November 9, 2012
The access to the government''s financial support package is unlikely to be attainable as Vietnam''s livestock industry is in a critical situation with many farms facing bankruptcy.
Pork prices have plummeted while the cost of animal feed has risen relentlessly, and demand for livestock products has slowed down. As a result, many livestock farmers are virtually bankrupt.
According to farmers'' calculations, they suffer a loss of at least VND600,000 (US$29) on raising a pig. In an attempt to help the industry, in early August the central bank ordered commercial banks to reduce interest rates on loans given to it to not more than 11%- the lowest rate on any credit. Those facing difficulties should be given two additional years to repay loans, it said.
Priority was to be given to households, co-operatives, and companies raising, slaughtering, and processing livestock and poultry. The move followed a Government order to help struggling farmers cope with disease outbreaks, falling prices, and lack of resources. But most livestock farmers have yet to benefit from this programme.
Nguyen Trong Long, director of the Hoang Long Service and Breeding Company based in Ha Noi''s Thanh Oai District, said his company raised around 4,000 pigs of which 1,000 were unsold.
Livestockfarms in southern provinces too have yet to benefit from the Government''s support policy. But due to low prices of pigs, 30-50% of individual farmers in the province have abandoned their farms while owners of large farms with more than 1,000 heads have reduced their herd size by up to 70%.
The prices of pork on the hoof have plummeted to less than VND40 million (US$1,920) per tonne, resulting in a loss of around VND5 million (US$240) per tonne to farmers, driving many of them out of business.
It was highly likely that there would be a severe shortage of pork towards the year-end, the Dong Nai Livestock Association warned. Its chairman, Nguyen Tri Cong, said some farm owners had contacted him to borrow money or ask him to look for buyers for their farms so that they could settle their debts to banks and animal-feed suppliers. Pig farmers in Dong Nai have not got the preferential credit offered by the Government, and most were paying 14% on loans, Cong said.
According to the Livestock Department, Viet Nam has around 6,020 large livestock farms, half of which are in dire need of funds to repay old debts and remain in business.
Nguyen Dang Vang, chairman of the Viet Nam Livestock Association, said feed prices in Viet Nam were much higher than in neighbouring countries because of massive dependence on imports for production materials and high interest rates and transport costs.
"If VAT is reduced to 5% and loan interest rates are lowered to 5-7%, feed production costs could be cut by 20%, greatly easing pressure on farmers," he said.
There are reports that the Ministry of Finance, the central bank, and commercial banks will work together to design a preferential credit package worth VND3 trillion (US$144.09 million) for the livestock and aquaculture sectors. This is expected to help livestock farm owners repay their debts and remain in business.