Farmers feeling the pinch of current supply chain obstacles

Without managing the ongoing pandemic soon, farmers are set to continue making losses, while small- and medium-sized feed facilities may even go bankrupt and supply chains will be broken with the imbalance of supply and demand.

Even the age of chickens is becoming a factor when it comes to farmers trying to sell and maintain their operations. Photo: Le Toan

Farmers feeling the pinch of current supply chain obstacles

In recent weeks, Nguyen Van Tien’s family in the northern province of Phu Tho’s Thanh Ba district has been suffering business headaches. The price of pigs has continuously dropped and no merchants are arriving to buy his 500 pigs because of social distancing in numerous localities.

Meanwhile, the price of animal feed has risen by around VND60,000 ($2.60) per 25 kg package.

“Since July, the price of live hogs has dropped by around VND25,000 ($1.10) per kg. The more times we feed them, the more losses we accrue because of the rising costs of feed, electricity, water, and general care,” said Tien.

This is a common situation for farmers up and down the country. Le Tien Dung, sales manager of Dabaco Phu Tho Co., Ltd., said that due to the pandemic restrictions, the number of cattle and poultry slaughtered and consumed has significantly reduced on a daily basis.

“Currently, we put into slaughter only half as many pigs for Hanoi or other provinces than before the pandemic. Besides this, due to the recent high efficiency in disease prevention in livestock, the strong re-herding has caused abundant supply and reduces the price of livestock products,” said Dung.

The pandemic is hitting all areas and causing a lot of trouble for society as a whole, even in food and breeding supply chains. The Ministry of Agriculture and Rural Development (MARD) has provided some forecasts that the supply chains of husbandry may be broken up entirely, and numerous firms and farmers will go bankrupt.

“This could certainly occur,” said Nguyen Van Trong, deputy director general of the MARD’s Department of Livestock Production. “The coronavirus pandemic has broken the supply chains, so the costs of some input materials for production have soared remarkably, especially the price of animal feed materials.”

Meanwhile, factories for production, slaughter, and processing in key areas like the southern province of Dong Nai are suffering from coronavirus cases, causing a shortage of employees. “The supply chains of inputs and distribution of outputs have been disrupted due to the closure of numerous wholesale markets, wet markets, and food stores in big cities and provinces in both the south and north,” Trong explained.

Moreover, growing inventories are also pushing the industry into even more difficulties this year. “Many live hogs and chickens are actually too old to sell, so farmers cannot continue re-herding as their inventories are already huge, with tens of millions of white-feathered chickens in the southern provinces only,” added the deputy director-general.

Since early August, the price of live hogs has been on a continuously decreasing trend. The ongoing pandemic has cut down consumption while supplies are recovering somewhat after the African swine fever epidemic was controlled.

At present, the price of live hogs is at its cheapest since the middle of 2019. The price of chickens meanwhile in southern provinces is also dropping to as low as VND6,000 (26 US cents) per kg over the previous month, while the total cost is nearly VND30,000 ($1.30) per kg.

A report from provincial departments of agricultural and rural developments in Dong Nai, Nghe An, and Phu Tho said that some major companies like C.P. Vietnam, Japfa, Dabaco, and GreenFeed have sold 5-10 per cent of the total number of white-feathered chickens; 50-70 per cent of colour-feathered chickens, and 70-80 per cent of pigs.

Explaining the drop in white-feathered chickens, especially in southern provinces, Bui Van Hoang, an expert at Indonesia-based Japfa Comfeed Vietnam, told VIR that these chickens are usually used for huge kitchens in factories, schools, and fast food restaurants, which have ceased operations over the past two months.

“They cannot shrink the number of chickens so quickly to fit with the current situation here. However, this is affecting small-sized farms only which are capturing 15 per cent of the white-feathered chickens’ supply resource. Meanwhile in big husbandry businesses, prices of chicken breeds, animal feed, and selling prices were fixed in early 2021 with not much change in the year,” said Hoang.

In the opinion of Nguyen Nhu So, chairman of Dabaco Group, some livestock businesses can cope with low selling prices for a time because they can manage the whole supply chain and save production costs as much as possible, while their capital is also enough to deal with the challenges.

In addition to problems in production and consumption across the industry, circulation is adding a lot of costs and congested goods. Some localities have not yet agreed with regulations on goods circulation. Some of them asked for a PCR test instead of a quick coronavirus test for drivers and those results must be confirmed within 24-48 hours.

Moreover, factories cannot operate at full capacity because of the stay-at-work policy, and some employees have quit and travelled back to their hometowns.

To remove difficulties for the livestock industry, Trong of the Department of Livestock Production suggested that the relevant authorities connect and support cooperatives, farms, and livestock companies to expand markets, quickly bringing their products directly through the existing distribution network.

“Distribution channels of livestock products should be diversified and e-commerce platforms should be utilised to offset the closure of some traditional retail channels. We should mobilise some more mobile vending vehicles to boost consumption,” Trong said.

He emphasised that farmers’ efforts would be wasted without circulation and distribution. “They will stop restocking and the supply will be severely affected. Therefore, it is necessary to help them find output and increase the value of agricultural products and food,” Trong added.

Against these adversities, Nguyen Thanh Son, chairman of the Vietnam Poultry Association (VIPA) said that the industry is facing a risk of supply shortage, which is likely to happen in the remainder of the year, so the country should build a national strategy on stockpilling pork and other foods.

“Numerous countries have been reserving essential food for 5-6 months to deal with the scenarios of the pandemic, natural disasters, and climate change. This strategy needs the leadership of the government, and contribution of other social sectors. Businesses will also agree to help,” Son said.

Previously, the MARD and the VIPA sent a document to the government asking for a decrease of 50 per cent of import tax on animal feed materials, as well as considering price stabilisation measures to remove some risks for farmers.