Proceeding aciar beefcattle_ias team_jan_2014

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Proceeding aciar beefcattle_ias team_jan_2014

  1. 1. 1 Analysis and improvement of beef-cattle value chains in the South Central Coastal Vietnam Researcher Team: Ho Cao Viet (PhD.), Huynh Tran Quoc (MSc.), Le Van Gia Nho (MA), Nguyen Van An (MSc.) Department of Agricultural Systems Research (DASR); Institute of Agricultural Science for Southern Vietnam (IAS) Summary In the context of project SMCN/2007/109, the study on analysis of beef-cattle and cassava value chain is carried out since 2009 in 3 provinces of Binh Dinh, Phu Yen and Ninh Thuan. Key findings of beef-cattle value chain are following: (i) Beef-cattle industry contributes an important part in income sources of farmer household in SCC region; (ii) Price of live cattle and beef meat tends to move upward, market force of beef meat is relatively high in southern, especially in large cities; (iii) Farmers have changed their awareness on capital investment & improvement of cattle species; (iv) Policies on slaughter houses installation, veterinary service, program of artificial insermination, enlargement of pasture & forages area, support of government and private enterprises will improve both quality and quantity of cattle herd in SCC; (v) Cattle husbandry use cassava product & by-products as a feed source in the dry season whereas shortage of feed and for fattening. Meanwhile, manure is a fertile component that improved quality of degraded soil in SCC; (vi) Income generated by cattle keep balance of family budget and cash-flow; (vii) Transparency of price information is main factors that influenced significantly to farmer; (viii) Cooperation of farmers, vertical coordination among farmers and enterprises business are best solution to reduce risk and loss due to of price falling. Key words: Value chain of beef-cattle, agent, farming systems, market. 1. Introduction In the context of project SMCN/2007/109, the study on analysis of beef-cattle value chain is carried out in period 2010-2012 in 3 provinces of Binh Dinh, Phu Yen and Ninh Thuan. The surveys on different agents of beef-cattle value chains were conducted in order to collect information and analysis of chains. Cattle husbandry has generated important income for farmer in SCC. However, beef-cattle value chain is dealing with many constraints such as: market price fluctuation, price competition of imported beef meat, high cost of production, etc. The other reasons also affected to price fluctuation and indirectly influenced to farmer’s benefit is that vertical coordination amongs farmers and agents of slaughter houses, small enterprises and distributors. The purpose of this study is to identify beef-cattle supply chains and improve it in the context of Vietnam social economic environment. 2. Objectives of study - Analyse markets and positioning beef-cattle value chain in order to identify advantages and disadvantages of the chain; - Implement of support activities, policies implementation to improve beef-cattle value chain performance; - Identify short-term solutions and long-term strategies for beef-cattle value chains based on stakeholders and agents engagement. 3. Methodology of study Approach method Analytical frameworks were proposed by international organizations such as GTZ, ACDI/VOCA, M4P (Market for Poors) and were applied because these frameworks are according with context of research. Methodology of value chain study of FAO (2005) is also applied in this study. Research method * The qualitative method: PRA method, formal discussion, key informal panel (KIP), problem tree, SWOT, Venn diagram were applied in order to identify structure of chain in different provinces,
  2. 2. 2 interaction of each factors and agents in the chain, the impacts of institutions and policies on the chain and so on. Collection and analysis of secondary data (annual reports of people committees, statistical data, scientific report and information of MARD, DARD, NGO), institutional and political papers was also performed. Individual depth-interview, case studies and observation were applied in step of data collection. These databases are updated year by year. * The quantitative method: face-to-face survey to collection data and information from each agent, statistical analysis, cost and benefit analysis, value added analysis for each agents and overall chains based on main sub-chains or products and build up the scenario. Sampling method for survey: Non-propability sampling method (proportionate quota sampling combined with convenience sampling) was applied in study. There are 