Required Report - public distribution

**Date:** 9/1/2005

**GAIN Report Number:** VM5056

VM5056

**Vietnam**

**Livestock and Products**

**Livestock and Products Update**

**2005**

**Approved by:**

![](media/image1.wmf)John Wade

FAS Hanoi, U.S. Embassy

**Prepared by:**

Nguyen Thi Huong

**Report Highlights:**

Vietnam\'s livestock in 2004 had a growth rate of 2.3%. This was
significantly lower than in 2003 due to highly pathogenic avian
influenza outbreaks. However, Vietnam has been trying the best to
recover the poultry sector from this outbreak. Post estimates that
Vietnam\'s livestock sector will still grow at a 4% growth rate in 2005.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Hanoi \[VM1\]

\[VM\]

#  

[SUMMARY 3](#summary-1)

[Production 3](#production)

[Table 1: Vietnam's livestock sector annual Growth Rate
3](#table-1-vietnams-livestock-sector-annual-growth-rate)

[Table 2: Vietnam \-- Key Livestock Components - 2000-2005
3](#table-2-vietnam----key-livestock-components---2000-2005)

[Prices 4](#prices)

[Table 3. Domestic prices of livestock in Vietnam of Aug. 4, 2005
4](#table-3.-domestic-prices-of-livestock-in-vietnam-of-aug.-4-2005)

[POULTRY 4](#poultry)

[HPAI Outbreak 4](#hpai-outbreak)

[Table 4. Impact of AI on Vietnam poultry population
5](#table-4.-impact-of-ai-on-vietnam-poultry-population)

[Production 6](#production-1)

[Table 5: Vietnam - Poultry Sector 6](#table-5-vietnam---poultry-sector)

[Table 6. Annual volume of poultry in the areas of Vietnam
6](#table-6.-annual-volume-of-poultry-in-the-areas-of-vietnam)

[Vietnam poultry breeding stock 7](#vietnam-poultry-breeding-stock)

[Table 7. Distribution of poultry breed stocks, stations in Vietnam
7](#table-7.-distribution-of-poultry-breed-stocks-stations-in-vietnam)

[Total 7](#total)

[SWINE SECTOR 7](#swine-sector)

[Swine population 7](#swine-population)

[Pork production 7](#pork-production)

[Domestic pork prices 8](#domestic-pork-prices)

[Table 8: Vietnam's 2004-2005 Average Monthly Swine Prices (live
weight).
8](#table-8-vietnams-2004-2005-average-monthly-swine-prices-live-weight.)

[Trade 8](#trade)

[Table 9. The value and volume of USA Live Swine export to Vietnam in
2000-2004
9](#table-9.-the-value-and-volume-of-usa-live-swine-export-to-vietnam-in-2000-2004)

[CATTLE SECTOR 9](#cattle-sector)

[Cattle Inventory 9](#cattle-inventory)

[Dairy cattle 10](#dairy-cattle)

[Table 10. Total dairy cow population estimated in 2005 and 2010
10](#table-10.-total-dairy-cow-population-estimated-in-2005-and-2010)

[Table 11: Vietnam's Dairy Cow Population
11](#table-11-vietnams-dairy-cow-population)

[Dairy cow imports 11](#dairy-cow-imports)

[Table 12: Vietnam Dairy Cattle Imports
11](#table-12-vietnam-dairy-cattle-imports)

[Milk production 11](#milk-production)

[Table 13: Milk Production 11](#table-13-milk-production)

[Table 14: Vietnam's Plan for Fresh Milk Consumption in 2005 and 2010
12](#table-14-vietnams-plan-for-fresh-milk-consumption-in-2005-and-2010)

[Table 15: U.S. Dairy Product Exports to Vietnam (2000-Jan-Jun. 2005)
12](#table-15-u.s.-dairy-product-exports-to-vietnam-2000-jan-jun.-2005)

[ANIMAL FEED 12](#animal-feed)

[Table 16: Vietnam Commercial Animal Feed Production (2000-6/2005)
13](#table-16-vietnam-commercial-animal-feed-production-2000-62005)

[Vietnam's domestic price of animal feed has remained high
13](#vietnams-domestic-price-of-animal-feed-has-remained-high)

[Vietnam continues to import animal feed and materials
13](#vietnam-continues-to-import-animal-feed-and-materials)

[Table 17: Key U.S. Feed Ingredient Exports to Vietnam in Volume
14](#table-17-key-u.s.-feed-ingredient-exports-to-vietnam-in-volume)

[Table 18: Key U.S. Feed Ingredient Exports to Vietnam in Value
14](#table-18-key-u.s.-feed-ingredient-exports-to-vietnam-in-value)

[Animal feed processing industry 14](#animal-feed-processing-industry)

#  

# SUMMARY {#summary-1}

## Production 

The Ministry of Agricultural and Rural Development (MARD) reported that
Vietnam's livestock production value as a proportion of the total value
of Vietnam Agriculture production increased from 17% in 2001 to 22.4% in
2004. MARD hopes the country can raise this livestock proportion
livestock to 30% by 2010.

Vietnam's livestock in 2004 had a growth rate of 2.3% (See table 1).
This was significantly lower than in 2003 due to highly pathogenic avian
influenza outbreaks.

