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The state of smallholder-based pig industry in Vietnam: Insights from ILRI’s recent research


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Presented by Lucila A. Lapar at the workshop: Pathways to Impact: Pig Value Chain Development Potential in Vietnam, Vinh City, Vietnam, 27-28 September 2013

Presented by Lucila A. Lapar at the workshop: Pathways to Impact: Pig Value Chain Development Potential in Vietnam, Vinh City, Vietnam, 27-28 September 2013

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  • 1. The state of smallholder-based pig industry in Vietnam: insights from ILRI’s recent research Ma. Lucila A. Lapar Pathways to Impact: Pig Value Chain Development Potential in Vietnam Vinh City, Nghe An, Vietnam 27-28 Sept. 2013
  • 2. The challenge  Can research accelerate livestock and aquaculture development to benefit the poor? o Mixed record to date o Systematic under-investment o Also related to our research-for-development model?  Focus of new CGIAR Research Program o Increase productivity of small-scale systems o ‘by the poor’  poverty reduction o ‘for the poor’  food security
  • 3. Correcting perceptions 1. Animal-source foods are a luxury and bad for health, so should not promote 2. Small-scale production and marketing systems are disappearing; sector is quickly industrializing 3. Livestock and aquaculture development will have negative environmental impacts
  • 4. Our underlying hypothesis  Livestock and Blue Revolutions: accelerating demand in developing countries as urbanization and incomes rise  Industrial systems will provide a large part of the needed increase in supply to cities and the better- off in some places  But the poor will often continue to rely on small- scale production and marketing systems  If able to respond, they could contribute, both increasing supplies and reducing poverty  …and better manage the transition for many smallholder households
  • 5. Goal • To sustainably increase the productivity of – small-scale livestock and fish systems to increase the availability and affordability of animal-source foods for poor consumers and, – in doing so, reduce poverty through greater participation by the poor along the whole value chains for animal-source foods.
  • 6. Inputs & Services Production Processing Marketing Consumers Past research has focused specific aspects of given value chains, commodities and country. Inputs & Services Production Processing Marketing Consumers Country A Inputs & Services Production Processing Marketing Consumers Inputs & Services Production Processing Marketing Consumers Country D Country C Country B Basic Idea: Solution-driven R4D to achieve impact Traditional approach was piecemeal
  • 7. Strategic CRP 3.7 Cross-cutting Platforms • Technology Generation • Market Innovation • Targeting & Impact Inputs & Services Production Processing Marketing Consumers R4D integrated to transform selected value chains In targeted commodities and countries. Value chain development team + research partners GLOBAL RESEARCH PUBLIC GOODS INTERVENTIONS TO SCALE OUT REGIONALLY #1: Addressing the whole value chain Major intervention with development partners Approach: Solution-driven R4D to achieve impact
  • 8. CRP3.7Prepareintervention Development Partners $90m Performance Target: double production in x poor households Scaling out Knowledge Partners $10m Time 10 years CRP3.7 Strategic Research $10m #2: Working toward interventions for impact at scale Approach: Solution-driven R4D to achieve impact
  • 9. Approach: Solution-driven R4D to achieve impact #3: Focus on 9 target value chains
  • 10. Technology development: 1 Health 2 Genetics 3 Feeds Inputs & Services Production Processing Marketing Consumers Commodity X in Country Y 4 Value chain development 5 Targeting: Foresight, prioritization, environmental impacts 6 Cross-cutting: gender, impact, M&E, comms, capacity building Structure: Six integrated components Delivering the Program
  • 11. Context of a changing Asia • Economies are growing rapidly. • Incomes are rising in at least a proportion of the population. • Dietary patterns are changing. • Climate change and other environmental challenges are becoming front and center of development issues that need to be tackled. • All these have implications for the livestock sector and for the poor who depend on livestock.
  • 12. Key drivers of changing livestock landscape in Asia • The rural-urban divide. • Rapidly growing demand and rising prices for livestock products. • A food retail revolution, supply chain adjustment, and importance of traditional local markets • Trade liberalization. • Endemic, emerging, and re-emerging diseases, • Environmental concerns. • Changing production systems. • Evolving policy needs. • Increased donor interest in agriculture. • Changing roles of public and private sector.