3 reasons that method was applied: (i) Population of farmers is large in studied regions and not-determined; (ii) Collectors, middlemen, slaughter houses, semi-industrial slaughter enterprises are relative difficult to contact and determine. Researcher has to set up a close relationship with them. (iii) Objectives are identified characteristics of beef-cattle value chain and internal interaction of agents in chain. Economical and technical parameters are calculated for chain. Five steps of sampling are following: 1. Basing on the availability of budget, timescale, performance to decide the sample size; 2. Select the representative regions for beef-cattle production in 3 provinecs that located in SCC: district of Phu Cat (Binh Dinh), Tuy An (Phu Yen) and Ninh Phuoc (Ninh Thuan). 3. Select representative communes that located in these districts: Cat Trinh (Phu Cat), An Chan (Tuy An), Phuoc Dinh (Ninh Phuoc). 4. Select farmers, arrange annual surveys and carry out face-to-face interviews. 5. Select local collectors, middlemen, slaughter houses and enterprises. The sample is distributed as follow:  30 farmer households (different herd size)  5 collectors (1 & 2 level)  4 slaughter houses (in Binh Dinh, Phu Yen & Ninh Thuan)  2 semi-industrial slaughter companies (in Bien Hoa & Ba Ria-Vung Tau) Data analysis: Applying the descriptive statistics for data analysis. There is a measurement of econmic and financial parameters, overall calculation of chain that presented in the table below (Table 1 & Figure 1 & 2). Inputs Total production (P) Intermediate Costs (IC) Value of main products Value of by-products Input materials Value Added (VA) Hired labor cost Financial cost Taxation Gross Profit (GPr) Depreciation Net Profit (NPr) Figure 1 - Financial parameters in beef-cattle value chain
  3. 3. 3 Figure 2 – Financial parameters of overall chain Table 1 – Economic parameters and cost-benefit analysis Parameter Formula Total Production (P) (Productivity x selling price of main product per unit) + Income of by-products (if any) Total cost (TC) Variable costs (VC) + Fixed costs (FC) Fixed costs Maintenance + Depreciation + Salary & wage + Tax Variable costs (VC) Beef-cattle producers Feeds + Veterinary + Labor wage Collectors/Middlemen Input materials + Labor wage + Transportation + Energy (fuel, electrivity) + Tax on product (if any) Slaughter houses Input materials + Labor wage + Transportation + Energy + Tax Gross Profit (GPr) Total Production (P) – Total cost (TC) Intermediate Costs (IC) Input materials + Energy Value Added (VA) P – IC Hired wages + Interest on loan + Communication fee + Tax + Maintenance & Repair + Depreciation + Net Returm of producers 4. The results & discussion 4.1 Production and consumption of beef in global market United States beef exports are increasing at a rapid pace at 1.3 million tonnes, it would emerge as the second largest world beef exporter after Brazil. In Europe, euro weakness is facilitating beef sales from the EU to the Russian Federation and to many Middle Eastern markets, in particular Turkey. Conversely, the strength of Australian and New Zealand currencies is expected to depress exports from the two countries. This would allow India to move up, becoming the fourth largest exporter of beef, as strong demand for low-priced buffalo beef in Southeast Asian countries, such as Malaysia and Philippines, fosters an increase of bovine meat. Table 2 - Bovine meat statistics (thousand tonnes, carcass weight equivalent) Unit: 1,000 tonnes, carcass weight euivalent Purpose Production Imports Exports Utilization Year 2010 2011 2010 2011 2010 2011 2010 2011 China 5.617 5.517 343 520 121 120 5.929 5.917 India 2.610 2.740 1 1 716 800 1.895 1.941 Indonesia 454 440 120 120 1 1 574 580 Iran 380 385 265 300 - - 645 685 Japan 514 488 725 760 6 7 1.223 1.241 Korea 247 252 366 429 2 1 608 641 Malaysia 28 29 155 165 7 8 176 186 Philippines 287 290 130 145 2 2 415 433 Asia 15.285 15.269 3.183 3.493 952 1.035 17.503 17.690 Source: FAO, 2011. Asian people eat about 17.7 million tonnes in total of 64.4 million tonnes (2011). Beef meat is supplied mainly by domestic production (77%), 18% from importation and 5% for exportation. The largest beef importer is Japan. Vietnam imports annually 40 thousand tons of beef meat from US. In the 9 first months of 2013, 32,500 live cattle has been imported1 from Australia for 1 http://vietnamnet.vn IC Farmer IC Collectors IC Slaughter houses P Farmer P Collectors P Slaughter housesVA Farmer VA Collectors VA Slaughter houses IC Farmer IC Collectors IC Tlaughter houses GPr Trading VA Chain
