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agricultural production in Dong Nai Province in the period 2005-2015. Specifically, in 2015, pig farms achieved a production value of 6,878.4 billion VND, an increase of 411.5 billion VND compared to 2011, or an increase of 6.4%. Compared to 2010, the production value in 2015 increased by 2,912.1 billion VND, or an increase of 73.4%.
3.2.7. Product selling price and product consumption market
3.2.7.1 Product selling price
Product selling price is a factor that has a large and direct impact on the revenue and profits of livestock farms. The selling price of pork products of farms depends on many factors such as production costs, customer demand, supply and demand in the market, market information, etc. For pig farms of foreign-invested companies, the selling price of products is relatively stable because the output products are guaranteed because these companies have a closed production system from production, processing to product consumption. For pig farms of joint stock companies and cooperatives, the selling price has also been relatively stable in recent years because they have signed consumption contracts with food processing companies in other localities. In particular, the selling price of products of household pig farms always fluctuates and is also influenced by traders. In recent years, pork prices on the market have changed frequently and there are many reasons such as pork supply and demand, product quality, product information, etc. Fluctuating product prices directly affect the production and business activities of livestock farms.
3.2.7.2 Product consumption market
The product consumption market is a decisive factor for the existence and development of pig farms. Dong Nai is a province with strengths in developing the pig farming industry and has a large market for livestock products. In addition to the domestic market, livestock products of farms are also widely consumed in large quantities in markets such as Ho Chi Minh City, Ba Ria Vung Tau, Binh Duong, but mainly supplied to the domestic market.
Pork products from farms consumed in the province are about 29,337 tons/year, accounting for 21.7% of the total pork output of the farms. The rest is mainly
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is consumed outside the province and the output of pork from Dong Nai exported abroad is almost negligible. Therefore, pig farms still have many opportunities to expand product consumption in markets around the world to increase the value of farm products.
Table 3.17: Average annual output of pork consumed by pig farms in Dong Nai province
Consumer market
Pig production (tons) | Rate (%) | |
In the province | 29,337 | 21.7 |
Out of province | 105,854 | 78.3 |
Total | 135,191 | 100 |
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(Source: Dong Nai Department of Agriculture and Rural Development, 2015)
The consumption situation of pig farms in Dong Nai is as follows:
For livestock farms of FDI companies : only for CP companies, products are produced and processed by the company according to a closed production model. Pigs raised from CP farms and processing farms are transferred to CP's centralized slaughterhouse and processing factory, products are processed into fresh meat or canned food. Then the products are consumed at CP stores such as Fresh Mark stores, CP shops, fast food. With this closed production process, CP's pig farms are completely assured of output for the consumer market. However, this form requires investors to have large capital, so very few units are able to invest in this closed production model. The remaining FDI livestock enterprises in Dong Nai province have not yet invested in a closed production and consumption system like CP, but commercial pork products are all sold to CP companies and some are consumed directly in the Ho Chi Minh City market. The main consumption channel is through the following two channels:
Channel 1: accounts for 90% of products from livestock farms of FDI companies and pig farms processing for FDI companies that have signed contracts to purchase all products. After leaving the farm, the products are brought to
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into the slaughterhouse and processing plant of CP Company. Then the products are brought into the CP store system for sale to consumers.
Channel 2: accounts for 10%, is the products of FDI companies other than CP companies, the products are purchased by traders and transferred to food processing companies in Ho Chi Minh City to reach consumers.
