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Farmers give up own businesses, work for int’l firms

Farmers give up own businesses, work for int’l firms

Wednesday, November 14, 2012, 10:58 GMT+7

A number of local animal farmers have had to give up building their own business to work as ‘outsourcers’ for foreign companies due to the heavy reliance on the latter in terms of animal breed and feed. The number of ‘independent chicken raisers,’ those that organize the farm and sell chicken on their own, in the Song Ray Commune of the southern province of Dong Nai has increasingly declined over the years due to high business risks against poor effectiveness. “Although we are called independent farmers, we in fact have to rely on the foreign companies,” said Nguyen Thi Hoa, who owns a 3,000 chicken farm. “The foreign firms sell chicken breeds only on the condition that we also buy the feed from them,” she explained. Many farmers have thus been driven into a tough spot as breed prices can fluctuate from VND5,000 to VND20,000 an animal. “When the chickens die from an epidemic, the companies claim it’s our fault and refuse to compensate,” she added. The huge risks have sent many chicken farm owners in the southern provinces to get rid of their independent business, and switch to work as outsourcers for foreign firms. “Five years ago there was a farm with 50,000 chickens, but the owner still had to switch to work for a Thai company due to losses,” said Tran Viet Son, another chicken farmer in Dong Nai.Foreign dominance The white chicken breed market remains dominated by foreign companies, which supply almost 100 percent of the breed for the domestic market, according to the Husbandry Agency under the Ministry of Agriculture and Rural Development. The three most common names are Japfa (Indonesia), CP (Thailand), and Emivest (Malaysia), which can sell as many as 6 million chickens to farmers at peak business time. CP, which arrived in Vietnam in 1993, now dominates the meat and egg market. With an outsourcing network of 20,000 households countrywide, the company accounts for 50 percent of the chicken egg market, 30 percent of the chicken meat market, and 7 percent of the pork market. The foreign players also dominate the animal feed market, according to the Husbandry Agency. The country is currently home to 233 animal feed manufacturing plants, 58, or 24.9 percent, of which are run by foreign companies, accounting for as much as 60 percent of the total production.Struggling on their own Local husbandry farmers attribute their hardship to the exorbitant lending interest rate, and the lack of government support. “Foreign firms have huge capital that enables them to grant high commissions for the dealers, and allow late payment for customers,” said Nguyen Xuan Thanh, who had to close his animal feed manufacturing plant last year after eight years of operating at a loss. “As my small company could not do so, the customers all switched to the foreign rivals.” Meanwhile, Pham Van Tuan, who runs a 100,000 chicken farm in Dong Nai, said he has never been able to access government incentives. “We have to fight against the difficulties on our own,” he said. “And now we are no longer able to compete with the foreign firms.”

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