News 235 views last update:6 Aug 2012

Losses for Vietnamese feed producers

Animal feed producers in Vietnam are halting production and facing losses due to faulty forecasts indicating prices of raw materials will continue to increase after the 2008 summer.

Feed producers, especially raw material traders, imported large volumes of soybean-bean based oil cake from July to September at the high price of US$550 per tonne. Mass purchases were made under the fear that prices would keep increasing. However, the price fell to $360 per tonne in October, and now hovers between $280 and $300 per tonne.

Feed producers cannot recoup their investment in the raw materials, and the stock-piled oil cake is estimated to be worth about $16 million and has a volume of between 20,000-30,000 tonnes, according to the Vietnam Animal Feed Association. Around 40 animal feed producers have stopped production and about 20-30 per cent have reduced production to avoid losses caused by decreasing prices of raw material in international markets, said Le Ba Lich, chairman of the association. Other producers are accepting losses to retain their consumers.

Oil-cake made from soybeans is not the only raw material to see prices decline. The price of corn has been cut almost by half from $305 to $164 per tonne. Fish meal has also decreased from $1,100 to $764 per tonne. It takes about one to two months for animal feed to be shipped to Viet Nam, because it is imported from the US, India and Peru. So, the feed was imported at the high prices of this summer, and the importers face loss, Lich said. This is a recurring problem, because most companies focus solely on export prices and do not pay enough attention to import prices, Lich said.

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