CP Food Processing Company
(90%)
Door system
CP's goods
(67.5%)
Consumers
use
Farm
livestock
FDI pig
Products from
pork
(33.5%)
Consumers
use
Trader
(10%)
Manufacturing companies
food processing
Ho Chi Minh City
Consumers
use
(Source: CP Company, Nurpark, Evimest and author's market reference, 2015)
Diagram 3.1: Product consumption channels of pig farms of FDI companies
For pig farms of cooperatives : Before 2012, producers and traders of Ho Chi Minh City and Dong Nai had linked together to create a food supply chain from producers to consumers, which was implemented by some units. However, this chain was not sustainable because the parties did not really share benefits with each other. When the price of pigs dropped and farmers were losing money, they did not receive sharing from the business units, so this link had to stop. Since 2012, livestock products of cooperatives have been sold to some companies in Ho Chi Minh City such as Vissan, Pham Ton, Son Ha with relatively stable quantities and prices. The cooperatives signed contracts to supply products to the above companies according to the contracts on the principle that members have the right to negotiate and decide on the value of their agricultural products. This also shows that the role of cooperatives is becoming more and more important, especially in gathering and linking farmers to produce and consume products according to the value chain. In addition, the
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Pig farms of cooperatives and other units in Dong Nai have many opportunities to consume products in the Ho Chi Minh City market because Ho Chi Minh City currently has policies to provide maximum support for its businesses to consume livestock products by expanding distribution channels. This can be seen through the rapid increase in price stabilization points of sale. If in 2008, Ho Chi Minh City only had nearly 250 price stabilization points of sale, by the end of 2014 there were more than four thousand points. Before 2010, price stabilization goods were only sold during the Lunar New Year, but from 2011 to now, they have been implemented throughout the year. The selling price at stabilization points is always 5-10% lower, so the amount of goods consumed is quite large. In addition, the city is promoting sales to industrial parks through a system of convenience stores. Supermarket systems are also being facilitated to develop further. Regarding livestock and poultry meat products in general, the city's slaughtering capacity cannot meet the demand because there are only 26 facilities, so slaughterhouses in neighboring provinces are needed. Thus, livestock products that Dong Nai is strong in, such as livestock meat, have the opportunity to be better consumed in the Ho Chi Minh City market.
For pig farms of joint stock companies : piglet products are consumed according to contracts of the Province, specifically providing products to serve the livestock support programs, support for the poor of the Province. For pork products, they are sold to traders for consumption in the provinces as in the case of household farms.
For household pig farms : the output of livestock products of household pig farms is piglets and pork. Piglets are often used by farms for breeding, while pork is consumed by farms themselves, mainly through traders, so prices fluctuate frequently.
This shows that the consumption of products from household pig farms is mostly through traders, so there are many risks and price fluctuations, often being forced down by traders, and there is no unit or agency that stands up to organize the consumption of products or act as a bridge to consume products for them. Thus, the consumption of products from household pig farms has
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the most volatile and risky compared to pig farms of the other units mentioned above.
Farm
pig farming
Trader
long way
Manufacturing company
food processing
Trader
Slaughterhouse
Trader
Slaughterhouse
Retail
Retail
Consumer
out of province
Consumer
local
(Source: author's survey, 2015)
Diagram 3.2: Pork consumption channel of household pig farms
Besides, it is also necessary to recognize the existing problems in the pork consumption market in Dong Nai as follows:
Dong Nai has developed a strong livestock industry, but in general, the province's livestock industry currently lacks market information when there is no detailed and accurate research on market demand from agencies and departments. This is also one of the reasons for the massive development of pig farms leading to losses in recent times. Currently, the province has no unit providing accurate statistics on market prices, quantity, output of pigs supplied to the market in and outside the province as well as the export demand for pork, etc. The statistics are general and lack detail, so producers and livestock farms continue to develop their herds without starting from market demand.
The pork export market of Vietnam in general and Dong Nai in particular is currently very limited, with low competitiveness due to low quality and
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High livestock costs, food hygiene and safety factors from farming to processing have not met requirements, especially markets with high quality requirements. Therefore, when Vietnam integrates deeply into the world economy, it will open up many opportunities and expand the consumption market for Dong Nai livestock products such as pork to countries in the ASEAN region and other regions.
The products consumed by livestock farms are mainly raw products and are mainly sold directly. This shows that the farms are still very passive in the process of consuming products, and in many cases the prices of the farm products are forced down by buyers. Regarding the product consumption market, most of the products are consumed within the province and neighboring provinces, the products reserved for export are still very limited.
