The agri-giant has expanded its feed capacity in Vietnam to 1.4 million tons with the extension, announced last week, of a feed mill in the Binh Dinh province.
The facility, in the main, serves the swine and poultry sectors.
Speaking to FeedNavigator.com this morning, Jorge Becerra, MD Cargill Feed & Nutrition Vietnam, said the company's confidence in the potential of the Vietnamese livestock sector comes from nearly 20 years’ experience of supplying feed in that country.
“We got here as soon as relations between the US and Vietnam were normalized,” he said.
Vietnam’s animal feed industry - while relatively young compared to other countries in South East Asia - is also one of the most promising markets in the region, said the agri-giant.
“GDP (gross domestic product) growth is strong and there is a very young population base so we see continued demand for animal protein,” said Becerra.
Meat consumption in the country almost doubled from 16.7 kg per capita in 2001 to 32.8 kg per capita in 2011, and is projected to hit 35 kg per capita by 2020.
But the top two proteins of choice are chicken and fish.
Dairy viability questioned
In terms of the dairy sector, which is very much at the embryonic stage, Becerra said the agri-giant is still evaluating its attractiveness before market entry:
“It takes a long time to develop the meal supply stage in a country this size. So it really has to make strong business sense for Cargill to invest in a sector and we still are undecided about the dairy side of things in Vietnam,” said the MD.
Becerra said providing consistency on the feed side is the challenge in Vietnam. “There are five million farming households in the country, all with diverse ways of housing and treating livestock and managing farms. Thus we have to devise compound feed products that can perform evenly across all types of husbandry production systems.”
Cargill's expanded feed facility in Binh Dinh, which has seen annual capacity go from 60,000 tons to 240,000 tons, has warehousing and distribution infrastructure in place to enable effective delivery of feed in the region, he added.
The company estimates it has trained over 1.5 million Vietnamese producers in animal health and nutrition awareness over the past 17 years.
University delivered farm extension services, typical in the US, are practically non-existent in Vietnam, and Cargill is trying to ape those kinds of programs in its nutrition courses in the field, said Becerra.
“We have developed workshops that are sponsored by dealers in the various regions. Producers learn about best practice models at a swine producer, for example, that has had demonstrably high productivity using our feed products.”
On the asset trail
Cargill has grown both organically and through acquisition in Vietnam over the past few years. “Both options are still on the table in terms of continued expansion in this market,” said Becerra.
November 2011 saw the agri-giant purchase a shrimp feed mill located south of Ho Chi Minh City from Higashimaru Vietnam.
The acquisition represented Cargill’s first investment in Vietnam’s shrimp feed industry.
The aquaculture sector in Vietnam is very much at the early stage, cautions Becerra and he said there is much to do in terms of improving husbandry techniques and ensuring its credibility on the global export market.
Japanese importers recently cited the excessively high levels of oxytetracycline (OTC) in shrimp shipments from Vietnam as the reason they were pulling out of the Vietnamese shrimp market.
And the Vietnam association of seafood exporters and producers (VASEP) subsequently warned the industry that unless local shrimp businesses strengthen self-regulation of OTC they will fail to penetrate the Japanese market.