###  Table 1: Vietnam's livestock sector annual Growth Rate 

  ------------ -------------------- -------------------- ----------------
  **Year**     **Total Ag Sector**  **Crop Production**  **Livestock**

  2000         5.4                  5.2                  6.7

  2001         2.6                  2.3                  4.2

  2002         6.2                  5.5                  9.9

  2003         4.2                  3.2                  8.2

  2004         4.2                  4.7                  2.3
  ------------ -------------------- -------------------- ----------------

*Source: General Statistical Office (GSO), MARD*

Post estimates that Vietnam's livestock sector will grow at a 4% growth
rate in 2005 as Vietnam has been trying the best to recovering from the
avian influenza outbreak.

MARD estimates Vietnam's 2005 animal meat production (live weight) at
2,800 thousand metric tons (TMT), about 11.7% higher than 2004's
production (see table 2). Pork plays a dominant role in total livestock
production. Currently, about 80% of the meat production is pork while
the share of poultry meat is about 12.8% and other kinds of meat
including beef, buffalo, and goat meat occupy only 7.2%.

### Table 2: Vietnam \-- Key Livestock Components - 2000-2005

+-----------------+-----------+-------+-------+------+-------+------+
|                 | **Unit**  | **2   | **2   | **20 | *     | **20 |
|                 |           | 002** | 003** | 04** | *2005 | 10** |
|                 |           |       |       |      | e     |      |
|                 |           |       |       |      | st.** | **es |
|                 |           |       |       |      |       | t.** |
+-----------------+-----------+-------+-------+------+-------+------+
| Cattle          | Thousand  | 4,    | 4,    | 4    | 5,250 | 6    |
| population      | heads     | 062.9 | 397.3 | ,910 |       | ,500 |
+-----------------+-----------+-------+-------+------+-------+------+
| Buffalo         | Thousand  | 2,    | 2,835 | 2    | 2,950 | 3    |
| population      | heads     | 814.5 |       | ,870 |       | ,300 |
+-----------------+-----------+-------+-------+------+-------+------+
| Swine           | Thousand  | 2     | 2     | 26   | 2     | 33   |
| population      | heads     | 3,210 | 5,461 | ,144 | 7,000 | ,000 |
+-----------------+-----------+-------+-------+------+-------+------+
| Poultry         | Thousand  | 23    | 25    | 218  | 24    | 350  |
| population      | heads     | 3,300 | 4,057 | ,152 | 5,000 | ,000 |
+-----------------+-----------+-------+-------+------+-------+------+
| Goats and sheep | Thousand  | 621.9 | 7     | 1,0  | 1,200 | 2    |
|                 | heads     |       | 80.35 | 20.2 |       | ,000 |
+-----------------+-----------+-------+-------+------+-------+------+
| **Total meat    | **tmt**   | *     | **2,  | *    | **2,  | *    |
| production**    |           | *2,19 | 329** | *2,5 | 600** | *3,7 |
|                 |           | 6.2** |       | 07** |       | 00** |
| **(live         |           |       |       |      |       |      |
| weight)**       |           |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| *of which pork  | tmt       | *1,6  | *1    | *2,  | *2    | *2,  |
| meat*           |           | 53.6* | ,795* | 012* | ,100* | 900* |
+-----------------+-----------+-------+-------+------+-------+------+
| *Poultry meat*  | tmt       | *3    | *373* | *32  | *300* | *    |
|                 |           | 88.4* |       | 0.4* |       | 500* |
| *(live weight)* |           |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| *Beef and       | tmt       | *1    | *161* | *18  | *200* | *    |
| buffalo meat*   |           | 54.2* |       | 0.3* |       | 300* |
+-----------------+-----------+-------+-------+------+-------+------+
| Share of pork   | \%        | 75    | 77    | 80   | 80.77 | 78.5 |
| meat/total meat |           |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| Share of        | \%        | 18    | 16    | 13   | 11.54 | 13.5 |
| poultry         |           |       |       |      |       |      |
| meat/total meat |           |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| Share of beef   | \%        | 7     | 7     | 7    | 7.69  | 8    |
| and buffalo     |           |       |       |      |       |      |
| meat            |           |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| Total Egg       | Billion   | 4.53  | 4.85  | 3.94 | 3.85  | 4.9  |
| production      | pieces    |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| Per capita egg  | Pieces/   | 56.63 | 60.62 | 4    | 50    | 62   |
| consumption     | head/year |       |       | 8.64 |       |      |
+-----------------+-----------+-------+-------+------+-------+------+
| Per capita meat | kg/       | 27    | 28    | 31.3 | 35    | 40   |
| consumption     | head/year |       |       |      |       |      |
| (live weight)   |           |       |       |      |       |      |
+-----------------+-----------+-------+-------+------+-------+------+

*Source: GSO, MARD*

In Vietnam, per capita meat consumption is increasing. Annual per capita
meat consumption (live weight) in Vietnam increased to 31.3 kg in 2004
as the income levels of Vietnamese people are improving. MARD estimates
that 2005 per capita consumption will be about 35 kg/head/year, up
significantly from 23 kg in 2000.

## Prices

Post estimates prices of livestock in domestic market in 2005 will
increase significantly because of high demand *and* the continued impact
of the bird flu in 2004 and 2005. The supply of poultry meat decreased
sharply in 2004, which made chicken meat prices increased 20%-30%
compared with 2003.

Annual average price of pork (live weight) in 2004 was VND 14,800/kg
(live weight). The average pork price in southern Vietnam was VND 15,550
per kg, equivalent to US\$ 1.00, and in northern Vietnam was VND
14,000/kg equivalent to US\$ 0.9.

Recent Vietnamese domestic market prices for livestock are stated in
table 3.

