Agri-industry faces losses
Agri-industry faces losses
Faced with a flood of inexpensive US chicken imports, Vietnamese farmers are adopting new strategies to stay economically alive in a more global market, especially after the Trans-Pacific Partnership takes effect.
One of the many farmers affected by US chicken imports is Nguyen Huu Tuyen, of Ha Noi. He has suffered severe losses since the imports began dominating the market a few years ago.
In the past, he planned to expand his five-hectare farm and plant corn for animal feed, but now has decided to grow oranges and pomelos.
In 2014, Tuyen, who lives in Chuong My District's Thanh Binh Commune, incurred a loss of VND400 million (US$18,181) after selling 15,000 heads of white-feathered chickens at low prices.
Ten years ago, he was raising at least 40,000 chicken per batch, fetching high profits from buyers.
"I rarely faced losses during those years. Even last year, I received more than VND600 million in profit," said Tuyen, who admitted that he knows little about the TPP.
"I had invested a billion dong to develop my farm, but I stopped my expansion plan after hearing about the TPP," he added.
He has heard rumours that after the TPP, the tariff on chicken imports would fall to zero.
So, Tuyen, as well as other chicken breeders in Chuong My District, have begun raising free-range chicken, which other countries typically do not export.
Tuyen's neighbour, Le Xuan Phan, now has a bank debt of VND300 million, and no longer owns farmland.
"My business was very good, but after 2013 my family lost at least VND100 million from chicken sales. I raised six big batches of chicken each year," Phan said, adding that he would "never raise white-feathered chicken again".
Now, more than two-thirds of households in Thanh Binh Commune in Chuong My District have switched to raising free-range chicken.
Chicken farmers in the southern province of Dong Nai have also adopted the same solution.
Tran Van Hai, 44, who has 20 years of experience in breeding chicken in Cam My District's Song Ray Commune, now breeds 4,000 free-range chickens a year, after once raising 20,000 white-feathered chickens.
With chicken selling at low prices, Hai had to sell his land to clear a debt of billions of dong. With white-feathered chicken, he lost at least VND20 million for each batch of 2,000 chicken.
Most farmers living near his neighbours have also begun breeding free-range chicken and have given up raising the white-feathered kind.
"I believe that one day the prices for free-range chicken will also be cheap. I will then give up this business," Hai said.
Vu Tuan Lap, 48, a chicken farmer in Cam My District, who has raised chicken for 12 years, said he had become wealthy thanks to the job.
But now most of his family's income comes from tilling fields.
Four years ago, Lap, a farmer in Dong Nai Province, began breeding free-range chicken, and now has 15,000 heads.
"I get much more profit from raising free-range chicken, so I will continue. I think there are many more challenges ahead. If the situation becomes worse with free-range chicken, I will quit and invest in gardening, and raise fish and pigs," Lap said.
Besides chicken, Viet Nam's agricultural products are expected to face strong competition from other TPP-member countries when the trade agreement takes effect.
As a result, farmers like Tuyen, Phan and Lap will have to reduce their business scale or shift to other products.
Agricultural reform
Economic expert Le Dang Doanh has said that animal husbandry would face tough competition after the TPP.
Farmers raising chicken, pigs and cows will be hit, while more chicken and beef will be imported from Australia, the US, New Zealand and other countries.
Experts have recommended that the Government adopt a new growth model for agriculture, restructure production and boost application of science and technology.
This would be essential to maintain competitiveness, particularly for farm and livestock products, in the home market.
The Ministry of Industry and Trade has said that many Vietnamese meat products remain uncompetitive against imports.
However, the impact of the TPP on Viet Nam will be inconsiderable, according to the ministry, as most economies in the TPP do not compete directly with Viet Nam, except in agricultural products.
Virginia B. Foote, co-founder and president of the US–Viet Nam Trade Council, and president and CEO of Bay Global Strategy, said "This will be good for Viet Nam, because there will be more global standards which will help the economy, and help companies integrate into the global supply chain. TPP will help Viet Nam increase competitiveness."
"Twelve years from now, Viet Nam's tariffs will be cut between 0 and 1 per cent. Viet Nam will have to lower its tariffs, so Japan, the US and other countries will be able to export more cheaply to Viet Nam," she said.
"Viet Nam has said that pork and chicken are sensitive areas, so the country wants to go very slowly in opening the market to those," Foote added.
Viet Nam is a major agricultural exporter, ranking second globally in rice, coffee, cashew and garlic exports. But the prices it receives for its goods are low because of quality, according to Foote.
"So you have to have more investment in agricultural services. Instead of getting the lowest price for a huge amount, Viet Nam needs to increase the quality of rice. The services would help to do that," she said.
Viet Nam pays the second-highest volume of tariffs on its goods exported to the US, after China. With TPP, the total amount of tariffs will fall by hundreds of millions of US dollars, according to Foote.
