April 2010 The good news is … Pig rearing is an important and viable livelihood and employment option for poor households in Vietnam. And the bad news is … Enhancing the competitiveness of smallholder pig producers in an adjusting Vietnam market Food safety is an increasing concern among consumers in Vietnam, putting at risk the viability of household pig production, with imposition of policies and regulations to address animal disease and other food safety risks. ILRI INTERNATIONAL LIVESTOCK RESEARCH INSTITUTE OBJECTIVE Identify pragmatic options about technology, institutional arrangements and policy interventions to improve the competitiveness of smallholder pig producers in an adjusting Vietnam market. Component 1: Consumer demand analysis Assessing demand for different attributes of pork as a driver for pig production, market potential and implications for smallholders’ involvement and competitiveness. Component 2: Producer analysis Examining current smallholder practices and performance to identify areas where smallholders can compete, what should change and policy, technology and institutional support for these changes to take place. Component 3: Market actor analysis Investigating market actors and linkages between supply and demand. Component 4: Pig sector modelling Modelling the linkages and dynamics in the pig sector and projecting pig sector development under various policy scenarios. Component 5: Policy advocacy and communication Facilitating dialogue among stakeholders about key messages from research findings to ultimately influence local and national livestock policies. MAIN FINDINGS Demand for pork Pork is the dominant type of meat in the Vietnamese diet and will probably remain so in the future, accounting for 30–40% of total meat expenditures of households surveyed (see Figure 1). Demand for pork and other meat will increase considerably with growing consumer affluence. Consumers, however, tend to diversify towards other meat products such as poultry, beef and seafood as income rises. There is a strong preference for fresh pork, which constitutes a natural market protection from imported pork in chilled, frozen or processed forms. Traditional open markets are still the main outlets for daily pork shopping (see Figure 2). Pig disease and chemical residues are the main concerns of meat consumers with respect to food safety. During outbreaks of diseases, consumers tend to reduce meat consumption and/or shift to modern outlets for meat purchase which are considered safer. Risk assessment of pork supply chain in Hanoi and peri-urban areas showed that pork sold in traditional markets is no less safer than that sold in supermarkets. Supply of pig: Smallholder perspective Household pig producers play an important role in supplying market demand, a situation that will likely continue in the next few decades. Currently, household pig production accounts for at least 70% of total pork supply in Vietnam. Pig rearing provides an important source of income and household employment in the absence of alternative livelihood options. Women make significant contribution to pig husbandry. Access to improved breeds is associated with scale. Improving breed quality that fits smallholder conditions is critical in improving pig quality and productivity. High and rising feed cost is a critical constraint to pig producers, with purchased feed as a proportion of total feed cost rising with scale (see Figure 3). Expanding options for own produced feeds, in terms of choices and quality, can potentially enhance smallholder competitiveness. Under current conditions, small household pig producers are still able to generate incomes from pig rearing by exploiting areas where they have cost advantages, given low labour opportunity cost and lower cost of own produced feed and crop by-products. (see Figure 4) Market access and linkages among market actors There are no clear differences in smallholders’ accessibility to input suppliers despite the fact that there is price differential across scale, probably due to transaction cost. Small household pig producers appear to be able to capture a reasonable share of end product prices, suggesting a reasonably competitive output market, although there are differences across scale, with share rising with scale. (see Figure 5). CONCLUSION AND IMPLICATIONS Market opportunities exist for household pig producers as the economy grows and consumer incomes rise. Consumer preference for fresh pork and for traditional market outlets favour small household producers’ participation in pork value chains and provide natural market protection against imported pork. Small household pig producers are competitive and able to generate income from pig production as long as they can exploit areas where they have cost advantages. For the next few decades, smallholder pig rearing will continue to play an important role in pork supply, poverty reduction and household employment generation, especially for women in Vietnam, as a transition strategy during the ongoing structural transformation of the rural sector. Policies to support access to better technologies (breed and feed) and services that are appropriate to household pig production systems would considerably enhance smallholders’ competitiveness and sustain their effective participation in Vietnam’s adjusting market for pork. Figure 5: Share of retail pork price captured by pig producers METHODOLOGY Consumer survey Urban households in Hanoi and Ho Chi Minh City and rural households in six provinces representing six agro-ecological zones in Vietnam Producer survey Household producers and non-producers of pigs in 6 provinces Market actor survey Market intermediaries in thre representative provinces in north, central and south Vietnam Pig sector partial equilibrium modelling Figure 1: Meat expenditure share Figure 2: Market outlets for pork Figure 3: Percentage share of own produced vs. purchased feed Figure 4: Price-cost and gross margin-cost ratios
Enhancing the competitiveness of smallholder pig producers in an adjusting Vietnam market
Feb 13, 2017
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April 2010
The good news is …
Pig rearing is an important and viable livelihood and employment option for poor households in Vietnam.