  • 13. Some highlights from recent ILRI studies in Vietnam Pork value chain
  • 14. Employment generation in household pig production Smallholder pig production generates employment estimated at about 4 million full- time labor along the pork supply chain, valued at about $3.3 billion or approximately 5.5% of Vietnam’s GDP in 2007. Household labor constitutes the main labor inputs in household pig production. Women labor accounts for at least half of total labor days in household pig production.
  • 15. Meat expenditures Pork accounts for 40% of meat expenditures by Vietnamese household consumers. 0 5 10 15 20 25 30 35 40 45 Current 10% 20% 50% 100% Fresh pork Fish Poultry Beef Seafood Percentage of consumer expenditure on meat Projected percentage increase in consumer income
  • 16. Meat demand analysis: Implications for Vietnam • As income rises: – Pork and other meat consumption would substantially increase -  opportunities for livestock production, including smallholder production. – Fresh pork remains important, however, consumers tend to diversify their diet towards other meat such as seafood, poultry, beef and eggs. -- livestock production must diversify to cater to more diverse demand. • Price is still a key factor in meat purchase decision and thus in meat market competition - reducing costs (and, subsequently, price) is key for livestock development. • Increase in price of one meat often reduces its consumption and consumption of other meat due to income effect.  Cost reduction would enhance competitiveness and increase meat consumption. • Different types of meat are weakly substitutable, given income effect - livestock production diversification
  • 17. Food safety and risk assessment studies Nearly half the consumers (43%) had concerns about pork. Most common was fear of disease from pork, followed by fear of chemical contamination, un-fresh pork, and bad smell. Only 1% expressed nutritional concerns.
  • 18. Average ranking of major concerns about meat safety HN HCMC All Diseases of livestock 1.2 1.1 1.2 Hormone used in animals 2.8 3.0 2.9 Antibiotic use 3.0 2.9 3.0 Hygiene in market outlet (including meat seller) 3.8 2.6 3.2 Hygiene in slaughtering 3.9 2.8 3.4 Concentrate feeding of animals 3.7 4.1 3.8 Other 3.5 3.1 3.2 Animal diseases tops the list of major concerns of urban consumers about meat safety.
  • 19. Consumer response to pig disease outbreak •About half of consumers either stop or reduce pork consumption; about one-third substitute other meats. •More consumers in HCMC than in Hanoi shift to modern outlets for pork. 52% 6% 35% 7% Hanoi Stopped/reduced consumption Shift to modern outlets Substitute other meats Other 50% 15% 29% 6% HCMC Stopped/reduced consumption Shift to modern outlets Substitute other meats Other
  • 20. Preferred market outlets for fresh pork 0% 20% 40% 60% 80% 100% Hanoi HCMC Overall Modern retail outlets Permanent open market Traditional temporary outlet Traditional market outlets remain the most preferred purchase outlets for fresh pork by Vietnamese consumers.
  • 21. Types of market outlets for fresh pork in Vietnam Temporary Neighborhood Market
  • 22. Types of market outlets for fresh pork in Vietnam Permanent Open Market
  • 23. Types of market outlets for fresh pork in Vietnam Modern Retail Outlets
  • 24. Implications from market studies  Market outlet choice by consumers of fresh pork in urban cities in Vietnam is conditioned by factors related to their level of affluence, time budgets (female), concerns about food safety and hygiene, proximity to market outlets, and geographical location.  Use of modern retail outlets is increasingly observed among urban consumers who are younger, more affluent and hence can afford to invest in cooling facilities for storing fresh food, are more concerned about food safety and hygiene and opted to live farther away from city centers.
  • 25. Implications from market studies  There is still a substantial group of urban consumers who are dependent on traditional market outlets ranging from temporary neighborhood outlets to permanent open markets and who value accessibility and trust in the supplier that has been developed over time from repeated transactions.  These consumers belong to lower income groups who generally have limited options for food supply, hence, making it more important that they maintain access to their preferred outlets.
  • 26. Implications from market studies  The strong preference of Vietnamese consumers to purchase fresh pork at non-modern retail outlets provides a degree of market protection to smallholder pig producers from imports of pork.  The relevant policy debate is how to ensure that traditional market outlets remain viable and up to par with the competition posed by modern retail outlets, since these outlets are key to smallholder producers’ inclusion in the restructuring process going on in the food retail sector, while keeping fresh meat easily accessible to low income urban consumers.