  4. 4. 4 slaughtering and supplying for restaurant, supermarket because price of beef meat imported from Australia only more expensive than that of Vietnamese beef from 10 to 15 percent2 . Source: Beef Industry Analysis. Agricultural Industries Group. 2012. Figure 3 – Beef meat exportation in global market (2003-2012) In April 2011, FAO estimated that price index has moved up 180 points at highest since the last 20 years. Until October 2011, price index went down at 177 points. However, price of beef meat was still higher than 12% compared to 2010. Source: FAO (2011) Figure 3 – Price fluctuation of beef meat in global market, 2008-2012 Reduced supplies in traditional importing markets, such as Indonesia, Japan and the Russian Federation, are pushing up imports in 2011 to 7.6 million tonnes. Accounting for half of global imports, countries in Asia are expected to raise their beef imports by nearly 10 percent to 3.5 million tonnes. A lifting of Viet Nam’s eight-year ban on Canadian cattle and beef is supporting imports, which have risen 100-fold over the past five years. The Australian ban on live cattle exports to Indonesia will likely stimulate a shift of import demand towards beef in this country. Following up the evolution of diseases, drought, shortage of pasture area, production, volatility of price of poultry meat and livestock, these factors affected to price of beef and reached to record price of 2011 (Food Outlook, 20113 ). In recent years, the price of bovine meat keeps increasing in domestic and global market. Price in Vietnam market fluctuated from 130 to 150 thousand VND/kg in 2005-06 to 180 thousand VND in 2009-2010. In period of 2011-2012, price moved up from 180 to 280 thousand VND/kg (9-13 USD/kg), then moves up to 300-350 thousand in the end of 2013 although economic crisis and shifting of meat demand from pork and chicken meat due to antibiotic residues in these kinds of meat. Quality of beef meat quality of domestic-species in Vietnam is highly evaluated, adapted with 2 http://vneconomy.vn 3 Food Outlook. Global Market Analysis. FAO (2011) Trade-weighter international price
  5. 5. 5 food safety and organic farming. Although the both of quality and quantity of beef-cattle are increased, Vietnam had to import 200 to 300 thousands tonnes of beef meat yearly (MARD, 2011). These factors bring to beef-cattle value chain a golden opportunity. Agroviet (2012)4 : production of beef meat has gone down in first 6 months of 2012, equivalent of 1.5% compared to 2011 (174.8 thousand tonnes), bovine herd has 5.3 million heads (reduced by 7% compared to 2011). Price of beef meat in Vietnam central region tend to increase and restored again in the end of 2012 at level of 160 to 250 thousands VND per kg5 . On the contrary, buying price of live cattle in Australian market is only 2 USD per kg, plus 5% of taxation and transportation fee, imported price in HCM port is 58 thousands VND/kg, whereas domestic cost price is 70 thousands VND (#3 USD)/kg6 . Beef-cattle are key animal of farmer households in SCC region, particularly in dry season because income of cattle could help farmer to balance family’s budget as well as to pay debt. By-products of crops are feed of cattle husbandry and it does not compete with human food. The manure can be used to improve degraded-soil quality and generate extra-income for household as selling. This sector employed mainly source of under-employed family that is very available in central rural area. However, because of small scale each family has 2 to 5 heads of cattle the beef-cattle value chain has been faced many challenges and constrains. Cooperation and collaboration of each agent along the chain is very loose. Chain from “plough to fork” is facing many constrains, so that farmers are most suffered and faces frequently with risks of falling down price of meat and volability of input materials price. Beef-cattle husbandry should be based on the signal of market and demand and through policy implementation of master plan for beef-cattle supply chain from pasture, veterinary, species, breeding facilities, feed processing, husbandry techniques, credit systems, slaughter house, marketing & distribution. In order to connect all these factors and agents, it’s necessary to have a “conductor” to coordinate all agents together to drive chain towards effectiveness, adaptation with natural – ecological – economical condition and farmers’ custom in SCC region. Animal husbandry, particularly beef-cattle breeding is a farmers’ longstanding customs in Phu Yen. Local species called “bò vàng” is very famous in region. Weather condition is relative convenient, there are natural pasture and cropping