### 

### Table 3. Domestic prices of livestock in Vietnam of Aug. 4, 2005 

(US\$ 1= VND 15,900)

  -------------------------------- ------------------- -------------------
                                   in Northern         In Southern
                                   provinces           provinces

  Pork meat (live weight) (VND/kg) 13,500-15,000       17,500-19,500

  Chicken meat (live weight)(local 35,000- 36,000      44,000-52,000
  indigenous type) (VND/kg)                            

  Chicken meat (local indigenous   45,000-50,000       46,000-54,000
  type) (VND/kg)                                       

  Beef (VND/kg)                    65,000-75,000       75,000-80,000

  Chicken Eggs (VND/ten eggs)      14,000-15,000       15,000-16,000

  Duck Eggs (VND/ten eggs)         12,000-13,000       13,000-14,000
  -------------------------------- ------------------- -------------------

*Source: MARD, FAS*

# 

# POULTRY 

# 

## HPAI Outbreak 

Vietnam's Department of Animal Health (DAH), breaks down the two-year
old outbreak of highly pathogenic avian influenza (HPAI) into three
periods.) .

##### First period from late December 2003 to March 2004

The HPAI spread throughout Vietnam hitting 57 of 64 of the country's
provinces and cities. The DAH estimated the number of suspected infected
and culled poultry at 58.66 million head, 30.4 million were chicken,
13.5 million were waterfowls, and 14.76 million were domesticated quail.

##### Second period from April 2004 to November 2004 

The outbreak during this period was mainly confined to the Mekong River
Delta. The total number of culled poultry in this period was far less
than in the first outbreak, only 80,078 head, of which there were 55,999
chicken, 8,132 waterfowls, and 19,947 quail*.* By November 2004, in the
whole country there was only one commune affected and the number of
destroyed poultry was only 20 heads.

##### Third period from December 2004 to present

The avian influenza outbreak became more severe again in December 2004
when 12 provinces were affected and 43,139 poultry culled. The peak of
the outbreak during this period was in January, during which 1,080,190
thousand birds were destroyed in 31 provinces.

MARD reports that the total number of culled poultry from December 2004
to Aug. 8^th^, 2005 was 2,158, 526 heads, of which 475,841 were chicken,
831,656 were waterfowls and 851,029 quails.

This last period has been characterized by outbreaks occurring mostly on
small household farms. No large farm has been affected.

In all periods, disease occurrence has tended to be associated with
areas where waterfowls populations are significant. Most of the
provinces with high risks of infection are in the Mekong River Delta,
where 70% of waterfowl have tested positive with the bird flu virus
strain H5N1.

### Table 4. Impact of AI on Vietnam poultry population

  ------------------------ ----------------------------------------------
  **Period**               **Number of poultry death/destroyed**

  December 2003-March 30,  43.9 million of which 30.4 million chicken,
  2004                     13.5 million waterfowls

                           excluding 14.76 million quails

                           

  April-Nov. 2004          80,078 heads of which 55,999 chicken, 8,132
                           ducks

                           and 19,947 quails

                           

  Dec. 2004- Aug. 8, 2005  475,841 chicken; 831,656 ducks and 851,029
                           quails
  ------------------------ ----------------------------------------------

*Source: MARD*

Vietnam plans to use vaccination as a control measure for HPAI. Several
types of bird flu vaccines were tested on a limited scale in early 2004,
and pilot vaccinations for the northern Nam Dinh and southern Tien Giang
provinces started in August 2005. DAH intends to vaccinate nationwide
before December when the next increase in infections is inspected.

Vietnam is using vaccines imported from China and the Netherlands to
inoculate chickens, ducks and quails against the H5N1 virus. The
National Epidemic and Hygiene Institute is also developing a bird flu
vaccine for production. This vaccine is expected to be available in
Vietnam towards the end of this year.

Vietnam's government has said they will pay farmers VND 15,000-18,000
(\$US 1= \$15,868) for each diseased chicken, duck or geese culled.

MARD and Ministry of Health (MOH) are taking strict measures to protect
poultry breeding farms from the bird flu outbreak. These include setting
up checkpoints and mobile quarantine teams and preventing the illegal
transportation of poultry. Because of the bird flu, MARD has designed a
project to restructure the domestic poultry breeding system to encourage
sustainable development. The poultry-breeding sector must make detailed
plans for developing concentrated breeding sites taking advantage of
industrial breeding and production. However, MARD decided not to allow
any waterfowl hatchings until February 2006 since waterfowls are so
frequently associated with the disease.

## Production

Due to the HPAI outbreak Vietnam's 2004 poultry population dropped 14%
to 218 million as compared to 254 million in 2003 (See table 5&6).

MARD hopes the country can increase the total poultry population by 12%
to 245 million by 2005 and to 350 million by 2010. However total meat
production will decrease as inventories are rebuilt. However, post
believes Vietnam will not be able to reach the 2005 goal in poultry
population due to the HPAI outbreaks.

