The state of smallholder-based pig industry in Vietnam: Insights from ILRI’s recent research

The state of smallholder-based pig industry in Vietnam: insights from ILRI’s recent research

Ma. Lucila A. Lapar

Pathways to Impact: Pig Value Chain Development Potential in Vietnam

Vinh City, Nghe An, Vietnam

27-28 Sept. 2013

The challenge

Can research accelerate livestock and aquaculture

development to benefit the poor?

o Mixed record to date

o Systematic under-investment

o Also related to our research-for-development

model?

Focus of new CGIAR Research Program

o Increase productivity of small-scale systems

o ‘by the poor’ poverty reduction

o ‘for the poor’ food security

Correcting perceptions

1. Animal-source foods are a luxury and bad for

health, so should not promote

2. Small-scale production and marketing systems are

disappearing; sector is quickly industrializing

3. Livestock and aquaculture development will have

negative environmental impacts

Our underlying hypothesis

Livestock and Blue Revolutions: accelerating

demand in developing countries as urbanization

and incomes rise

Industrial systems will provide a large part of the

needed increase in supply to cities and the better-

off in some places

But the poor will often continue to rely on small-

scale production and marketing systems

If able to respond, they could contribute, both

increasing supplies and reducing poverty

…and better manage the transition for

many smallholder households

Goal

• To sustainably increase the productivity of

– small-scale livestock and fish systems to increase the availability and affordability of animal-source foods for poor consumers and,

– in doing so, reduce poverty through greater participation by the poor along the whole value chains for animal-source foods.

Inputs & Services Production Processing Marketing Consumers

Past research has focused specific aspects

of given value chains, commodities and country.


...in Country A



...in Country D

...in Country C

...in Country B

Basic Idea: Solution-driven R4D to achieve impact

Traditional approach was piecemeal

Strategic CRP 3.7 Cross-cutting Platforms

• Technology Generation

• Market Innovation

• Targeting & Impact


R4D integrated to transform selected value chains

In targeted commodities and countries.

Value chain development team + research partners

GLOBAL RESEARCH

PUBLIC GOODS

INTERVENTIONS TO

SCALE OUT REGIONALLY

#1: Addressing the whole value chain

Major intervention with development partners

Approach: Solution-driven R4D to achieve impact

CR

P3

.7 P

rep

are

inte

rven

tio

n

Development Partners $90m

Performance Target:

double production in

x poor households Scaling out

Knowledge Partners $10m

Time 10 years

CRP3.7 Strategic Research $10m

#2: Working toward interventions for impact at scale



#3: Focus on 9 target value chains

Technology

development:

1 Health

2 Genetics

3 Feeds


Commodity X in Country Y

4 Value chain development

5 Targeting: Foresight, prioritization, environmental impacts

6 Cross-cutting: gender, impact, M&E, comms, capacity

building

Structure: Six integrated components

Delivering the Program

Context of a changing Asia

• Economies are growing rapidly.

• Incomes are rising in at least a proportion of the population.

• Dietary patterns are changing.

• Climate change and other environmental challenges are becoming front and center of development issues that need to be tackled.

• All these have implications for the livestock sector and for the poor who depend on livestock.

Key drivers of changing livestock landscape in Asia

• The rural-urban divide.

• Rapidly growing demand and rising prices for livestock products.

• A food retail revolution, supply chain adjustment, and importance of traditional local markets

• Trade liberalization.

• Endemic, emerging, and re-emerging diseases,

• Environmental concerns.

• Changing production systems.

• Evolving policy needs.

• Increased donor interest in agriculture.

• Changing roles of public and private sector.

Some highlights from recent ILRI studies in Vietnam

Pork value chain

Employment generation in household

pig production

Smallholder pig production generates

employment estimated at about 4 million full-

time labor along the pork supply chain,

valued at about $3.3 billion or approximately

5.5% of Vietnam’s GDP in 2007.

Household labor constitutes the main labor

inputs in household pig production.

Women labor accounts for at least half of

total labor days in household pig production.

Meat expenditures

Pork accounts for 40% of meat expenditures by

Vietnamese household consumers.

0

5

10

15

20

25

30

35

40

45

Current 10% 20% 50% 100%

Fresh pork

Fish

Poultry

Beef

Seafood

Percentage of

consumer expenditure on meat

Projected percentage increase in consumer income

Meat demand analysis: Implications for Vietnam

• As income rises: – Pork and other meat consumption would substantially increase - opportunities for livestock production, including smallholder production.