by-products. Provincial policies and strategies have planned beef-cattle will be a key animal in crop-animal systems transition. Herd scale increased from 3-6% yearly, ordered after Binh Dinh. At present, there are 233.6 thousand beef-cattes, mainly in mountainous districts Son Hoa, Song Hinh and Đong Xuan, occupied of 60% whole herd. According Centre of Animal Varieties and Techniques of Phu Yen province: amount of beef exported to other provinces is 30 thousand heads per year. Of which, 70-75% supply to Ho Chi Minh city market where is main consumption place. The ratio of breeding beef occupied 34.5%, most of herd has small body, low weight (180-220 kg, 230-270 kg per head of cow and bull, respectively), and far away standard of exportation. There are many problems that farmers facing such as: lack of forage in dry season, illness and diseases, loss of weight. The provincial government has strategy to develop herd of beef-cattle to 2015 focusing on issues: (i) Improving beef species and services for animal husbandry; (ii) Controlling epidemics and diseases effectively; (iii) Advocacy and complaining farmers to leave grazing and switch to intensive breeding; (iv) Investing on input composed feed and fattening; (v) Introducing high- biomass grass varieties to farmers; (vi) Training local staff, technician, veterinarian to support farmers in artificial insemination and purebred bulls (enhance crossbred beef-cattle ratio of 70% of herd in 2015)7 . According to Binh Dinh DARD: in 2011, the herd has 251.485 heads, occupied of 26.6% of herd in SCC region. The average of growth is 10.7% yearly. (this figure is 6.8%/year in SCC). The ratio of crossbred cattle occupied of 29% of herd in 2001, up to 68% in 2012. Production of live beef to consume in domestic market is 23,327 tons, increased 14,341 tons compared to 2001. The main 4 Báo cáo kết quả thực hiện kế hoạch 6 tháng năm 2012 ngành NN & PTNT (Report of agricultural & rural development sector in first 6 months 2012). 5 www.phuyen.gov.vn, www.stc.binhdinh.gov.vn, www.thuongmai.vn 6 http://vietnamnet.vn 7 http://www.baomoi.com
  6. 6. 6 market of Binh Dinh beef meat is in southern: Ho Chi Minh City, Dong Nai, Da Nang. Beef-cattle husbandry brings a stable income source for farmers and creates job for rural areas. There are some issues as following: (i) Small-size herd and scattered; (ii) Constrains in technical application at farmer household level; (iii) Too difficult in approaching to credit and small-financial source for husbandry; (iv) Frequently happening epidemics and diseases in beef breeding; (v) Unstable for outputs and consumption market; (vi) Low benefit and inefficiency. The policies of Binh Dinh province: (i) Adjusting and building up master plan for beef-cattle breeding from farmers to slaughter house and industrial processing; (ii) Reorganizing the slaughter systems; (iii) Investing on facilities, exotic species, zebu-blood bulls ratio of 82.5% for insemination; (iv) Priority budget for agricultural extension and demonstration of animal feed processing; (v) Exempting land tax for large-scale cattle farm, modern slaughter house, animal-feed factory; (vi) Supporting animal feeders/farmers credit and feasibility to approach small financial sources and market; (vii) Building up brand name for beef-cattle of Binh Dinh; (v) Organizing the vertical coordination among farmers – middlemen – scientists – local government8 . Hoang Manh Quan (2005) and Le Duc Ngoan (2008)9 pointed out status quo of cattle production in SCC region as following: (i) Reduction of amount of cattle due to uncontrolled diseases; (ii) Shortage of feed & forage, particularly in dry season; low nutrients in feed; (iii) High rate of local species (occupied of 85.7% in Hue), crossbred species occupied of low rate (14.3% in Hue) compared to figures of whole country; (iv) Number of technician and veterinarian not meet demand of animal husbandry, program of insemination inefficiency; (v) Natural pasture for grazing is narrowing in recent years, lack of water for irrigating; (vi) from 70-76,7% of farmers in Quang Ngai sells beef through middlemen, over 90% of farmers sells cattle at home, non-transparent price is very popular; (vii) Income of beef-cattle husbandry occupies of 21.9-26.2% of family income; 61,5- 64,4% of animal husbandry income; (viii) Intermediate costs occupies of 6,376 million VND, of which, 88% of species cost and 10.7% of feed (in 2007); (ix) In 2007, annual gross return of cattle is 10.9 million VND, cost-benefit ratio is 0,7; net profit is 4.5 million VND per year. Generally, production of beef-cattle has moved down from 2007 to 2010 in SCC