### Table 5: Vietnam - Poultry Sector

  --------------- ---------- ---------- ---------- ---------- ---------- -------- ---------
                  **Unit**   **2001**   **2002**   **2003**   **2004**   **2005   **2010
                                                                         est.**   est.**

  Total poultry   Million    218.12     233.3      254.06     218.15     245      350
  population      heads                                                           

  Chicken         Million    158        159        185        159        195      270
  population      heads                                                           

  Duck population Million    58         73         69         59         50       80
                  heads                                                           

  Poultry meat    Thousand   322.6      388.4      372.72     316.41     300      500
  production      metric ton                                                      

  Poultry egg     Billion    4.16       4.53       4.85       3.94       3.85     
  production      pieces                                                          
  --------------- ---------- ---------- ---------- ---------- ---------- -------- ---------

*Source: GSO; MARD, Vietnam Feed Association*

### 

### Table 6. Annual volume of poultry in the areas of Vietnam

(Unit: Million head)

  ---------------- ------------ ------------ ------------ ------------ -------------
  **Areas**        **2001**     **2002**     **2003**     **2004**     **Growth rate
                                                                       compare
                                                                       2004/2003
                                                                       (%)**

  **Whole          **218.12**   **233.29**   **254.06**   **218.15**   **-14**
  Country**                                                            

  *North Vietnam*  *126.49*     *134.90*     *151.67*     *142.06*     ***-6.3***

  Red River Delta  46.86        50.66        65.55        59.08        -9.8

  North East       45.62        47.33        41.64        39.51        -5.1

  North West       6.8          7.11         7.85         7.89         0.5

  North Central    27.16        29.79        36.68        35.59        -2.9
  Coast                                                                

  *South Vietnam*  *91.60*      *98.39*      *102.39*     *76.09*      ***-25.6***

  South Central    14.36        15.36        16.19        14.79        -8.6
  Coast                                                                

  Central          5.62         6.26         10.06        8.68         -13.7
  Highlands                                                            

  North East South 24.9         26.78        24.67        11.05        -55.2

  Mekong River     46.72        49.99        51.46        35.56        -30.8
  Delta                                                                
  ---------------- ------------ ------------ ------------ ------------ -------------

*Source: MARD*

## Vietnam poultry breeding stock 

In all of Vietnam there are 2,260 poultry farms, of which 119 are
breeding farms. Sixty-seven percent of breeders stocks are local private
own companies (see table 8).

### Table 7. Distribution of poultry breed stocks, stations in Vietnam

+----+-----------------------------------------+-----------------------+
| *  | **Name of organization**                | **Amount**            |
| *S |                                         |                       |
| /N |                                         |                       |
| ** |                                         |                       |
+----+-----------------------------------------+-----------------------+
| 1  | National Institute of Animal Husbandry  | 6                     |
+----+-----------------------------------------+-----------------------+
| 2  | Vietnam National Livestock Cooperation  | 7                     |
+----+-----------------------------------------+-----------------------+
| 3  | Institute of Agricultural Science of    | 1                     |
|    | South Vietnam                           |                       |
+----+-----------------------------------------+-----------------------+
| 4  | Companies, Centers, enterprises under   | 15                    |
|    | control of Province                     |                       |
+----+-----------------------------------------+-----------------------+
| 5  | Companies under control of Foreign      | 10                    |
|    | Investment                              |                       |
+----+-----------------------------------------+-----------------------+
| 6  | Private own farms                       | 80                    |
+----+-----------------------------------------+-----------------------+
|    | ## Total                                | **119**               |
+----+-----------------------------------------+-----------------------+

*Source: MARD*

To improve the poultry sector Vietnam is keen to import pure chicken
breeds for growing and for cross breeding from a variety of countries
and companies.

######## 

# SWINE SECTOR

## Swine population

According to MARD, total swine population reached 26.1 million head by
the end of 2004 (see table 2), increasing 2.7% in comparison with 2003.
Of this, 3.7 million head were sows.

Vietnam targets to have 27,000 thousand heads of pigs by 2005 and 33,000
thousand heads by 2010.

## Pork production

Swine are the most important animal for Vietnamese livestock production
and MARD pays the most attention to this sector. Pork production in 2004
reached 2.012 MMT tons, increasing 12% by comparison with 2003 (1.795
MMT) (see table 2) to a significant degree due to the use of more
high-yield lean meat hybrids and foreign swine breeding stocks, and
better quality pig feeds. MARD hopes pork production will reach 2.100
MMT (live weight) in 2005, 104% higher than last year's production. They
also have a target of 2.9 MMT for 2010 (see table 2).

In the Vietnamese diet, fresh pork meat is the most common animal
protein source. Now Vietnamese people in cities are also consuming more
processed pork (canned meat or prepared sausages). However, legal
imported pork products are still not widely available in Vietnam.

## Domestic pork prices 

# 

By the end of 2004 and in the first six months of 2005, domestic pork
prices increased sharply in both northern and southern provinces due
primarily to the impact of bird flu.(see table 8). However, after
peaking in February of this year in northern province and in June in
southern provinces, pork prices have been dropping as the bird flu
situation has improved and higher prices have prompted swine producers
to increase production.

# 

### Table 8: Vietnam's 2004-2005 Average Monthly Swine Prices (live weight). 

(Unit: VND/kg) (US\$1=VND 15,900)

  ------------ --------------- --------------- --------------- ---------------- --------------- ---------------
  **Months**   **Northern                                      **Southern                       
               provinces**                                     provinces**                      

               **2003**        **2004**        **2005**        **2003**         **2004**        **2005**

  January      11,000-12,500   10,500-12,500   16,000-17,500   16,000-17,000    12,500-13,500   18,000-19,000

  February     11,500-12,000   13,500-15,000   16,500-18,500   16,500-17,000    12,000-15,000   18,000-20,500

  March        11,000-12,000   11,500-12,500   15,000-17,500   16,000-17,000    14,000-15,000   18,000-19,500

  April        11,000-12,500   13,000-14,000   14,500-15,500   16,200-16,500    14,000-14,500   19,000-22,000

