December 10, 2008
Vietnam animal feed producers face loss
Animal feed producers in Vietnam are halting production and facing losses due to faulty forecasts indicating prices of raw materials will continue to increase after the 2008 summer.
Feed producers, especially raw material traders, imported large volumes of soy- based oil cake from July to September at a high price of US$550 per tonne. Mass purchases were also made in anticipation of high feed prices in the coming months.
However, the price fell to US$360 per tonne in October, and now hovers between US$280 to US$300 per tonne.
According to the Vietnam Animal Feed Association (VAFA), feed producers cannot recoup their investments in the raw materials, and the stock-piled oil cake is estimated to be worth about US$16 million and has a volume of between 20,000 to 30,000 tonnes.
VAFA chairman Le Ba Lich said around 40 animal feed producers have stopped production and about 20 to 30 percent have reduced production to avoid losses caused by decreasing prices of raw material in international markets.
The price of corn has also been cut almost by half from US$305 to US$164 per tonne. Fish meal has also decreased from US$1,100 to US$764 per tonne.
Lich said it takes about one to two months for animal feed from US, India and Peru to be shipped to Vietnam hence purchases were done at a period where prices are still high.
He said importers do not pay enough attention to import prices because most companies focus solely on export prices.