  • 27. Pig genotypes studies Context • Some indigenous pig species have disappeared and some others are at high risk (research with NIAS collaborators). • Some of these breeds are still used by many ethnic groups. • Niche market for some pork meat with desired taste. Recommendation • Breed conservation (the role & responsibility of NIAS) • Exploit & further study the potential of some of these breeds (collaborative research with NIAS) and explore potential for niche markets for pork meat with desired taste Some of these breeds are useful as maternal sows for small- scale piglet production.
  • 28. Pig genotypes studies Context and proposed model for piloting (Mong Cai sow + western male for piglet production) • In many rural & remote districts of northern & central Vietnam, there is insufficient local production of piglets and fatteners. • As a consequence, rural pig producers buy piglets being transported from lowland or coastal areas. Outcome: disease spread & low fattening productivity. • “In these systems, more meat from pig production would be difficult to market” (local stakeholders). • Pig production can instead be targeted to produce more piglets. Outcome: same number of fatteners produced / year but increased number of locally born piglets / year, decreased number of imported piglets / year, more piglets sold by local producers.
  • 29. Increasing the proportion of own-produced feed to total feed use can decrease total feed cost. This provides cost advantage to small producers that use higher proportion of own- produced feed. 0% 20% 40% 60% 80% 100% Small Medium Large Small Medium Large Small Medium Large Farrow to Wean Farrow to Finish Grow to Finish Structure of Feed Cost by Production System and Scale Purchased feed Own produced feed
  • 30. Feed-use efficiency (in maize equivalent) 0 1 2 3 4 5 6 Small Medium Large Overall Small Medium Large Overall Small Medium Large overall Farrow to wean Farrow to finish Grow to finish Kg maize equivalent/kg liveweight gain Purchased feed Own produced feed
  • 31. Costs, efficiency, competitiveness • Own-produced feed holds significant share of pig feed in household pig production, providing low-cost feeding strategies • Use of industrial feed associated with scale of production • Use of crossbreeds with high % of local breeds (e.g., Mong Cai) suitable to smallholder conditions • Adoption of improved breeds associated with scale of production, wealth of producers
  • 32. Costs, efficiency, competitiveness • Feed conversion ratio (FCR) estimates using maize equivalent (ME) suggest no significant differences in feed efficiency across scale • There are no significant differences in cost/unit output across scales • While not significant, differences in unit cost is highly sensitive to feed cost (65- 90% of total production cost) • No clear evidence of economies of scale found in household pig production in this study.
  • 33. Implications on production efficiency  Smallholder pig producers are competitive in producing pork that meet the demand requirements of Vietnam’s fresh meat market.  Household pig producers are able to generate incomes from pig raising by exploiting areas where they have cost advantage.  Expanding options for own-produced feeds, in terms of choices and quality, can enhance their competitiveness, particularly in areas that are far from commercial feed sources, and complemented with improved access to extension.  Limitations in available land and household labor will be constraints to scaling up by household pig producers.
  • 34. Implications from technology adoption studies  Pig raising will likely remain tied to agricultural crop production by households that have available human and financial resources and land – an issue for rural development.  Opportunities for non-farm employment and other non-farm income sources will likely compete for household labor available for pig raising – an issue for scaling up.
  • 35. Implications from technology adoption studies  Market access (input and outputs) is an important stimulus for derived demand for improved breed and feed (increasing demand for pork).  Poor, small producers may not likely benefit from productivity gains from adoption of improved technologies – an issue of access and capacity to adopt.
  • 36. Implications from technology adoption studies  Public sector policy has a role to play in improving access and capacity of the poor.  Specific types of production systems (e.g., local breed piglet production) can provide pro- poor niche market opportunities. Here, public sector policy can facilitate access to supporting services to reduce production and market risk (e.g. animal health services) and improving market access.
  • 37. Proposed actions from value chain studies  Invest in upgrading slaughterhouse and market facilities to improve hygiene and food safety standards in pork.  Undertake a comprehensive pork risk assessment to inform policy, improve consumer safety, and safeguard participation of smallholders in the pork supply chain.  Pilot test strategies for collective action and other forms of organization that will reduce transaction costs of input procurement and output marketing. Need supporting policies to foster an enabling environment for their propagation.  Set up pilot schemes for testing the viability of a quality assurance system that is feasible in smallholder context and its cost-effectiveness in delivering safe pork.
  • 38. CGIAR is a global partnership that unites organizations engaged in research for a food secure future. The CGIAR Research Program on Livestock and Fish aims to increase the productivity of small-scale livestock and fish systems in sustainable ways, making meat, milk and fish more available and affordable across the developing world. CGIAR Research Program on Livestock and Fish