region, particularly in 3 provinces of Binh Dinh, Phu Yen and Ninh Thuan. In 2009-2010, cattle heads reduced from 2,489 to 2,391 (equivalent 3.9%). In which, reduction took place mainly in Binh Dinh (12 thousands of heads; occupied 4%), then in Phu Yen (2 thousands of heads) and least in Ninh Thuan. Main reasons of problem are diseases, ineffective technical impacts (veterinary, artificial insemination), especially short-term price falling of beef meat. However, in SCC provinces, herd has recoverd in middle of 2011 because meat demand exceeds internal supply in large cities such as Ho Chi Minh, Ha Noi, Da Nang, Nha Trang, Vung Tau, etc. 100 150 200 250 300 350 2005 2006 2007 2008 2009 2010 2011 Beef-cattle(1000head) Bình Định Phú Yên Ninh Thuận Source: General Statistic Office (2011 & 2012) Figure 4 – Herd of beef-cattle in central Vietnam, 2005-2011 8 www.baobinhdinh.com.vn. Workshop “Nâng cao năng lực cạnh tranh chăn nuôi bò thịt” (Enhancement of competition of beef–cattle sector), 2012 9 Hoàng Mạnh Quân (2005), et al. ; Lê Đức Ngoan & Trần Thị Hường (2008)
  7. 7. 7 Fluctuation of beef meat price occurred in 2010-2011 that varied from 180 to 250 thousands VND/kg, and was double to triple folds much higher than price of pork. As a result, buying price of live cattle moved up, improved beef meat market force, and cattle keepers recived higher income than in previous year. Further, this sector still contributes an important part in farmers’ income; it also generates available capital source, budget cash-flow, and effectively use by-products from crops (cassava leaf, manioc peel and root, peanut stems, paddy straw, green forage etc.). 4.2 Positioning and analyzing the value chain of beef-cattle and the agents of chain Chain in domestic market Products line Beef-cattle value chain in SCC region includes four agents: (i) Farmersr; (ii) Collectors/middlemen; (iii) Slaughter houses; (iv) Dealer/distributors and other agents. Figure 5 – Beef-cattle supply chain in SCC Farmer producing at small-scale, having 2 to 5 cattle heads with mixed litters at different ages feeding together in farm. 1 to 2 years-old beef or few-months veal is often traded though local collectors or middlemen during dry season (April to August) and holiday occasion. In recent years, they invest capital on cattle species and fatterning. Transaction based on negotiation between farmers and collectors in informal market. Therefore, farmers faced several problems: (i) Can not decide selling price and don’t know clearly market demand; (ii) Do not measure accurately (farmer Agricultural Extension Centre, Veterinary Services, Animal Varieties Centre, Private Services DARD Bank, Public Services, Processing and Trade Sector Farmers Collectors Dealers, distributors Retailers, processing units Slaughter houses Live cattle Live cattle Meat, Born & by- products Meat, Born & by- products 70% cattle 75% cattle 25% cattle Meat & by- products Meat Leather Farmers Slaughter houses Leather (10%) Meat (30%) Bone, blood Slaughter houses in Biên Hòa, HCM city Local market Provincial Dealer Distributors Factories in HCMC Retailers Distribution systems in HCM city 30% cattle Middle- men
  8. 8. 8 lost 5-10 kg per live cattle); (iii) Assess live cattle quality based on quantity factors and having no doubtless among farmers and middlemen; (iv) 70% of farmers sell live cattle directly to local collectors and 30% to small-scale slaughter houses. Assume that farmer bought 1 year-old calve, this calve will be sold at two-years old, as beef-cattle, for local middleman. Total production (P) includes value of cattle, that accounts for 60%, and manure (by-product) is 31%. Intermediate cost (IC) accounts for 65% of P, including supplement feed accounts for nearly 34% of IC. Value added (VA) accounts for 35% of P, which contributes mainly by family labor. Net profit (NPr) generates only 230,000 VND per cattle per year (Table 3). Table 3 - Financial analysis of live cattle husbandry of farmer, 2010-2012 Items Total (1,000VND) Proportion (%) 1. Total production (P) 5,800 100 - Cattle 4,000 69 - Manure 1,800 31 2. Intermediate cost (IC) 3,753 64.7 - 1 year-old calve 2,500 - Rice straw, peanut stems 433 - Cassava pulp, flour, salt 820 3. Value added (VA) 2,047 35.3 Labor 1,800 Gross profit (GPr) 247 - Depreciation 17 - Net profit (NPr) 230 Source: Survey data, DASR, 2010-2012 Collectors and middlemen: transaction through this network was formed spontaneously between farmers and middlemen who are agents to decide buying-selling price of live cattle. Amount of collectors and structures of network depend on regional and purchasing-power factor. Almost transaction occurs mainly during December to nearly Tet festival. There were 60 to 70% of live cattle selling in local slaughter houses and 25-30% was transported to the southern market. Market force of live cattle is affected by southern meat market. Local collector often has on-farm and off-farm activities, therefore income from cattle purchase accounted for 20% of their income. 