Natural Protection from International Competition in the Livestock Industry: Analysis, Examples and Vietnam's Pork Market as a Case
In some countries, local agricultural products (particularly livestock products) are shielded from international competition by ‘natural’ factors influencing the purchase of products. These factors include strong local tastes (or preferences) that favour the local product and the absence (or relative absence) of complementary retail outlets or home appliances suitable for storing and preparing potential imported substitutes. The desire for fresh meat rather than chilled or frozen meat, the absence or limited accessibility of supermarket outlets and limited refrigeration possibilities in homes can limit imports into developed countries of meat supplied by developed countries. From consumer’s perspectives these fresh or raw products are significantly different products from their frozen or processed alternatives, and so face different demand parameters. This product differentiation is nearly always ignored in trade models, which instead assume homogenous commodities. Where local fresh products make up over 90% of sales, such as pork in Vietnam, this unrecognized product differentiation can undermine model results, since raw or fresh products are generally untradeable. Examples of such limitations on trade are given for several developing countries, including some African nations. Religious consideration can also be a factor restricting international trade in livestock products and sometimes, government regulations on food imports reflect the tastes of local buyers, for example their demands for food purity and so on. Some simple economic analysis is provided of how local producers of livestock benefit from natural protection. Drawing on the results of recent research completed in Vietnam and other sources, factors that provide natural protection to Vietnam’s pork industry are identified, and particular attention is given to their implications for small-scale household pig producers compared to larger-scale commercial pig producers in Vietnam. It is noted that the current protection of Vietnam’s pig industry is not entirely based on preference for pork from local breeds of pigs but arises for other reasons. Some consideration is given to whether the natural protection of Vietnam’s pig industry will change in the future.
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