Pig value chains in Vietnam

Pig Value Chain in Vietnam CGIAR Research Program 3.7 Vietnam Smallholder Pig Value Chain Team Meeting Delhi, 30 April – 1 May 2012 Lucy Lapar

Overview of smallholder pig value chain in VN Pork is a significant component of the Vietnamese diet, per capita pork consumption is likely to remain on the uptrend with rising incomes. Strong demand for fresh pork that smallholders can supply through most preferred outlets by consumers. Dominance of smallholders in pig production, importance in employment generation, significant contribution to HH income Projections show that even with no growth from smallholders, large farms will likely account for only 12% of the VN pork market share Smallholder pig systems can generate efficiency gains from low-cost locally-sourced feeding options Enabling policy environment, willingness of policymakers, development partners, and stakeholders to engage in R4D initiatives

Dominance of pork in livestock total outputYear Pig Chicken Cattle Others Total1990 65 11 14 10 1002000 68 14 9 9 1002005 72 12 8 8 1002009 62 13 11 14 100Source of data: FAOSTAT 2009.Household pig production supply at least80% of Vietnam’s pork.But growth in supply has failed to keeppace with rising demand, resulting inaccelerated increase in real pork prices.

Supply of pork in VietnamMost Vietnamese pigholding households keep very few pigs buton average the size of their herds is slowly rising. Although notshown, the percentage of pigholding households with 21 pigs ormore rose from 0.3% in 2001 to 1.75% in 2006.

Projected share of pork supply from large-scale producersShare of large-scale modern sector in pig production 14% Base simulation 12% High income growth 10% High tech growth in modern sector 8% No tech growth in traditional 6% No tech growth in maize 4% High income elasticity of modern High income elast and tech 2% growth in modern Worst case for traditional 0% sector 0 1 2 3 4 5 6 7 8 9 10 Year

Share of pig income in total household income 9.2% Crop Pig 20.2% 38.2% Non-pig livestock Other agriculture 11.6% Non-agriculture production 13.9% Wage and salary 3.6% 3.3% Income from pigs accounts for about 14% of rural household income, or 24% of rural household income from agriculture.

Value added along the pork supply chain where household producers participate Pig Consumers Producers Butchers RetailersFeedSuppliers • +2400V ND • +1800 ($0.13) • +6200 • +1300 VND VND • 21% VND ($0.09) ($0.33) ($0.07) • 15% • 11% • 53%Value added generated in pork value chainswhere household pig producers participate isabout 11,700 VND per kg liveweight (or $0.62)

Structure of Feed Cost by Production System and Scale Purchased feed Own produced feed100% 80% 60% 40% 20% 0% Small Medium Large Small Medium Large Small Medium Large Farrow to Wean Farrow to Finish Grow to FinishIncreasing 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.

Feed-use efficiency (in maize equivalent) Kg maize equivalent/kgliveweight gain 6 5 4 3 2 1 0 Medium Medium Medium overall Large Overall Large Overall Large Small Small Small Farrow to wean Farrow to finish Grow to finish Purchased feed Own produced feed

Cost per unit output in household-based pig production252015 Small Medium10 Large 5 0 Farrow to Wean Farrow to finish Grow to finishEconomies of scale in piglet production; no significant difference across scale full cycle slaughter hog production and pig fattening

Gross margin (‘000 VND per kg output)16141210 Small8 Medium Large6 Overall420 Farrow to Wean Farrow to finish Grow to finish Household-based pig production can generate gross margins ranging from 4,000 to 15,000 VND/kg liveweight of pig produced.

Current Issues Smallholder competitiveness (vis-à-vis other suppliers, e.g., large farms, imports) remains a development policy challenge  rising feed prices  Volatile domestic pork prices  animal disease risks (production and markets) Emerging quality and food safety concerns Environmental issues

R4D efforts to date Animal health and food safety1. ACIAR: Reducing health risk in smallholder pigsystems (2012-2017)  Builds on previous project (Improving competitiveness of pig producers in an adjusting Vietnam market)  Phase 2 proposal under review; target start 3rd Q 20122. EcoZD: identify priority zoonoses in SouthVietnam; evaluate risk factors

R4D efforts to date Feeds1. IFAD-CIAT: Improving forage-based feedingsystems (ongoing in CLV)  Vietnam component to include assessment of feeding options in smallholder pig systems Genetics1. GEF-Asia: Conservation through utilization ofanimal genetic resources (ongoing)  Vietnam component on pigs and poultry, market surveys?

R4D efforts to date Development initiatives1. WB – Livestock competitiveness and food safety project(LIFSAP)  Potential partner for testing of interventions (GAP, improved slaughterhouse and market infra, training)2. CIDA – Pig commodity chain quality assurance system  Focus: Testing interventions in medium-large pig farms and slaughterhouses, e.g., GAP; South Vietnam  Willing to share lessons on best practices Others?  ?

Strategic partners Development initiatives and policy advocacy1. WB, MARD (DLP, DAH), provincial DARDs2. CIDA and VN partners3. FAO3. Private sector – AsVELIS4. NGO – Oxfam, IDE Research1. HUA, HSPH2. MARD and associated research institutes (NIAS, NIVR, IPSARD)3. ACIAR and links with other ACIAR-funded projects

Impact pathway and outcomesPathway: works with research and development partners and value chain actors to identify opportunities, test and validate best-bet options and strategies, and disseminate lessons for scaling up and policy advocacy for pro-poor upgrading of the value chain.Outcome: increased marketable surplus (30%) from household pig production and sustained, viable participation by smallholders in pig production in the project sites (10%)

Proposed Intermediate Outcomes Priority VC constraints resolved and/or relaxed Increase in farm level productivity (30%) Evidence and mechanism for scaling out are in place.