1-2 family members engaged to business. They usually invest 40 to 50 million VND for buying, transaction and stockage. Clients are farmers in village or inter- villages. Payment is mainly by cash. Table 4 - Financial analysis of collector agent, 2010-2012 Items Total value (1,000VND) Proportion (%) 1. Total production (P) 4,500 100 Selling cattle 4,500 2. Intermediate cost (IC) 4,000 88.9 Buying cattle 4,000 3. Value added (VA) 500 11.1 - Transportation & communication cost 180 - Brokerage commission 50 - Veterinary control 10 Gross Profit (GPr) 260 - Net Profit (NPr) 260 Source: Survey data, DASR, 2010-2012 Average number of live cattle purchased monthly varies from 7 to 15, of which, 20% buying directly from farmers, 80% must buy through middlemen. Then, cattles were sold to wholesalers or local slaughter houses. December to January (Lunar calendar) are peak months for cattle purchasese, estimated of 15 cattles per month in average. In which, crossbred Sind occupies of 60%
  9. 9. 9 and local species (called”Bò Vàng) is 40%. Purchase oral agreement among trader and farmer live cattle will be deliveried at farmer’s gate between 7 to 20 days. Buying price is various depending on to cattle breed, Crossbred Sind live cattle has higher price than local one, because it gives more carcass weight than others. In recent year, price is also growing up yearly from 3 to 5 %. Analyzing transaction of one live cattle, collector profits 260,000 VND within 20 days. Average monthly profit of collector is estimated about 1.8 million VND. VA generated by collector occupies of 11% of P, of which, 30% from transportation cost, and 10% from brokerage commission. Table 5 - Financial analysis of slaughter house, 2010-2012 Items Total (1,000VND) Proportion (%) 1. Total production (P) 5,305 1.1 Main products 4,345 81.9 1st grade meat 1,540 2nd grade meat 1,980 3rd grade meat 825 1.2 By products 960 18.1 - Blood & Offal 555 - Bonne, skin, horn, hoof… 405 2. Intermediate costs (IC) 4,506 84.9 - Cattle 4,500 - Feedstuff 5 - Electric & water 1 3. Value added (VA) 799 15.1 - Labor 150 - Transportation & communication costs 80 Gross Profit (GPr) 569 - Depreciation 3 - Net Profit (NPr) 566 Source: Survey data, DASR 2010-2012. Slaughter houses: small-scale slaughter houses located in local areas and equipped by simple tools. They often buy live cattle directly from farmers (occupies of 30%) and local collectors (70%). Final products of slaughter houses are beef-meat in various grades and consume by provincial distributors and consumed in southern region. By-products of slaughtering (bone, blood, intestine, etc.) are sold in local markets. Leather consumes by dealers and end-users are leather factories in Hochiminh city. In present, in Binh Dinh, Phu Yen and Ninh Thuan, there are not existing industrial-scale slaughter houses. Consequently, about 25% of live cattle is transported to slaughter houses that located in Bien Hoa (Dong Nai province, 25 km far from Hochiminh city) and Hochiminh city. In the case to slaughter a cattle weight of 170 kgs, slaughter house obtains about 5.3 million VND, in which meat products keeps 82% of P, by-products (blood, tripe, bone, skin, etc.) occupies of 18%. Proportion of IC is 85% of P and other agents created 15% of VA. NPr occupies of 71% of VA. If slaughter houses buy directly cattle from farmers/producers, they can profit 1 million VND. Slaughter in Bien Hoa, Dong Nai, an external agent of beef-cattle value chain of SCC region Survey in 2010-2012 covered agents of chain of SSC region. However, investigation of slaughter houses that located in Dong Nai provinces, southern Vietnam also carried out in 2012. In recent years, beef meat market in southern of Vietnam is very large and growing up. In Bien Hoa, Dong Nai, there are slaughter houses that have capacity to slaughter from small to medium scale and supply a large demand of meat in surrounding areas, especially HCM city. There are 6 slaughters that can process 50 to 100 heads of cattle per day in average (Trung Dong slaughter)10 that cattles are bought from different regions (SCC provinces, Tay Ninh, Cambodia, An Giang, Cu 10 Bureau of Veterinary of Dong Nai issued the licence papers for 42 slaughters and animal business enterprises in 2011.
