TPP impacts on livestock breeding sector from expert view

TPP impacts on livestock breeding sector from expert view

The Trans-Pacific Partnership Agreement (TPP) which currently involves 12 countries is expected to assist local livestock breeding sector with luring more foreign investment, but it appears hard to make this come true in the context foreign imported food flowing into Vietnamese market.

Figures from Ministry of Planning and Investment’s Foreign Investment Agency show that as of December 15, 2013 there were a total 501 foreign direct investment (FDI) projects in agro-forestry-fisheries worth $3.35 billion in total committed capital but representing only 1.5 per cent of the country’s total FDI capital.

Of this $3.3 billion, investments into animal feed accounted for a lion’s share of more than 94 per cent while over 4 per cent of the capital was in breeds and merely 1 per cent was in animal husbandry, according to Ministry of Agriculture and Rural Development (MARD) statistics.

While livestock breeding is less charming to foreign investors, foreign stock has flowed into Vietnamese market.

Last year, Vietnam imported 167,000 cows and 96,000 tonnes of poultry, irrespective of tens of thousands of cows imported into Vietnam via shared borders with Laos and Cambodia and poultry volumes illegally entered Vietnam through borderlines with China, according to figures from MARD’s Animal Husbandry Department.

At present, cattle imported into Vietnam from Australia, New Zealand and ASEAN members incurs 5 per cent tariff while fresh or frozen cattle meat bears 7 per cent tariff.

With the ratification of the TPP hopefully within this year the tariff will fall to zero per cent, facilitating the presence of more foreign stock and food in the Vietnamese market.

“The livestock breeding sector would be at disadvantages following ratification of the TPP. For example, after TPP ratification made-in-Thailand chickens would be shipped to Vietnam and sold at cheaper prices compared to local ones since we have to import most from breeds to food and veterinary drugs for the sector,” said Nguyen Phuong Thanh, chairman of Asia-Pacific Import Export Joint Stock Company.

Animal Husbandry Department deputy head Tong Xuan Chinh added that besides TPP, Vietnam is about to sign a string of free trade agreements (FTA) under which many made-in-Vietnam items will more easily enter relevant foreign markets.

In return, some foreign food will have more chance to ramp up presence in Vietnam and in the livestock breeding sector cattle and poultry food of foreign origin will get the first tickets.

“To survive competition right in the home ground, the [animal husbandry] sector needs to restructure, focusing on some key products only,” said Chinh.

“It is enough time for us to change if we start right from now. We shall only develop advantageous products like pork and poultry. Besides, a shift from individual fragmented farming into farm-based and enclosed model and lower feed cost is a must,” Chinh noted.

Economic experts were concerned Vietnam’s livestock breeding sector could hardly compete with foreign players in the home ground on the back of tariff removal following TPP ratification.

From other angle, chairman of Vietnam National Animal Husbandry Association Nguyen Dang Vang said international integration would entail opportunities for the sector to lure more foreign investment.

The four areas the animal husbandry sector urgently sources investment are processing industry, cow raising, breed production and equipment manufacture serving farm-based breeding of cattle and poultry, Vang noted.

From the part of firms, they said doing business in this field is two risky though there is still room for development.

Besides, it is not easy to benefit from investment incentives.

Accordingly, in 2010 the government enacted Decree 61/2010/ND-CP providing incentives to stimulate businesses to invest in agriculture and rural development.

However, until present agricultural sector projects enjoying the incentives have only accounted for less than 1 per cent of total project numbers.

“That was because the procedures to enjoy these incentives remain complex. Lack of state budget to execute incentive policies is another issue,” Chinh said.

In late 2013, the government enacted Decree 210/2013/ND-CP amending Decree 61/2010/ND-CP with more preferences to agricultural sector investors.

The decree was hoped to fuel investment into agriculture, particularly livestock breeding in the upcoming period.

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