– Fresh pork remains important, however, consumers tend to diversify their diet towards other meat such as seafood, poultry, beef and eggs. -- livestock production must diversify to cater to more diverse demand.

• Price is still a key factor in meat purchase decision and thus in meat market competition - reducing costs (and, subsequently, price) is key for livestock development.

• Increase in price of one meat often reduces its consumption and consumption of other meat due to income effect. Cost reduction would enhance competitiveness and increase meat consumption.

• Different types of meat are weakly substitutable, given income effect - livestock production diversification

Food safety and risk assessment

studies

Nearly half the consumers (43%) had

concerns about pork.

Most common was fear of disease from pork,

followed by fear of chemical contamination,

un-fresh pork, and bad smell.

Only 1% expressed nutritional concerns.

Average ranking of major concerns

about meat safety

HN HCMC All

Diseases of livestock 1.2 1.1 1.2

Hormone used in animals 2.8 3.0 2.9

Antibiotic use 3.0 2.9 3.0

Hygiene in market outlet (including

meat seller) 3.8 2.6 3.2

Hygiene in slaughtering 3.9 2.8 3.4

Concentrate feeding of animals 3.7 4.1 3.8

Other 3.5 3.1 3.2

Animal diseases tops the list of major concerns of

urban consumers about meat safety.

Consumer response to pig disease

outbreak

•About half of consumers either stop or reduce pork

consumption; about one-third substitute other meats.

•More consumers in HCMC than in Hanoi shift to

modern outlets for pork.

52%

6%

35%

7%

Hanoi Stopped/reducedconsumption

Shift to modernoutlets

Substitute othermeats

Other

50%

15%

29%

6%

HCMC

Stopped/reducedconsumption

Shift to modernoutlets

Substitute othermeats

Other

Preferred market outlets for fresh pork

0%

20%

40%

60%

80%

100%

Hanoi HCMC Overall

Modern retail outlets Permanent open marketTraditional temporary outlet

Traditional market outlets remain the most

preferred purchase outlets for fresh pork

by Vietnamese consumers.

Types of market outlets for fresh

pork in Vietnam

Temporary Neighborhood Market


pork in Vietnam

Permanent Open Market


pork in Vietnam

Modern Retail Outlets

Implications from market studies Market outlet choice by consumers of fresh pork in

urban cities in Vietnam is conditioned by factors

related to their level of affluence, time budgets

(female), concerns about food safety and hygiene,

proximity to market outlets, and geographical location.

Use of modern retail outlets is increasingly observed

among urban consumers who are younger, more

affluent and hence can afford to invest in cooling

facilities for storing fresh food, are more concerned

about food safety and hygiene and opted to live

farther away from city centers.

Implications from market studies

There is still a substantial group of urban consumers

who are dependent on traditional market outlets

ranging from temporary neighborhood outlets to

permanent open markets and who value

accessibility and trust in the supplier that has been

developed over time from repeated transactions.

These consumers belong to lower income groups

who generally have limited options for food supply,

hence, making it more important that they maintain

access to their preferred outlets.

Implications from market studies The strong preference of Vietnamese consumers to

purchase fresh pork at non-modern retail outlets

provides a degree of market protection to

smallholder pig producers from imports of pork.

The relevant policy debate is how to ensure that

traditional market outlets remain viable and up to par

with the competition posed by modern retail outlets,

since these outlets are key to smallholder producers’

inclusion in the restructuring process going on in the

food retail sector, while keeping fresh meat easily

accessible to low income urban consumers.

Pig genotypes studies Context

• Some indigenous pig species have disappeared and some others are at high risk (research with NIAS collaborators).

• Some of these breeds are still used by many ethnic groups.

• Niche market for some pork meat with desired taste.

Recommendation

• Breed conservation (the role & responsibility of NIAS)

• Exploit & further study the potential of some of these breeds (collaborative research with NIAS) and explore potential for niche markets for pork meat with desired taste

Some of these breeds are useful as maternal sows for small-scale piglet production.

Pig genotypes studies Context and proposed model for piloting (Mong Cai sow +

western male for piglet production)

• In many rural & remote districts of northern & central Vietnam, there is insufficient local production of piglets and fatteners.