  10. 10. 10 Chi). Until to October 2011, 12,300 cattles are imported from SCC provinces (compared to 14,000 in 2010). Figures pointed out cattle husbandry in central is affected largely by the southern market. Market access would be well arrangement if there were a network of slaughter houses & processing factories installed along the chain. Furthermore, transportation cost among central-southern interprovinces is also a big problem to reduce competition if live cattle carrying out to southern. Analysis of profit sharing in chain Contribution of agents is respectively following: farmers 61%, collector 15% and slaughter houses 24%. Share of profit: slaughter houses 54% in 1-5 days, collector received 25% in 7-20 days and farmer shared 22% in 1-3 years. Feeding cattle still exists and necessary because family labor and by-products are used and generates income in overview of animal cropping systems. If these resources are no longer or farmers must hire or purchase, they would not receive any profit. Table 6 – Profit contribution of each agent in beef-cattle value chain Agents of supply chain VA GPr NPr Value (1,000VND) Proportion (%) Value (1,000VND) Proportion (%) Value (1,000VND) Proportion (%) Farmer/Producer 2,047 61.2 247 23 230 21.8 Collector/Middleman 500 14.9 260 24.2 260 24.6 Slaughter house 799 23.9 569 52.9 566 53.6 Total 3,346 100 1,076 100 1,056 100 Source: Calculated from survey data, 2010-2012. 4.3 Strategy to improve beef-cattle supply chain Table 7 - Technical solutions to improve beef-cattle supply chain in SCC region Problems Technical solutions Involved agents 1.Beef-cattle species and grass varieties 2. Nutrient and feed 3.Veterinary 4.Marketing skill and capacity 4. Quality of beef meat -Higher performance programs for breeding and artificial insertion -Introducing high-biomass grass varieties and adapting with extreme weather condition in south central coastal -Apply nutrients-balance techniques, modify micro-elements & salt in dry season, fattening by cassava flour and pulp, fermented rice straw and cassava leaf, etc. -Increase ratio of vaccination and mapping for disease prediction -Training farmers on marketing skill and capacity -Apply husbandry techniques towards organic farming and GAP Extension service Veterinary service Media agency Private enterprise Research institute University Non-government organization Table 8 - Economic and market solutions to improve beef-cattle supply chain in SCC region Problems Economic solutions Involved agents Economic 1.Capital 2. Beef-cattle husbandry area 3.Import of bovine meat 4.Cordination of agents 5.Slaughter and processing factory -Credit program for beef-cattle husbandry (high loan and low interest rate, combine technical support) -Master plan for bovine husbandry accordance with purchasing power and available resources (land, labor) -Imported quota of bovine meat, flexible tariff and non-tariff barriers to protect bovine in domestic -Organize contract farming, horizontal coordination to purchase input materials and beef meat consumption -Plan & build up slaughter houses and processing factories in SCC Credit agency Bank for society welfare Seft-help group Private enterprise Department of trade Market 1.Beef collect and distribution 2.Market fragmentation 3.Production strategy 4.Export -Transparence in price and transaction method between farmers and collectors, upload website to inform market-price information -Organize auction and distribution systems for bovine -Policies to encourage beef-cattle husbandry towards high-quality, safety and competitive price with imported meat, target to high- income domestic market in Da Nang, HCMC, Ha Noi, Bien Hoa etc., and oversea countries -Improve scale of herds and develop specialized-farm -Find out, market studies new high-competitive markets with competitive-price and high quality (organic- farming, natural grazing, nonuse chemicals and industrial feeds) Government Enterprise Research Institute University Non-Government Organization