  May          11,000-12,500   13,500-15,000   13,500-15,500   16,000-16,500    14,000-14,500   21,500-22,500

  June         11,000-12,500   13,500-15,000   13,500-15,500   15,000-16,000    14,500-15,000   22,500-23,500

  July         11,000-12,500   13,500-15,000   13,500-15,000   12,000-13,500    14,200-14,700   21,000-23,000

  August       11,000-12,500   15,000-16,500   13,000-14,000   11,000-13,000    15,000-17,000   18,000-19,500

  September    11,000-12,500   14,500-16,500                   11,000-13,500    15,000-17,000   

  October      10,500-12,500   15,000-16,500                   11,000-12\'500   15.000-17,000   

  November     10,500-12,500   15,000-16,000                   11,500-12,500    15,000-17,000   

  December     10,500-12,500   15,000-16,000                   12,500-12,700    16,500-18,000   
  ------------ --------------- --------------- --------------- ---------------- --------------- ---------------

*Source: MARD*

## Trade

Although the Vietnamese government has plans to increase pork exports to
80,000 tons this year and 100,000 tons for years afterwards, exports
continue at the 10,000--30,000 tons only, worth US\$16--48 million
/year.

Vietnam pork meat does not compete effectively in the international
market. Health restrictions related to both animal and human health
close many markets to Vietnam. Vietnamese pork is also not usually lean
enough to compete overseas. The lean meat ratio of live pigs is still
very low (about 33.6% - 40.6 % in the north and 34.5%-42.6% in the south
of Vietnam) while international markets require leaner meat ratios.

MARD plans to support industrial style farms, encourage production with
good quality breeds and lower export prices. Vietnam imported very high
quality pork breeds from USA (for the northern provinces) and Australia
(for southern provinces) such as: Landrace, Yorkshire, Duroc that will
produce pork with lean meat ratios up to 56-60%. However poor
intellectual property rights protection in Vietnam limits the degree to
which foreign breeders are willing to provide genetics to the country.

The United States has exported live pigs to Vietnam for recent years.
The value and volume of U.S. live swine, which were exported to Vietnam
during the period of 2000 -- 2004, are stated in table 9. In 2004, the
number of live swine imported from the United States decreased
significantly to 110 head, a 50% decrease compared with the previous
years. During the first five months of 2005, Vietnam has not imported
any live swine from the United States.

### Table 9. The value and volume of USA Live Swine export to Vietnam in 2000-2004

  ---------------- ---------- ---------- ---------- ---------- ---------- --------
                   **2000**   **2001**   **2002**   **2003**   **2004**   **2005
                                                                          est.**

  Volume (heads)   932        0          110        222        110        150

  Value (in        256        0          111        215        126        159
  Thousand US                                                             
  Dollars)                                                                
  ---------------- ---------- ---------- ---------- ---------- ---------- --------

*Source: US. Department of Commerce, U.S. Census Bureau, FAS estimate*

#### 

#### Illegal import of pork meat and live pigs from China difficult to control

While Vietnam tries to boost its production to meet domestic consumption
and the government's export plan, in fact there were illegal imports of
pork meat and live pigs from China, which are difficult to control.
These imports meet a strong and growing domestic demand, especially in
provinces bordering China.

# CATTLE SECTOR

## Cattle Inventory

In 2004, the cattle and buffalo inventory in Vietnam was 4.908 million
head of cattle and 2.87 million head of buffalo, increasing 7.6% in
total compared with 2003. The cattle number increased 11,7% compared
with 2003 to 4.394 million head (see table 2), of which 95,794 were
dairy cows.

[]{.mark}

The total beef and buffalo meat production of Vietnam in 2004 reached
180.3 TMT, a 12% increase compared with 2003, of which 121.3 TMT were
beef and 59 TMT were buffalo meat.

Post estimates the cattle inventory will be 5.25 million head by 2005,
an increase of 4% in comparison with 2004 due to high domestic demands
for beef and dairy products. Up to now, Vietnam has 3,400 cattle
breeding farms, of which about 1,000 farms are in the north and 2,400
farms in the south. The number of cattle breeding farms is increasing in
Vietnam as this sector is profitable to the farmers.

Local farmers are currently unable to provide enough grass for cattle.
This will continue to be a big problem given the many demands for
Vietnam's land. MARD encourages many regions in the country to have
"appropriate plans" to increase fresh grass areas, but how this will be
achieved in practice is unclear. This would seem to indicate significant
opportunities for the import of beef and processed dairy products in the
future.

## 

## Dairy cattle

MARD reported that Vietnam's dairy cattle population increased
significantly from 41,240 heads in 2001 to 95,794 heads in 2004

The Ministry of Industry estimates that the dairy cows inventory will
grow to 200,000 -- 250,000 head by 2010 (see table 10 & 11). Although
production is still very small given Vietnams population, demand for
fresh dairy products particularly among wealthier city dwellers is
driving this increase in local dairy production.

The proportion of dairy cows in Southern provinces is about 70% of the
total, followed by the North with 24% and the central region with 6%. Ho
Chi Minh City is the largest dairy-farming center in the country with
over 52,000 head. Dairy farm size varies between regions. In the
Northern provinces, the average number of dairy cows per farm is 4-5,
while the average size of a dairy farm in the Southern provinces is 7-10
cows. However, industrial type dairy farms with an average size of
1,000-2,000 cows are set up in both northern and southern parts of
Vietnam. .

Despite this growth, many small household farms find they cannot compete
and are selling their dairy cattle. The big scale dairy farms are
replacing the small household farms.

