Application of a multi-market partial
equilibrium model in the pig sector of Vietnam
and Uganda
Lucila Lapar, Emily Ouma, Peter Lule, Nguyen Que, Dang Khoi and Karl Rich
ICAE PIM Pre-conference workshop on Rural Transformation in the 21st Century: The
Challenges of Low-Income, Late-Transforming Countries
Westin Hotel, Vancouver
28th July 2018

The Uganda and Vietnam pig sectors
 Dynamic and rapidly expanding
sector in both countries
o Rising demand for pork
o Pork per capita consumption 25 kg in
Vietnam and 4 kg in Uganda
 Important source of livelihood,
especially for smallholder farmers:
o 8 mn Vietnamese households (32% of
households)
o 2 mn Ugandan households (20% of
households)
 Smallholder backyard production
systems (intensive to extensive)

Pig population trend
15000
20000
25000
30000
2000 2002 2004 2006 2008 2010 2012
Animalsx1000
Pig population in Vietnam
(2000 – 2012)
0
1000
2000
3000
4000
1970 1980 1990 2000 2008 2014
Animalsx1000
Pig population in Uganda
(1970 - 2014)

 Largely informal sector
 Markets and products
 Selected countries and value
chains under Livestock CRP
Markets and products

Study rationale
 Growth in the sector portend a bright outlook for
smallholder pig sector development in both countries
 However, the trajectory of growth may differ due to:
o Varying socio-economic and policy
contexts
o How the sector responds to
emerging rural and agri-food
systems transformation
o Revolution in food retail systems:
demand for traceability, supply
consistency and food safety

Research questions
 How will rising income affect total pork demand and
the composition of pork demand?
 How will shifts in pork demand influence pig
producers, particularly small-scale producers i.e. will
small-scale pig producers be squeezed out of the
market?
 How will the growth of pig production affect maize
markets – specifically, will imports grow?

Methodology
 Apply a multi-market model framework to conduct two-
country case studies to assess the impact of the
trajectories of change on smallholder domestic market
shares in supply of pork.
 Partial equilibrium
o Focussed only on the maize and pig sectors, does not
capture all other sectors in the economy
 Spatial
o Simulates market dynamics and interregional trade in eight
regions in Vietnam and five in Uganda
o Inter-regional trade is defined endogenously in the
model following the rules of spatial arbitrage

Model characteristics
 Recursive and dynamic
o Simulates impacts over a 10 year period based on growth in income, population,
and production technology (2014-25)
o Baseline data from various sources (mainly, National Statistics Bureau)
 Disaggregation of chosen commodities
o Maize as a feed product
o Specific pork products
 Fresh pork sold in rural wet markets produced by traditional smallholder
producers
 Fresh pork sold in urban/peri-urban wet markets produced by commercially-
oriented producers,
 Processed pork sold in formal market outlets including supermarkets
produced by large, modern producers
 System of equations/inequalities solved using MCP in
GAMS

Baseline scenario - assumptions
Parameters Vietnam Uganda
Per capita income growth rate 5% per year 5% per year
Population growth rate 1.05% per year 1% per year
Technological growth rate
Maize 2% per year 5% per year
Traditional smallholder pig sector 2% per year 5% per year
Commercial oriented pig sector 2.5% per year 5% per year
Modern pig sector 3% per year 5% per year
Income elasticities of demand
Maize 0.39 0.25
Traditional smallholder pig sector 1.25 0.90
Commercial oriented pig sector 1.38 1.80
Modern pig sector 1.51 1.80

Simulations
Scenario Change relative to baseline (% p.a.)
Higher income growth Income growth rate increased to 10%
Higher productivity growth in modern
pig sector
Technological growth rate in sector increased to 10%
Higher productivity growth in traditional
pig sector
Technological growth rate in sector increased to 10%
No productivity growth in traditional pig
sector
Technological growth rate in sector reduced to 0%
No productivity growth in maize Technological growth rate in sector reduced to 0%
Higher income elasticities for
commercial and modern pig products
Income elasticities increased to 2.7
Higher income elasticities + higher
productivity growth in commercial and
modern pig sector
Income elasticities increased to 2.7 and technological
growth in commercial and modern pig sector increased
to 10%
Worst case for traditional sector High technological growth in modern/no technological
growth in traditional/increase in income elasticity
modern/reduction in income elasticity for traditional

Results – changes in pig sector market
share under different scenarios, Uganda
0 10 20 30 40 50 60 70 80 90 100
2014
Base scenario
Higher income
No prod growth traditional sector
High productivity growth traditional sector
High productivity growth in the commercial sector
No productivity growth in the maize sector
High income elasticity commercial and modern pig
products
High income elasticity commercial & modern pig
products+productivity growth
Worst case scenario
%
Traditional sector Commercial sector Modern sector

Results – changes in pig sector market
share under different scenarios, Vietnam
0 10 20 30 40 50 60 70 80 90 100
2014
Base scenario
Higher income
No prod growth traditional sector
High productivity growth traditional sector
High productivity growth in the commercial sector
No productivity growth in the maize sector
High income elasticity commercial and modern pig products
High income elasticity commercial & modern pig
products+productivity growth
Worst case scenario
%
Traditional sector Commercial sector Modern sector

Pork export under different scenarios in
Vietnam (‘000’ tons)
Scenarios 2020 2021 2022 2023 2024 2025
Baseline 9.6 9.7 9.7 9.6 9.5 9.3
High income growth 0 -4 -19 -38 -62 -92
No productivity growth in
traditional pig sector
5.3 4.3 3.1 1.8 0.2 0
Higher productivity growth -
traditional pig sector
17.7 19.6 21.6 23.8 162 419
Higher productivity growth -
modern pig sector
52.1 63.2 76 90.7 107 127
Higher income elasticity -
modern pork sector
0.0 0.0 0.0 0.0 0.0 0.0
Higher income elasticity &
productivity growth modern
pork sector
23.9 27.5 31.6 36.2 41.4 47.5
Worst case scenario in
traditional pork sector
-20 -54 -101 -166 -254 -372

Maize export under different scenarios (‘000’
tons)
-9000 -8000 -7000 -6000 -5000 -4000 -3000 -2000 -1000 0
Base scenario
Higher income
No prod growth traditional sector
High productivity growth traditional sector
High productivity growth in the commercial sector
No productivity growth in the maize sector
High income elasticity commercial and modern pig products
High income elasticity commercial & modern pig products+productivity growth
Worst case scenario
'000' tons
Uganda Vietnam

Conclusions
 Traditional smallholder sector will still account for the bulk of the
pig market share in the coming decade
 Technology breakthroughs present a win-win for developing both
the traditional and modern commercial pig sectors in the 2
countries
 Technology is the most significant driver to improve production of
the commercial/modern pig sub-sector
o Productivity enhancing technologies may include feeds, animal health, and
breeds
 Rising pork demand without technological development will lead
to imports rather than growing domestic production
 Impact of technological changes in the traditional sector:
o Reduce production cost and consumer price,
o Maintain market shares, and have pro-poor impacts

This work was financed by
ACIAR, EC-IFAD, Irish Aid, and Livestock CRP
It is implemented in a partnership with
Center for Agricultural Policy – Institute of Policy and Strategy for
Agriculture and Rural Development, Vietnam
It contributes to the CGIAR Research Program on
Livestock, and PIM
Acknowledgements

This presentation is licensed for use under the Creative Commons Attribution 4.0 International Licence.
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