribution agency
• Grow raw materials for animal feed such as rice,
maize, potato, sweet potato, etc.
• Harvest
• Sell to collector or feed mill/processing agencies
• Purchase agricultural products (raw materials for
feed) from farmers.
• Sell to warehouse or processing agency or feed
mill
• Deliver agricultural products to the border
between China and Vietnam then sell to “border”
collectors to export to China via cross-border
trade
• Purchase agricultural products from farmers and
collectors
• Process (milling, drying, etc.) from fresh products
• Sell to livestock farming for making self-made feed
• Sell to animal feed company for producing
industrial feed
• Sell to collectors to export to China via cross -
border trade or export to Philippines, Malaysia,
China via official trade
• Import raw materials
• Sell to animal feed companies or other trading
companies to export
• Purchase raw materials from warehouse/ feed
mill/ processing agencies then sell to livestock
farming for making self-made feed.
• Distribute industrial feed produced by animal feed
company to livestock farming.
• Import themselves or buy raw material from
domestic sources or trading companies
• Produce animal feed
• Sell to domestic market via a distribution system
and to export
Vietnam Animal Feed Market Preview | Value chain analysis
7
13.26 million tones of animal feed are consumed per year
Figure 3: Estimated consumption of industrial feed in Vietnam, 2011-2015
Source: StoxPlus’s estimation from AgroMonitor
Note: We estimate the consumption in 2011-2014 based on the consuming level of the year 2014. For the
production of animal feed, we use official numbers from MARD. However, the real numbers could be 10% lower,
according to industrial experts. In such case, the real production is nearly same with the consumption or
market supply and demand is balanced.
• Vietnam is an agricultural country with 70% of electors are
involved in agriculture sector including farming, livestock and
fishery. Vietnamese farmers grow around 379 million of livestock
for all kinds per year.
• The consumption of feed has grown in line with the development
of livestock sector and about 20 million tones of animal feed to
be consumed per year. Of which, there are 13.26 million tones of
industrial feed and 6.27 million tones of self-made feed.
• Self-made feed is very popular in Vietnam since the price of
feed’s ingredients is decreasing while the price of industrial
feed keeps stable. To reduce production cost, Vietnamese
farmers tend to buy feed ingredients then mix these
ingredients based on their experience. However it is a short-
term story.
• In long –term, Vietnamese livestock industry is switching from
household model to industrial farming with large-scale
business. It’s one of key drivers to push the Vietnam
industrial feed up.
• Vietnam has exported feed since 2013. However the volume of
feed exported is very small, only 0.28 million tone in 2015.
Majority of feed consumption is for domestic consumption
purpose.
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
2011 2012 2013 2014 2015
Million t
one
Domestic consumption Export Total supply
For the production of animal feed, we use official
numbers from MARD. However, the real numbers could
be 10% lower, according to our industrial experts
Vietnam Animal Feed Market Preview | Market size and segmentation
8
Pig and poultry are main sources of consuming animal feed in Vietnam
Figure 4: Domestic consumption of industrial feed by type of
livestock,2015
Source: StoxPlus
• Pigs and poultries are main livestock feeding in Vietnam. It’s suitable
with Vietnamese preference of food. A household survey conducted in
2010 by Vietnam Animal Feed Association found that 40% of household
meat expenditure was spent on pork, with preference given to fresh pork
over chilled or processed meat.
• As the result, demand of feed from the two segments accounts for 97%
total feed consumption in Vietnam.
• Feed for pigs is the dominant segment with 64% of total feed
consumed in Vietnam. The country has total of 27.75 million pigs
including 23.7 million pigs to pork and 4.05 million sows.
• With the size of 341.9 million heads in 2015, 4.23 million tones of
feed was consumed by poultry segment. In which, the proportion of
chicken, duck and goose are 76%, 20% and 4%, respectively.
• The cattle industry in Vietnam is small. So on, only 3% feed is for
other livestock excluding pigs and poultry.
Pig64%
Poultry33%
Others3%
Livestock Total number (Million heads)
Poultry 341.91
Chicken 259.30
Duck 69.55
Goose 13.06
Pig 27.75
Beef 5.37
Buffalo 2.52
Others 2.02
Total 379.57
Figure 5: Breakdown of livestock in Vietnam by type, 2015
Source: StoxPlus from Department of Livestock production, MARD
By volume
Vietnam Animal Feed Market Preview | Demand analysis
9
Demand for poultry feed and cattle will increase in line with the change in livestock’s
structure under the Decision No.10/2008/QD-TTg
Figure 6: Structure of Vietnamese meat by volume in 2015
Source: StoxPlus
Figure 7: Planned structure of Vietnamese meat by volume in 2020
Source: StoxPlus
73%
19%
8%
Pork Poultry Beef, buffalo, goat, sheep
62%
28%
10%
Pork Poultry Beef, buffalo, goat, sheep
• Under the Decision No.10/2008/QD-TTg, the structure of livestock in Vietnam will be changed in 2020. The proportion of pork is decreasing while
the proportion of both poultry and cattle are increasing. Pork is expected to decrease from current level 73% to 62% of total meat in 2020. While
Poultry will sharply increase from 19% in 2015 to 28% in 2020. Same trend with poultry, beef, buffalo, goat and sheep will have a 2% increase in
2020 compared to 2015.
• It’s a key driver affecting to the structure of demand for feed and should be taking into consider in estimation of the demand and supply for each
kind of feeds in the period 2016-2020
Vietnam Animal Feed Market Preview | Demand analysis
10
Many brand name companies in global animal feed market are already in Vietnam and
dominating the market
Figure 8: Market share of Vietnam animal feed market, 2013
Source: StoxPlus from Vietnam Animal Feed Association
19%
10%
8%
8%
4%5%5%
4%
4%
3%
2%
28%
C.P
Newhope
Cargill
Proconco
Anco
ANT
Greenfeed
Japta
CJ Vina Agri
Dabaco
Vina
Others
Animal feed
Foreign-dominated market
• Most of the large corporations in agriculture in the world has been
in Vietnam for investment in manufacturing animal feed.
• CP Vietnam is the biggest name in Vietnam animal feed market
with 19-20% total market share. The company have penetrate to
Vietnam since 1990. C.P has total of 08 feed plants in Vietnam as
of 2015. Of which, 04 animal feed plants, 03 fishery feed
companies and a corn drying plant.
• Cargill is another outstanding name, the company is expanding
their business in Vietnam with several new plants in Nghe An, Binh
Duong and Ho Chi Minh
Rise of local companies ?
• However, in 2015, the market witnessed some signs of change.
Specifically, Masan, through its subsidiaries is Nutri-Science Masan,
has acquired 52% stake and 70% stake Proconco of Anco.
• At the same time, a fishery company naming Hung Vuong
Corporation (HVG) and steelmakers - JSC Hoa Phat Group also
"attack" on the feed market.
• To date, on the basis of announced production volume, three
leading position belongs to CP (3.8 million tones, 21% market
share), Masan Nutri-Science (2.5 million tones, 14% market share),
and Hung Vuong GreenFeed are holding 8.3% share (1.5 million
tons). However, there’s no official survey about the real market
share at this time.
How could top 10 dominate the market?
- Have a long history of animal feed business in Vietnam
- Have a good brand name
- High capital capacity
- Advantage of economies of scale in doing business
- Have a wide distribution network over the country
- Good commission policy for distribution agents
Vietnam Animal Feed Market Preview | Competition Landscape
11
STOXPLUS INTRODUCTION
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