  11. 11. 11 5 Conclusions and suggestions 5.1 Conclusions  In SCC region, cattle husbandry contributes an important part in family income, keep balance of family budget and cash-flow of farmer households though the year. Price of live cattle and beef meat tends to move upward, the market force of beef meat is relatively high in southern, especially in large cities that affected overall beef-cattle supply chain of SCC region.  A major part of farmers has changed their awareness on cattle husbandry; especially they invest capital on cattle species, feed, forage, and fatterning.  Lack of forage in dry season is a constraint that influenced to scaling up herd.  Policies on installation of slaughter house, veterinary service, program of artificial insemination, enlarge of pastures & forages area, etc. with government and private enterprises’ support could improve quality and quantity of cattle herd in 3 studied provinces.  Cattle husbandry use cassava products & crop by-products as a feed source in dry season whereas shortage of feed and for fattening. Meanwhile, cow manure is a fertile source that is very useful for degraded soil and has high value. 5.2 Suggestion  Maintain and strengthen beef species improvement program, focus on remote areas whereas farmer is difficult to access veterinary service.  Introduce high potential bio-mass and drought tolerance grass varieties. Encourage farmer use crop by-products (fermented straw, maize & peanut stem, cassava leave & peel), and modify nutrients & micro-elements (nutrient lick block) in dry season (other project’s component).  Organize a vertical coordination amongs farmers and local collectors.  Plan a master-plan of slaughter house, processing factories targeting to southern market.  Improve skills of marketing and market access for farmers and extension staffs.
  12. 12. 12 REFERENCE 1. Bureau of Statistic of Ninh Thuan (2011). Statistical Data in 2010. 2. Bureau of Statistic of Phu Yen (2011). Statistical Data in 2010. 3. Bureau of Statistic of Binh Dinh (2011). Statistical Data in 2010. 4. FAO (2010). Food Outlook December 2010 – Global Market Analysis. http://www.fao.org/docrep/012/ak341e/ak341e06.htm 5. FAO (2011). Food Outlook December 2011 – Global Market Analysis. 6. Hồ Cao Việt (2012). Báo cáo chuỗi giá trị khoai mì và bò thịt vùng Duyên hải Nam Trung bộ (Project Report on analyis of cassava & beefcatle in SCC). Trình bày tại Hội thảo tổng kết dự án ACIAR, tháng 3/2013 tại Bình Định. 7. Hoàng Mạnh Quân (2005). Tình hình phát triển chăn nuôi bò thịt ở Thừa Thiên Huế (Development of beef-cattle in Thua Thien – Hue) 8. DARD of Phu Yen (2009). Planning for Agriculture and Rural Development in 5 years 2006-2010. 9. DARD of Ninh Thuan (2011). Annual report on general situation of agricultural production in 2011. 10. DARD of Ninh Thuan (2006). Project on development of beef-cattle husbandry in Ninh Thuan, 2006-2010. 11. DARS (2010). Annual Report on the Analysing value chain of beef-cattle and cassava for South Central Coastal Vietnam 12. General Statistic Office (2011). Statistical Data in 2010. Statistic Publishing House. http://www.gso.gov.vn 13. Lê Đức Ngoan,Trần Thị Hường (2008). Đánh giá thực trạng và hiệu quả kinh tế chăn nuôi bò ở nông hộ tại 2 vùng sinh thái của Quảng Ngãi (Evaluation on the status- quo and economic efficiency of beef-cattle husbandry in 2 sub-ecological systems in Quangngai province). 14. Tran Tien Khai, Ho Cao Viet et al. (2011). Analysis of value chain of coconut in Ben Tre province (project DPRP/2011). University of Economics of Hochiminh City (UEH). 15. Trần Tiến Khai, Hồ Cao Việt, Lê Văn Gia Nhỏ, Nguyễn Văn An (2012). Ước lượng tài chính của chuỗi giá trị dừa Bến Tre (Financial estimation forcoconut value chian in Ben Tre province). Tạp chí Phát triển Kinh tế (Economics Development Magazine). Số 265. Trang 46-51. 16. www.baobinhdinh.com.vn. Hội thảo “Nâng cao năng lực cạnh tranh chăn nuôi bò thịt” do Sở NN-PTNT tổ chức, 2012.(Worshop on enhacement of competition of beef-cattle husbandry in Binh Dinh”, held by DARD)

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