And the bad news is …
Enhancing the competitiveness of smallholder pig producers in an adjusting Vietnam market
Food safety is an increasing concern among consumers in Vietnam, putting at risk the viability of household pig production, with imposition of policies and regulations to address animal disease and other food safety risks.
ILRI INTERNATIONAL LIVESTOCK RESEARCH INSTITUTE
OBJECTIVE Identify pragmatic options about technology, institutional arrangements and policy interventions to improve the competitiveness of smallholder
pig producers in an adjusting Vietnam market.
Component 1: Consumer demand analysis Assessing demand for different attributes of pork as a driver for pig production, market potential and implications for smallholders’ involvement and competitiveness. Component 2: Producer analysis Examining current smallholder practices and performance to identify areas where smallholders can compete, what should change and policy, technology and institutional support for these changes to take place. Component 3: Market actor analysis Investigating market actors and linkages between supply and demand. Component 4: Pig sector modelling Modelling the linkages and dynamics in the pig sector and projecting pig sector development under various policy scenarios. Component 5: Policy advocacy and communication Facilitating dialogue among stakeholders about key messages from research findings to ultimately influence local and national livestock policies.
MAIN FINDINGS
Demand for pork
Pork is the dominant type of meat in the Vietnamese diet and will probably remain so in the future, accounting for 30–40% of total meat expenditures of households surveyed (see Figure 1).
Demand for pork and other meat will increase considerably with growing consumer affluence. Consumers, however, tend to diversify towards other meat products such as poultry, beef and seafood as income rises.
There is a strong preference for fresh pork, which constitutes a natural market protection from imported pork in chilled, frozen or processed forms.
Traditional open markets are still the main outlets for daily pork shopping (see Figure 2).
Pig disease and chemical residues are the main concerns of meat consumers with respect to food safety. During outbreaks of diseases, consumers tend to reduce meat consumption and/or shift to modern outlets for meat purchase which are considered safer.
Risk assessment of pork supply chain in Hanoi and peri-urban areas showed that pork sold in traditional markets is no less safer than that sold in supermarkets.
Supply of pig: Smallholder perspective
Household pig producers play an important role in supplying market demand, a situation that will likely continue in the next few decades. Currently, household pig production accounts for at least 70% of total pork supply in Vietnam.
Pig rearing provides an important source of income and household employment in the absence of alternative livelihood options. Women make significant contribution to pig husbandry.
Access to improved breeds is associated with scale. Improving breed quality that fits smallholder conditions is critical in improving pig quality and productivity.
High and rising feed cost is a critical constraint to pig producers, with purchased feed as a proportion of total feed cost rising with scale (see Figure 3). Expanding options for own produced feeds, in terms of choices and quality, can potentially enhance smallholder competitiveness.
Under current conditions, small household pig producers are still able to generate incomes from pig rearing by exploiting areas where they have cost advantages, given low labour opportunity cost and lower cost of own produced feed and crop by-products. (see Figure 4)
Market access and linkages among market actors There are no clear differences in smallholders’ accessibility to input suppliers despite the fact that there is price differential across scale, probably due to transaction cost.
Small household pig producers appear to be able to capture a reasonable share of end product prices, suggesting a reasonably competitive output market, although there are differences across scale, with share rising with scale. (see Figure 5).
CONCLUSION AND IMPLICATIONS Market opportunities exist for household pig producers as the economy grows and consumer incomes rise. Consumer preference for fresh pork and for traditional market outlets favour small household producers’ participation in pork value chains and provide natural market protection against imported pork.
Small household pig producers are competitive and able to generate income from pig production as long as they can exploit areas where they have cost advantages. For the next few decades, smallholder pig rearing will continue to play an important role in pork supply, poverty reduction and household employment generation, especially for women in Vietnam, as a transition strategy during the ongoing structural transformation of the rural sector.
Policies to support access to better technologies (breed and feed) and services that are appropriate to household pig production systems would considerably enhance smallholders’ competitiveness and sustain their effective participation in Vietnam’s adjusting market for pork. Figure 5: Share of retail pork price captured by pig producers
METHODOLOGY Consumer survey Urban households in Hanoi and Ho Chi Minh City
and rural households in six provinces representing six agro-ecological zones in Vietnam
Producer survey Household producers and non-producers of pigs in 6 provinces
Market actor survey Market intermediaries in thre representative provinces in north, central and south Vietnam
Pig sector partial equilibrium modelling
Figure 1: Meat expenditure share
Figure 2: Market outlets for pork
Figure 3: Percentage share of own produced vs. purchased feed
Figure 4: Price-cost and gross margin-cost ratios
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