Three weeks ago, the Livestock Production Department, under the Ministry of Agriculture and Rural Development (MARD), signed a document asking China’s Tongwei Vietnam to provide more documents so that the firm will be allowed to import Vietnam Lecithin, an important ingredient used for making animal feeds.
Tongwei currently has two animal feed facilities, including four production lines for producing fish feed and five production lines for making shrimp feed. In its strategy in Vietnam, Tongwei is expected to expand the number of its facilities and distribution networks in the near future.
“In addition to Tongwei, many other foreign firms have also registered to import new feed materials into Vietnam during the first six months of the year,” said a source from the department’s Secretariat. “The rate of foreign firms registering to import new feed materials has increased by about 20% in this year’s first half, as compared to about 10% in the corresponding period last year. Many firms are also planning to open new feed mills.”
Over three weeks ago, Australia-Vietnam joint venture Mavin Group inaugurated its fifth feed mill in Vietnam, worth US$30 million, in the southern province of Dong Thap. This is also the biggest feed mill in the Mekong Delta region, annually producing 400,000 tonnes of livestock feed and aqua feed.
The mill is equipped with new technology from Germany’s Bühler Group, including robotics and state-of-the-art equipment.
Chairman of Mavin Group, David Whitehead, said that Mavin will continue to invest in other projects in Dong Thap, with the total investment in the province expected to be over US$70.5 million.
Mavin has been granted an investment certificate to develop a nucleus pig breeding farm of 5,000 sows, annually producing 400,000 piglets. The firm will also develop pork meat production for export and engage in duck farming.
According to the MARD, since early this year, Vietnam’s agricultural sector has lured special attention from many foreign firms who are expanding their business and investment in the sector, which is now seeing limited foreign direct investment (FDI) - accounting for only 1% of the country’s total FDI.
Currently agricultural FDI in Vietnam is mostly found in the production of animal feeds and farm produce. Several Japanese projects are engaged in cultivating flowers and vegetables in the Central Highlands region. The total number of FDI agricultural projects is roughly 500, registered at US$3.44 billion.
For example, at present the US-backed Cargill company is building a US$30 million feed mill in the southern province of Binh Duong and is also planning to build another one in the northern Bac Ninh province.
Two months ago, Cargill opened its new 80,000 tonne storage facility in the southern province of Ba Ria-Vung Tau, with the aim of strengthening its grains and oilseeds distribution in Vietnam.
“Vietnam is a critical aquaculture market for Cargill. Cargill continues to be an active investor in Vietnam by further expanding our workforce, manufacturing capabilities, distribution network and product line diversification,” Jorge Becerra, managing director of Cargill Feed and Nutrition Vietnam, told Nhan dan Online.
In another case, South Korea’s CJ Vina Agri Company recently began operation of its sixth animal feed factory in the south-central province of Binh Dinh. The 4.1 hectare factory has a capacity of 150.000 tonnes per year and total investment capital of nearly US$30 million.
In the sugar sector, Indian sugar producer KCP Vietnam Industries Ltd., has invested US$103 million in Phu Yen province, with modern technologies used in dozens of its plants there.
“KCP will continue to build future projects, including a 60,000-litre-per-day distillery unit to produce fuel ethanol, an expansion of our biomass power project to 60 megawatts and an expansion of our Dong Xuan sugar unit to 6,000 tonnes of sugar cane per day. The total additional investment will be US$100 million,” said the firm’s general director K.V.S.R Subbaiah.
At present, about 60 foreign firms own over 70 animal feed mills, accounting for 65% of Vietnam’s animal feed market share.
According to StoxPlus, an associate company of Nikkei Inc. and QUICK Corp., 16.8 million tonnes of industrial animal feed were consumed in Vietnam in 2016, thanks to the development of the livestock sector.
The consumption of industrial animal feed is expected to be at 17 million tonnes in 2020. There are three main sources of animal feed demand in Vietnam including pig, poultry and cattle (beef/buffalo/sheep/goat). All segments pose potential opportunities for animal feed providers. Each segment poses a particular formula of animal feed for animal feed providers to fulfill the market potential.
IT solutions on the rise
Currently, Cargill is also expanding its investment and business portfolio in Vietnam via IT solutions. For example, shrimp farmers can tap into the first cloud-based solution in the aquaculture industry thanks to Cargill’s iQShrimp. The predictive software uses machine learning and sensors to give them real-time visibility into their farm operations. iQShrimp is a first-generation offering driven by iQuatic™, Cargill’s digital platform for aquaculture.
“Shrimp farming has inherent weather and disease risks,” said Neil Wendover, Cargill’s digital insights product line director for aquaculture. “By working directly with shrimp farmers, our data scientists can use machine learning to deliver insights in order to inform decisions that directly impact the growth and economics of their operations.”
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IT solutions are helping local shrimp production to develop sustainably
Many other foreign firms also want to apply their IT solutions in Vietnam’s agricultural sector. They come from many foreign markets, such as Gintel from Taiwan, GAGO Ltd from China, Enzootic Ltd from Hong Kong and Israel, Fluence corporation-NIROBOX from Israel, SmartFarm Co Ltd., and Verifik8/FairAgora Asia from Thailand), Pycno Industries from Australia, and Intello Labs Pvt. Ltd. from India.
“They offer a wide range of platforms, in the format of apps, software, and cell transplantation technology,” said agricultural expert Pham Hoang Ngan, and they are helping some of these firms to enter Vietnam.
“In Vietnam, local agricultural firms tend to use high-tech solutions in their production which cannot be made in Vietnam. This is offering great opportunities for these foreign enterprises,” Ngan told VIR.
For example, Thailand’s GoodHout BV is finding partners of coconut processors, suppliers of coconut husk, wood panels and furniture manufacturers. This firm’s solution is to turn coconut waste into a high quality bio-based material, such as flat coconut husk boards in various sizes and thickness, to be sold in the EU.
Meanwhile, GAGO Ltd is seeking co-operation with agricultural firms and agricultural insurance companies. Its intelligent agriculture solution is a cloud-based platform, enabling real-time monitoring and smarter decision-making by leveraging visualised agronomic data.
Also, Thailand’s Verifik8/FairAgora Asia is finding partners to apply data streams such as satellite imagery and sensors. Verifik8 is a software platform that connects producers and buyers to de-risk operations and improve compliance in the food supply chain, to improve social and environmental performance in the seafood supply chain.