Value Chain Outcomes: Inputs and Services Increased access by smallholders to good quality and cost- effective inputs such as appropriate feeds and breeds. Improved access by smallholders to efficient and cost-effective veterinary and extension services. Increased availability of cost-effective feeding options. More efficient markets for inputs and services in place.

Value Chain Outcomes: Production Improved productivity from adoption of good quality, cost- effective feeding options. Increased survival, growth, and disease resistance of sows and piglets. Enhanced production cost-efficiency from adoption of suitable pig breeds. Reduced incidence of pig diseases (e.g., PRRS, classical swine fever, diarrhea, cysticercosis, among others). Improved uptake by smallholders of appropriate pig husbandry and animal health practices.

Value Chain Outcomes: Transport and Processing  Reduced incidence of food-borne and water-borne diseases associated with pork consumption.  Increased public and private sector investment in upgrading of slaughtering and marketing facilities.  Better trained slaughterhouse operators, carcass transporters, and other pork supply chain actors.

Value Chain Outcomes: Marketing Increased availability of safe and hygienic pork supplied by smallholders or household producers. More efficient marketing system and arrangements in place and accessible to smallholder pig producers. Increased share of pork retail price accruing to smallholder pig producers. Higher proportion of women participation in pork supply chain, and improved income opportunities for women from these activities.

Proposed Priority Outcomes & Outputs 2012 2013 2014Outcomes CRP3.7, local and 1. Partners have capacity to Evidence base in each international partners have use basic set of tools for VC target VC for best-bet established an R&D alliance toassessment pro-poor VC transform target VC in each 2. Stakeholders in each development country country are increasingly interventions is aware of potential, influencing constraints and initial development options for pro-poor investment decisions development of target VC

Proposed Priority Outcomes & Outputs 2012 2013 2014Outcomes R&D alliance 1. capacity to use tools Evidence base 2. Stakeholders aware influencing decisionsResearch 1. Scoping study to develop an 1. Inventory and evidence base 1. Best-bet interventionOutputs inventory of feed technology (literature review) for key strategy formulated and options and identify stakeholders constraints and proposed tested, ready for scaling and potential partners. solutions compiled up and out. 2. Rapid assessment of target VC 2. Quantitative assessment of to inform design of in-depth VC performance assessment of animal health constraints, and to identify 3. Technical and economic preliminary priority constraints assessments of key VC and best-bet upgrading strategies components to target for to test. upgrading (e.g. farm-level: husbandry, feeds, breeds, 3. Selected best-best options on health, environmental issues; feeds, animal health (biosecurity, market-level: institutional diagnostics) and possibly breed, environment, food safety, identified and piloting initiated in demand characteristics; selected sites (e.g. with LIFSAP) overall: policies, organizational strategies)

Proposed Priority Outcomes & Outputs 2012 2013 2014Outcomes R&D alliance 1. capacity to use tools Evidence base 2. Stakeholders aware influencing decisionsResearchOutputs 4. Basic toolkit for VC assessment 4. Pig feed ration decision compiled for testing (with CRP 2) support tool – to inform feeding options under a range 5. Analytical framework for of feed types, nutrient value, assessing VC performance and feed prices (build on CIP- established (with CRP 2) LifSim model?)

Current Activities & Resources/Potential LinkagesACIAR Improving competitiveness of pig producers in an adjusting Vietnam market (recently completed, ongoing engagement with national partners on policy advocacy, outreach); completed New project: Supporting small-scale pig production in Vietnam through reducing risks, enhancing productivity, and upgrading value chains (with CRP 4.3, likely 2012);GEF-Asia Development and application of decision support tools to conserve and(Vietnam) sustainably use genetic diversity in indigenous livestock and wild relatives (pigs)CIAT Improved forage-based feeding systems in Vietnam (+Cambodia, Laos)WB-MARD Livestock Competitiveness and Food Safety Project (development partner)

Identified Priority Gaps for Resource Mobilization  VC assessment of productivity constraints from animal diseases, prioritization.  ACIAR risk assessment and food safety (2nd half 2012)  Inventory of feeding options and assessment to identify best-bet options for testing and validation, both in terms of technical parameters and economic viability.  CIAT-IFAD forage-based feeding systems, started in 2012; likely integration in Vietnam team’s work plan (being discussed)  Assessment of innovation capacity at farm level (farmers, development partners on technology adoption) and along the value chain (best practices, institutions).  Assessment of VC performance (ex ante and ex post) of identified interventions.

2012 Priorities for Organisational, Capacity Development and Communication Activities Restructure team to match CRP needs at the target VC (economist time + some vet- epi time from CRP 4.3 + some feeds specialist time). Identify gaps for priority recruitment and/or shared appointments (local research support, pig nutrition) and partnership.  Communications specialist (AYAD volunteer) in place to support communication activities  Research officer position being sought from funding through AVID Identify strategy and mechanisms for working links internally with other CRP3.7 components, and externally with CRP2 and CRP 4.3.

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Pig value chains in Vietnam

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