### Table 10. Total dairy cow population estimated in 2005 and 2010

+-----------------------+---------+--------------+---------+----------+
| **Areas**             | *       |              | *       |          |
|                       | *2005** |              | *2010** |          |
| **Provinces, Cities** |         |              |         |          |
+-----------------------+---------+--------------+---------+----------+
|                       | **Total | **Total      | **Total | **Total  |
|                       | dairy   | milking cow  | dairy   | dairy    |
|                       | cow     | population** | cow     | cow      |
|                       | popul   |              | popul   | popu     |
|                       | ation** |              | ation** | lation** |
+-----------------------+---------+--------------+---------+----------+
| 1                     | 2       | 3            | 4       | 5        |
+-----------------------+---------+--------------+---------+----------+
| I. South East Area    | 61.103  | 27.499       | 78.591  | 35.365   |
+-----------------------+---------+--------------+---------+----------+
| Lam Dong              | 4.533   | 2.000        | 7.385   | 3.300    |
+-----------------------+---------+--------------+---------+----------+
| 1                     | 2       | 3            | 4       | 5        |
+-----------------------+---------+--------------+---------+----------+
| II\. South West Area  | 9.913   | 4.461        | 26.011  | 11.696   |
+-----------------------+---------+--------------+---------+----------+
| III\. South Central   | 9.578   | 4.310        | 32.270  | 14.508   |
| Area                  |         |              |         |          |
+-----------------------+---------+--------------+---------+----------+
| IV\. North Central    | 12.500  | 5.625        | 39.500  | 17.775   |
| Area                  |         |              |         |          |
|                       |         |              | (       | (9.225)  |
|                       |         |              | 20.500) |          |
+-----------------------+---------+--------------+---------+----------+
| V. Red River Delta    | 21.217  | 9.545        | 49.100  | 22.095   |
+-----------------------+---------+--------------+---------+----------+
| VI\. Northern         | 18.917  | 8.512        | 38.382  | 17.270   |
| Mountainous Areas     |         |              |         |          |
+-----------------------+---------+--------------+---------+----------+
| **Total**             | **      | **           | **      | **       |
|                       | 13      | 61.952**     | 25      | 1        |
|                       | 7.761** |              | 2.239** | 13.459** |
+-----------------------+---------+--------------+---------+----------+

*Source: Ministry of Industry*

In Vietnam, 80% of the heard are Holstein Friesland (HF) and Jersey,
which produce 3,000- 5,500 litters/300 day cycle/head.

### 

### 

### Table 11: Vietnam's Dairy Cow Population 

(unit: head)

  -------------------------- ---------- ---------- ---------- ---------- ---------
                             **2001**   **2002**   **2003**   **2004**   **2005
                                                                         est.**

  Total dairy cow population 41,240     55,840     88,834     95,794     100,000

  of which in the Northern   6,170      11,066     21,320     22,991     25,000
  provinces                                                              

  in the Central provinces   935        3,653      5,330      5,748      8,000

  In the Southern provinces  34,135     41,121     62,184     67,055     75,000
  -------------------------- ---------- ---------- ---------- ---------- ---------

*Source: MARD*

## 

## Dairy cow imports

In 2004, Vietnam imported 1,200 head of dairy cattle, a 80% drop
compared with total dairy cow imports in 2003 (see table 12).

### Table 12: Vietnam Dairy Cattle Imports 

  ------------------------ ---------- ---------- ---------- ---------- ---------
                           **2001**   **2002**   **2003**   **2004**   **2005
                                                                       est.**

  Total imported cattle    1,133      3,889      6,215      2,200      1,500

  Of which imported cows   192        3,392      5,581      1,200      500
  ------------------------ ---------- ---------- ---------- ---------- ---------

*Source: Ministry of Trade, FAS estimate*

The main suppliers for dairy cows to Vietnam were Australia, New
Zealand, and Thailand. More than 80% of the cattle were shipped from
Australia. In the past, Vietnam imported small quantities of dairy
cattle from the United States, such as 104 dairy cows in 1997, and 121
breeding dairy cows and 183 bulls in 2001. Currently the Vietnam
government does not allow imports of live cattle from the United States
due to two recent cases of BSE in the United States.

## Milk production

Vietnam's 2004 fresh milk production was about 135,000 tons of milk, an
increase of 12.5% compared with 2003's level (see table 13) due to
increases in both cow numbers and yields. MARD hopes the country can
reach 165,000 tons production in 2005

### Table 13: Milk Production 

  ------------------ ---------------- ---------- ---------- ---------- --------- ---------
                                      **2002**   **2003**   **2004**   **2005    **2010
                                                                       est.**    est.**

  Fresh milk         Tons             95,000     126,000    151,310    165,000   350,000
  production                                                                     

  Fresh milk         kg/capita/year   1.18       1.56       1.84       1.95      2.3
  production per                                                                 
  capita                                                                         
  ------------------ ---------------- ---------- ---------- ---------- --------- ---------

*Source: MARD*

Fresh milk production per capita grew to 1.84 kg in 2004, an increase of
18% as compared with 2003's level. The target production for 2005 would
mean a per capita consumption of 1.95 kg.

