Pig Value Chain in Vietnam

Vietnam Smallholder Pig Value Chain Team Meeting

Delhi, 30 April – 1 May 2012

Lucy Lapar

CGIAR Research Program 3.7

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 output

Year Pig Chicken Cattle Others Total

1990 65 11 14 10 100

2000 68 14 9 9 100

2005 72 12 8 8 100

2009 62 13 11 14 100

Household pig production supply at least 80% of Vietnam’s pork. But growth in supply has failed to keep pace with rising demand, resulting in accelerated increase in real pork prices.

Source of data: FAOSTAT 2009.

Supply of pork in Vietnam

Most Vietnamese pigholding households keep very few pigs but on average the size of their herds is slowly rising. Although not shown, the percentage of pigholding households with 21 pigs or more rose from 0.3% in 2001 to 1.75% in 2006. 

Projected share of pork supply from large-scale producers

0%

2%

4%

6%

8%

10%

12%

14%

0 1 2 3 4 5 6 7 8 9 10

Shar

e of

larg

e-sc

ale

mod

ern

sect

or in

pig

pro

ducti

on

Year

Base simulation

High income growth

High tech growth in modern sector

No tech growth in traditional

No tech growth in maize

High income elasticity of modern

High income elast and tech growth in modern

Worst case for traditional sector

Share of pig income in total household income

38.2%

13.9%

3.3%3.6%

11.6%

20.2%

9.2%Crop

Pig

Non-pig livestock

Other agriculture

Non-agriculture production

Wage and salary

Other income

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

Value added generated in pork value chains where household pig producers participate is about 11,700 VND per kg liveweight (or $0.62)

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.

Small Medium Large Small Medium Large Small Medium LargeFarrow to Wean Farrow to Finish Grow to Finish

0%10%20%30%40%50%60%70%80%90%

100%

Structure of Feed Cost by Production System and Scale

Purchased feed Own produced feed

Feed-use efficiency (in maize equivalent)

Smal

l

Med

ium

Larg

e

Ove

rall

Smal

l

Med

ium

Larg

e

Ove

rall

Smal

l

Med

ium

Larg

e

over

all

Farrow to wean Farrow to finish Grow to finish

0

1

2

3

4

5

6

Purchased feed Own produced feed

Kg maize equiva-lent/kg

liveweight gain

Cost per unit output in household-based pig production

Economies of scale in piglet production; no significant difference across scale full cycle slaughter hog production and pig fattening

Farrow to Wean Farrow to finish Grow to finish0

5

10

15

20

25

SmallMediumLarge

Gross margin (‘000 VND per kg output)

Farrow to Wean Farrow to finish Grow to finish0

2

4

6

8

10

12

14

16

SmallMediumLargeOverall

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 safety

1. ACIAR: Reducing health risk in smallholder pig systems (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 2012

2. EcoZD: identify priority zoonoses in South Vietnam; evaluate risk factors

R4D efforts to date Feeds

1. IFAD-CIAT: Improving forage-based feeding systems (ongoing in CLV)

Vietnam component to include assessment of feeding options in smallholder pig systems

Genetics

1. GEF-Asia: Conservation through utilization of animal genetic resources (ongoing)

Vietnam component on pigs and poultry, market surveys?

R4D efforts to date Development initiatives

1. 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 advocacy

1. WB, MARD (DLP, DAH), provincial DARDs

2. CIDA and VN partners

3. FAO

3. Private sector – AsVELIS

4. NGO – Oxfam, IDE

Research

1. HUA, HSPH

2. MARD and associated research institutes (NIAS, NIVR, IPSARD)

3. ACIAR and links with other ACIAR-funded projects

Impact pathway and outcomes

Pathway: 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 & Outputs2012 2013 2014

Outcomes CRP3.7, local and international partners have established an R&D alliance to transform target VC in each country

1. Partners have capacity to use basic set of tools for VC assessment2. Stakeholders in each country are increasingly aware of potential, constraints and initial options for pro-poor development of target VC

Evidence base in each target VC for best-bet pro-poor VC development interventions is influencing development investment decisions

Proposed Priority Outcomes & Outputs2012 2013 2014

Outcomes R&D alliance 1. capacity to use tools 2. Stakeholders aware

Evidence base influencing decisions

Research Outputs

1. Scoping study to develop an inventory of feed technology options and identify stakeholders and potential partners.

2. Rapid assessment of target VC to inform design of in-depth assessment of animal health constraints, and to identify preliminary priority constraints and best-bet upgrading strategies to test.

3. Selected best-best options on feeds, animal health (biosecurity, diagnostics) and possibly breed, identified and piloting initiated in selected sites (e.g. with LIFSAP)

1. Inventory and evidence base (literature review) for key constraints and proposed solutions compiled

2. Quantitative assessment of VC performance

3. Technical and economic assessments of key VC components to target for upgrading (e.g. farm-level: husbandry, feeds, breeds, health, environmental issues; market-level: institutional environment, food safety, demand characteristics; overall: policies, organizational strategies)

1. Best-bet intervention strategy formulated and tested, ready for scaling up and out.

Proposed Priority Outcomes & Outputs2012 2013 2014

Outcomes R&D alliance 1. capacity to use tools 2. Stakeholders aware

Evidence base influencing decisions

Research Outputs 4. Basic toolkit for VC assessment

compiled for testing (with CRP 2)

5. Analytical framework for assessing VC performance established (with CRP 2)

4. Pig feed ration decision support tool – to inform feeding options under a range of feed types, nutrient value, and feed prices (build on CIP-LifSim model?)

Current Activities & Resources/Potential Linkages

ACIAR 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 (Vietnam)

Development and application of decision support tools to conserve and 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.