• As a consequence, rural pig producers buy piglets being transported from lowland or coastal areas. Outcome: disease spread & low fattening productivity.

• “In these systems, more meat from pig production would be difficult to market” (local stakeholders).

• Pig production can instead be targeted to produce more piglets. Outcome: same number of fatteners produced / year but increased number of locally born piglets / year, decreased number of imported piglets / year, more piglets sold by local producers.

Increasing the proportion of own-produced feed to

total feed use can decrease total feed cost.

This provides cost advantage to small

producers that use higher proportion of own-

produced feed.

0%

20%

40%

60%

80%

100%

Small Medium Large Small Medium Large Small Medium Large

Farrow to Wean Farrow to Finish Grow to Finish

Structure of Feed Cost by Production System and Scale

Purchased feed Own produced feed

Feed-use efficiency (in maize

equivalent)

0

1

2

3

4

5

6

Smal

l

Me

diu

m

Larg

e

Ove

rall

Smal

l

Me

diu

m

Larg

e

Ove

rall

Smal

l

Me

diu

m

Larg

e

ove

rall

Farrow to wean Farrow to finish Grow to finish

Kg maize equivalent/kg liveweight gain

Purchased feed Own produced feed

Costs, efficiency, competitiveness

• Own-produced feed holds significant share

of pig feed in household pig production,

providing low-cost feeding strategies

• Use of industrial feed associated with scale

of production

• Use of crossbreeds with high % of local

breeds (e.g., Mong Cai) suitable to

smallholder conditions

• Adoption of improved breeds associated

with scale of production, wealth of

producers

Costs, efficiency, competitiveness

• Feed conversion ratio (FCR) estimates

using maize equivalent (ME) suggest no

significant differences in feed efficiency

across scale

• There are no significant differences in

cost/unit output across scales

• While not significant, differences in unit

cost is highly sensitive to feed cost (65-

90% of total production cost)

• No clear evidence of economies of scale

found in household pig production in this

study.

Implications on production efficiency Smallholder pig producers are competitive in producing pork

that meet the demand requirements of Vietnam’s fresh meat

market.

Household pig producers are able to generate incomes from

pig raising by exploiting areas where they have cost

advantage.

Expanding options for own-produced feeds, in terms of

choices and quality, can enhance their competitiveness,

particularly in areas that are far from commercial feed

sources, and complemented with improved access to

extension.

Limitations in available land and household labor will be

constraints to scaling up by household pig producers.

Implications from technology

adoption studies Pig raising will likely remain tied to agricultural

crop production by households that have

available human and financial resources and

land – an issue for rural development.

Opportunities for non-farm employment and

other non-farm income sources will likely

compete for household labor available for pig

raising – an issue for scaling up.


adoption studies Market access (input and outputs) is an

important stimulus for derived demand for

improved breed and feed (increasing demand

for pork).

Poor, small producers may not likely benefit

from productivity gains from adoption of

improved technologies – an issue of access

and capacity to adopt.


adoption studies Public sector policy has a role to play in

improving access and capacity of the poor.

Specific types of production systems (e.g.,

local breed piglet production) can provide pro-

poor niche market opportunities. Here, public

sector policy can facilitate access to

supporting services to reduce production and

market risk (e.g. animal health services) and

improving market access.

Proposed actions from value chain studies

Invest in upgrading slaughterhouse and market facilities to

improve hygiene and food safety standards in pork.

Undertake a comprehensive pork risk assessment to inform

policy, improve consumer safety, and safeguard

participation of smallholders in the pork supply chain.

Pilot test strategies for collective action and other forms of

organization that will reduce transaction costs of input

procurement and output marketing. Need supporting

policies to foster an enabling environment for their

propagation.

Set up pilot schemes for testing the viability of a quality

assurance system that is feasible in smallholder context

and its cost-effectiveness in delivering safe pork.

CGIAR is a global partnership that unites organizations engaged in research for a food secure future. The CGIAR Research Program on Livestock and Fish aims to increase the productivity of small-scale livestock and fish systems in sustainable ways, making meat, milk and fish more available and affordable across the developing world.

CGIAR Research Program on Livestock and Fish

livestockfish.cgiar.org

http://livestockfish.cgiar.org/

The state of smallholder-based pig industry in Vietnam: Insights from ILRI’s recent research

Technology

production systems

smallscale production

poor consumers

double production

marketing systems

value chain development

vietnam pork value chain

development partners