Table 3.18: Export turnover of agricultural processing industry to 2015 and 2020
Export products
Current Status | Planning 2008-2015 | Planning 2016-2020 | ||||
2007 | Increase BQ (%) | Forecast to increase BQ (%) | Value (1000USD) | Forecast to increase BQ (%) | Value (1000USD) | |
Total: | 228,838 | 15.20 | 7.67 | 413,468 | 8.50 | 621,597 |
Processing and preserving pork | 0 | 0 | 200 | 5 | 255 | |
(Source: Development planning of Dong Nai agricultural and food processing industry to 2020 - Dong Nai Department of Industry and Trade)
Through table 3.18, we can see that the processing and preservation of pork is very limited. The province plans that by 2020 the export value of processed pork will be very low.
255,000 USD. This reflects the fact that the ability to produce pig products in Dong Nai in sufficient quantity and quality for export is very small. On the other hand, the problem of organizing consumption activities, the distribution channel system and the State's support from the central to local levels in organizing product consumption for farms is still very limited. In addition, a very important feature in nosichung agricultural business is that it is subject to many risks both natural and economic. Therefore, pig farms in the province often choose the safe solution of selling farm products immediately, so the value is not high and prices often fluctuate erratically.
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Dong Nai has not yet built a consumption chain for livestock products in general and pork consumption chain in particular from the formation of raw material areas requiring livestock planning, the involvement of functional agencies to issue certificates for facilities, product label certificates. Besides, there are difficulties in changing consumers' awareness of using clean products, handling incorrect products, poor quality goods floating on the market.
Products of pig farms in Dong Nai province participate in the safe food and vegetable trading floor organized by Dong Nai Department of Industry and Trade to create a more effective value chain, increase product value through each stage in the chain as well as increase value for the entire chain and introduce products to other neighboring provinces. However, this trading floor is not organized regularly, only 1-2 times/year, so it is difficult to contribute to creating an effective livestock product value chain.
Traders and producers, for immediate benefits, have used stimulants, lean meat additives or injected water into pigs before consumption, affecting the reputation and product quality of Dong Nai's livestock industry in general and creating unfair competition with other livestock units, affecting the health of consumers and affecting the export of pork products to foreign markets.
Although the Provincial People's Committee and other agencies have had many policies to support production and consumption, there are still problems with product preservation and food hygiene and safety. Currently, Dong Nai also has a large number of illegal pig slaughterhouses with 261 pig slaughterhouses without business licenses. On average, a slaughterhouse slaughters 10 pigs/day, and there are about more than 2,600 pigs with more than 1,200 tons of unquarantined pork brought to the market. This shows that these slaughterhouses consume a large number of pigs and provide products that have not been veterinary quarantined to the market, affecting the health of consumers and the reputation and quality of products of reputable pig farms.
Overall, Dong Nai's livestock farming is still scattered, not yet an industrial, large-scale livestock farming to reduce costs and increase productivity.
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competition in the market. Currently, raw materials for animal feed processing such as corn, soybeans, etc. are in short supply and must be imported. Most of the prices of these raw materials are high, so the input costs of animal husbandry are 10% - 20% higher than in the region, and 20% - 25% higher than in the world. With these disadvantages and in the near future, when import taxes on livestock and poultry meat must be reduced according to the commitment to join the WTO, even the domestic market will face fierce competition from imported products, leading to the consequence of gradually losing market share.
From the general situation of developing economic models of pig farms in Dong Nai according to the above analysis, the following observations can be drawn:
The province's pig farming economy has developed rapidly in quantity and diversified in farm types according to the characteristics of the units participating in the farm production and business process.
Farm scale and production and business capacity of farms are not uniform among groups, in which pig farms of FDI companies are large in capital and production capacity. Meanwhile, the scale and production and business capacity of household pig farms are limited.
The qualifications of farm owners and workers on farms are low and there are large differences between farms.
Farm production methods still depend heavily on natural conditions, productivity and livestock output are still low. In recent years, livestock diseases have been quite complicated, affecting the production process of farms.
The cost of input factors such as animal feed, breeding animals, and veterinary medicines tends to increase, affecting the production and business processes of farms.
Household farms lack capital to buy feed and breeds directly at low prices and to invest in expanding production scale. In addition to their own capital, these farms are in great need of loans from state support sources.
There is no close linkage in the value-added chain of products between livestock farms.