### Table 14: Vietnam's Plan for Fresh Milk Consumption in 2005 and 2010

+--------------------+--------+-------+-------+-------+-------+-------+
|                    | **     |  **2  |  **2  | **2   | **G   |       |
|                    | Unit** | 000** | 005** | 010** | rowth |       |
|                    |        |       |       |       | r     |       |
|                    |        |       |       |       | ate** |       |
|                    |        |       |       |       |       |       |
|                    |        |       |       |       | **    |       |
|                    |        |       |       |       | (%/ye |       |
|                    |        |       |       |       | ar)** |       |
+--------------------+--------+-------+-------+-------+-------+-------+
|                    |        |       |       |       | **2   | **2   |
|                    |        |       |       |       | 001-2 | 006-2 |
|                    |        |       |       |       | 005** | 010** |
+--------------------+--------+-------+-------+-------+-------+-------+
| Population         | Th     | 77,   | 8     | 8     |       |       |
|                    | ousand | 685.5 | 3,352 | 7,758 |       |       |
|                    | people |       |       |       |       |       |
+--------------------+--------+-------+-------+-------+-------+-------+
| Milk consumption   | Liter  | 5,9   | 8     | 10    |       |       |
| per capita         |        |       |       |       |       |       |
+--------------------+--------+-------+-------+-------+-------+-------+
| Total domestic     | Th     | 46    | 66    | 90    | 7,7   | 6,2   |
| milk consumption   | ousand | 0,000 | 7,000 | 0,000 |       |       |
|                    | liters |       |       |       |       |       |
+--------------------+--------+-------+-------+-------+-------+-------+

*Source: Ministry of Industry*

In the last 10 years, the domestic raw milk price has stayed steady at
VND 3,200 to VND 3,500 per kilo (\$US=VND 15,900. The fresh milk retail
price was around VND 3,550-VND 3,850/ liter in 2004,. Over the past few
years, the price of condensed milk has climbed to VND 9,000-VND 10,000
from VND 5,000.

Although the milk production is increasing, it still meets just 15%-20%
of the domestic milk consumption. To meet domestic demand, Vietnam spent
\$209 million on imports of milk and milk products in 2004. The United
States plays a major supplying nearly 15 percent of this total. The
value of U.S. dairy product export to Vietnam (CY 2000 to Jan-June 2005)
are presented in table 15.

### Table 15: U.S. Dairy Product Exports to Vietnam (2000-Jan-Jun. 2005)

(Unit: US\$ 1,000)

  ---------------- ----------- ----------- ----------- ----------- ------------ ------------ --------- -----
  **DAIRY          **2000**    **2001**    **2002**    **2003**    **2004**     **Jan-Jun.             
  PRODUCTS**                                                                    05**                   

  **NON-FAT DRY    4,188       1,727       1,110       1,145       15,720       15,167                 
  MILK**                                                                                               

  **DRY WHOLE MILK 0           5,403       615         0           5,330        0                      
  & CREAM**                                                                                            

  **OTHER DAIRY    1,142       1,606       2,855       3,826       5,178        5,786                  
  PRODUCTS**                                                                                           

  **WHEY**         708         748         1,317       1,412       2,529        1,452                  

  **CASEIN**       0           26          0           73          366          29                     

  **FLUID MILK &   134         219         125         96          18           0                      
  CREAM**                                                                                              

  **CONDENSED&     0           0           5           0           0            0                      
  EVAP MILK**                                                                                          

  **YOGRT & OTHR   0           22          0           0           0            0            0         \--
  FERM MILK**                                                                                          

  **ICE CREAM**    0           25          0           0           0            0                      

  **CHEESE &       7           10          0           0           0            0                      
  CURD**                                                                                               

  **TOTAL**        **6,179**   **9,786**   **6,027**   **6,552**   **29,141**   **22,433**             
  ---------------- ----------- ----------- ----------- ----------- ------------ ------------ --------- -----

*Source: US Department of Commerce, US Census Bureau, Foreign Trade
Statistics*   

Vietnam spent US\$ 171 million on imports of milk and milk products in
the first six months of 2005, an increase of 68% compared with the same
period of 2004 due in part to the government's recent decision to lift
tariffs and eliminate its dairy quota regime. Import growth should
continue as improvements in income are fueling stronger demand for dairy
products.

# ANIMAL FEED

Vietnam's 2003 commercial animal feed production was up by 14% but due
to the avian influenza outbreak, the 2004 increased only slightly
compared with 2003's total commercial feed production, of which 73% is
compound feed and 30% is concentrate.

### Table 16: Vietnam Commercial Animal Feed Production (2000-6/2005)

+-------------------------------+-----+-----+-----+-----+-----+--------+
|                               | **  | **  | **  | **  | **  | **Jan- |
|                               | 200 | 200 | 200 | 200 | 200 | Jun.** |
|                               | 0** | 1** | 2** | 3** | 4** |        |
|                               |     |     |     |     |     | **     |
|                               |     |     |     |     |     | 2005** |
+-------------------------------+-----+-----+-----+-----+-----+--------+
| Total animal feed production  | 8,  | 8,  | 8,  | 9,  | 10, | 5,000  |
| (TMT)                         | 200 | 500 | 900 | 500 | 000 |        |
+-------------------------------+-----+-----+-----+-----+-----+--------+
| Total commercial animal feed  | 2,  | 3,  | 3,  | 3,  | 3,  | 1,850  |
| production (TMT)              | 700 | 000 | 400 | 870 | 700 |        |
+-------------------------------+-----+-----+-----+-----+-----+--------+
| of which compound feed (TMT)  | 1,  | 1,  | 2,  | 2,  | 2,  | 1,400  |
|                               | 700 | 950 | 400 | 820 | 700 |        |
+-------------------------------+-----+-----+-----+-----+-----+--------+
| Concentrate feed (TMT)        | 330 | 350 | 340 | 350 | 350 | 150    |
+-------------------------------+-----+-----+-----+-----+-----+--------+
| Share of commercial           | 33  | 35  | 38  | 41  | 37  | 37     |
| feed/total feed (%)           |     |     |     |     |     |        |
+-------------------------------+-----+-----+-----+-----+-----+--------+

*Source: MARD, Vietnam Feed Association (VNFA)*

*(Note: the estimate conversion rate between concentrate feed and
commercial feed is 1:3)*

Post estimates that Vietnam must have about 11 -- 12 million tons of
animal feed to produce over 2,600 thousand tons of livestock production
by 2005 and 13-15 million tons by the end of 2010.

