Structural Transformation in the Pig Sector in an Adjusting Vietnam Market: A Preliminary Investigation of Supply-side Changes

This abstract summarises this article which relies on available official statistics to outline salient features of Vietnam’s pig industry and changes in its structure occurring between 1996 and 2006. However, coverage of the latter aspect is limited by the availability of data. The focus of the article is on primary supplies of the quantity of pork. Between 1996 and 2006, Vietnam’s volume of production of pork more than doubled and its availability of pork per capita (from its own stock) approximately doubled. This was an outstanding achievement. In 2006, however, growth rates in pork supplies and its availability per capita slowed. Both increased pig numbers and rising pork yields contributed to the increased supply of pork in Vietnam between 1996 and 2006. When the whole of the period 1996-2006 is considered, increased pig numbers made the major contribution to Vietnam’s increased pork supplies. However, during this period increasing yields rose in relative importance as a contributor to expanding pork supplies and towards the end of the period, became the major influence on growth of pork supplies. In fact, increased yields were solely responsible for the continuing increase in pork supplies in 2006. This implies that the intensification of Vietnam’s pig sector has accelerated in recent years and that it has become more market dependent. Nevertheless, the latest available statistical evidence indicates that Vietnam’s pork production is still highly dependent on its household sector. In 2001, this sector accounted for over 90% of Vietnam’s pigs and over 90% of these were held by households having 10 pigs or fewer. The continuing importance of households as suppliers of pork in Vietnam is underlined further by the fact that there were only 10,811 registered pig farms in Vietnam in 2006. These specialized farms (which have higher average holdings of pigs than household) are located mainly in three regions (the Red River Delta, the South East and the Mekong River Delta). The Red River Delta accounts for just over half of these farms. Insufficient data were available to me to provide much evidence of changes in the scale of pig production by individual households and farms and to specify the relative growth of the household versus the farm component of pork supplies. However, some evidence emerged of a slight increase in scale. The regions of Vietnam contribute unevenly to the supply of its pork. In 2006, the largest volume of supply was from the Red River Delta (31.72%) and the Mekong Delta (19.57%) followed by the North East, South East and North Central Coast, each of which supplied about 12% of Vietnam’s pork. The remaining three regions were relatively minor contributors to Vietnam’s supply of pork. No major changes occurred in the relative suppliers of pork by Vietnam’s regions between 1996 and 2006, and all increased their supplies of pork. Pork yield in relation to pig stocks is found to vary substantially between Vietnam’s regions. For example, in 2006, the lowest yield of pork was in the North West (39.18 kgs) and the highest was in the Mekong River Delta (123.11 kgs), a difference of 83.93 kgs. Average pork yields in all the regions of Vietnam rose between 1996 and 2006 and a large increase was recorded in average pork yields in Vietnam. The absolute disparity in pork yields between Vietnam’s regions magnified. For instance, the difference between yields in the Mekong Delta and the North West (the regions with highest and lowest yields respectively) was 65.07 kgs in 1996 and rose to 83.93 kgs in 2006. When all regions are taken into account, the hypothesis is confirmed that absolute differences in yields between Vietnam’s regions have risen although a small decline occurred in relative differences in regional yields. Therefore, the extent of intensification of pork production and market dependence shows considerable regional variation in Vietnam and the variation has probably risen. Those regions surrounding or near Vietnam’s two major cities appear to be engaged in greatest intensification of pork production and have more market dependence than more distant regions. It should not, however, be automatically concluded that the economic efficiency of the pork production is greater in regions that have higher productivity than in those with lower productivity. This is because economic conditions are not the same in all regions, and there are environmental variations that affect productivity. In those regions having high productivity, pork producers seem to face higher economic risks because of their greater exposure to market volatility than in regions with lower productivity. Since 2006 Vietnam has begun to face the challenge of increased pork imports. This is a new source of competition for its pig industry. A few comments are provided on this subject.