## Vietnam's domestic price of animal feed has remained high 

Reportedly, the price of animal feed in April 2005 increased by 20% in
comparison with the same period of last year due to higher soybean and
corn import prices. Corn prices increased by 30%, from VND 1,900/kg to
VND 2,700/kg in northern provinces and to VND 2,500/kg in southern
provinces. Lysine import prices also increase by 5-10%.

Furthermore, bad management and distribution systems in Vietnam's
markets are also to the causes of high prices of animal feed. Normally,
first sales agencies add 10-12% to the original prices and second sales
agencies also add 10-12%. Therefore livestock farmers face a 20-24 %
increase in the price of animal feed, leading to higher production cost.

## Vietnam continues to import animal feed and materials

The Vietnamese animal feed production sector in Vietnam is now relying
heavily on imported feed ingredients. Vietnam imports 60% of the
materials, including maize, soybean meal, fish meal, meat & bone meal,
rice bran, wheat bran, pre-mixes and vitamins needed to produce animal
feed locally. In total, the whole sector annually imports 40% of maize,
80% of soybean meal and 50% of fish meal required for feed production.

In 2004 Vietnam spent US\$ 478 million on imports of animal feed and
materials. In the first six months of 2005, Vietnam spent US\$ 319
million a 54% increase compared with the same period of 2004.

Vietnam's 2004 imports of soybean meal are estimated at 890 TMT, a
decrease of 11% from 990 tmt imported in 2003 due to the impacts of the
avian influenza outbreak. However, the imports of soybean meal are
expected to continue to increase in the future due to limited local
production of soybeans and continued expansion in the livestock and fish
sector. With no commercial crushing facility in Vietnam, soybean meal
imports will continue to be a necessity. There is no import duty for
soybean meal.

Vietnam imports animal feed and materials from different countries
including China, Thailand, the Netherlands, England, France and the
United States.

### Table 17: Key U.S. Feed Ingredient Exports to Vietnam in Volume 

(Unit: Metric tons)

  ----------------------- ---------- ---------- ---------- ---------- ---------- -------------
                          **2000**   **2001**   **2002**   **2003**   **2004**   **Jan.-Jun.
                                                                                 05**

  Animal fodder (code:    0          0          0          236        107        0
  1214)                                                                          

  Soybean meal            18,990     15,000     25,388     44,498     17,469     10,524

  Animal feed (code:      6,087      7,716      5,886      8,671      4,806      9,881
  2309)                                                                          

  Maize (Corn) (code:     145.6      159.3      199.4      296.2      268.7      134
  1005)                                                                          

  Soybeans (code: 1201)   5,500      847        0          0          380        660
  ----------------------- ---------- ---------- ---------- ---------- ---------- -------------

*Source: U.S. Trade.*

## 

### Table 18: Key U.S. Feed Ingredient Exports to Vietnam in Value 

(In thousands of US. dollars)

  ----------------------- ---------- ---------- ---------- ---------- ---------- -------------
                          **2000**   **2001**   **2002**   **2003**   **2004**   **Jan.-Jun.
                                                                                 05**

  Animal fodder (code:    0          0          0          47         23         0
  1214)                                                                          

  Soybean cake & meal     3,420      2,907      5,011      10,312     4,230      2,298

  Animal feed (code:      2,547      4,105      3,187      4,653      3,781      10,617
  2309)                                                                          

  Maize (Corn) (code:     60         68         90         160        133        86
  1005)                                                                          

  Soybeans (code: 1201)   1,011      205        0          0          121        175
  ----------------------- ---------- ---------- ---------- ---------- ---------- -------------

*Source: U.S. trade*

## Animal feed processing industry

As of May 2004 according to MARD's data, there are 196 animal feed and
premix manufacturers operating in Vietnam, of which there are 44 animal
feed mills producing premix animal feed and 138-152 mills (to produce
both compound and concentrate feed). Among 196 animal feed mills, there
are 65 mills that belong to the Vietnam Animal Feed Association. The
total capacity of Vietnam's animal feed mills is estimated at 5.4
million metric tons (MMT).

The most animal feed mills are located in southeastern Vietnam These
account for 42.8% of all meals in the country and nearly 40% of total
animal feed production. The Red River Delta in the north of Vietnam
accounts for 26.1% of mills and 35.4% of production.

Key feed milling companies include foreign invested companies such as CP
Group (Thailand); Proconco (France); Cargill (USA); TTC (Taiwan); New
Hope (China) and Cheil Jedang group (South Korean) along with a number
of Vietnamese companies such as DABACO (Bac Ninh), VINA, Thanh Binh,
Long Chau (Dong Nai), VIC (Hai Phong), Hoan Duong (Hanoi), NOPICO An
Khanh, Ngoc Hoi Animal Feed Mill, and AFIMEX (An Giang).