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CARD Project 030/06 VIE: Developing a strategy for enhancing the competitiveness of rural small and medium enterprises in the agro-food chain: the case of animal feed Use of Industrial a

CARD Project 030/06 VIE: Developing a strategy for enhancing the competitiveness of rural small and medium enterprises in the agro-food chain: the case of animal feed

Use of Industrial and Mixed Feed by Livestock Producers in

Vietnam

For Information of the Minister of

Agriculture, and relevant Departments of

the Ministry of Agriculture and Rural

Development and Provincial

Departments of Agriculture and Rural

Development

Purpose

• To report on research findings

relating to the use of livestock feeds

by pig and chicken producers in

Vietnam, and

• To suggest implications from the

research relating to the current and

future use of industrial and mixed

feeds by livestock producers

Background

A survey in six provinces of 300 pig and

chicken livestock producers of mixed

production scale was conducted by the

Center for Agricultural Policy in 2009

One of the aims of the survey was to

investigate feed use by large and small

scale livestock enterprises Producers

were classified as small, medium or

large based on their per head production

in 2008 For pig producers, small

producers were classified as those

different for layer and broiler production For layer production, small firms were classified as those producing less than

1000 head per year, and large as those producing more than 4000 head per year For broiler production, small firms were classified as those producing less than

500 head per year, and large as those producing more than 3000 head per year The cost of animal feed is known to be the largest percentage of total production costs of livestock producers, and in this survey it was found on average that feed costs accounted for 79% of total production costs for chicken producers and 83% of total production costs for pig producers It is this high share of feed costs in total production costs that makes efficient feed use important in livestock production In this Policy Brief results from the research related to feed use and feed use efficiency in livestock production are discussed

Use of feed by livestock producers

Industrial feed is more often used by large producers, and more commonly in early production stages

In general, it was found that industrial feed was used more by larger producer

the amount of industrial feed used: that

is, larger producers used more industrial

feed (i.e quantity fed per head)

Industrial feed produced by foreign

companies was generally more favored

than that produced by domestic

companies, with more than 90% of the

surveyed households choosing both

complete and concentrate feed with a

foreign company brand The main reason

given by producers for this choice was

that foreign brand feeds were of better

quality and gave greater productivity

For chicken production: Most surveyed

households used complete feed for

chicken production in all three

production stages1: however, the

proportion commonly tends to decrease

from stage 1 to stage 3 (90%, 63% and

52% for broiler and 82%, 80% and 74%

for layer) Overall, the larger the

production scale, the more likely that

households used complete feed, and this

was generally true for all production

stages For medium and large groups, the

proportion of broiler households using

complete feed was high for all

production stages (over 60%), while only

about 26% and 43% of small households

used complete feed in the second and

third production stages respectively

Households with exotic/cross breeds

were more likely to use complete feed

than those with local chicken, and

households raising free-range chickens

also tended to use less complete feed

For pig production: More households

used complete feed for raising porkers

compared to sow production For raising

sows, the percentage of households using

complete feed was generally highest in

the lactating period at 65% For porker

production, more households used

1

A chicken batch normally has 3 feeding

production stages For broilers, stage 1 lasts on

average for about 29 days, stage 2 is the next 48

days and stage 3 is the last 40 days For layers,

the respective length of the 3 stages is 94 days,

172 days and 250 days

complete feed in the piglet stage (85%) than in the later stages2 Similar to chicken production, many more large scale producers fed their pigs using complete feed compared to small scale producers, and this was generally true for all different stages of porker and sow production

Use of mixed raw feed only diets is no longer prevalent; instead more complete only and diets using mixed industrial and raw feeds are used

Except for a few households that fed only mixed feed to their chickens (9% for broiler and 18% for layer), a large percentage of both pig and chicken producers used complete feed only: 53% for broiler and 64% for layer; and 43% for sow, 77% for piglet and 45% for porker production The remainder used both complete and mixed feed in the daily diet for livestock The ratio of concentrate feed in the total mixed feed was found to be about 27% overall for chicken producers, and 17% for porker produecion Mixed feed was used much more than complete feed by pig households for all production stages

Efficiency of industrial versus mixed feeds

Using the survey data for the on-farm feed use and liveweight gain, Feed Conversion Ratios (FCRs) were calculated for similar farm outputs: broilers and porkers For broiler production it was found that on-farm FCRs – the kg of feed fed per kg of bird produced - decreased as production scale increased The FCRs for broiler production on all farms decreased from local to cross to exotic breed (3.94, 2.45 and 2.24 respectively) The FCR was much lower in households using complete feed only rather than mixed

2

A porker batch consists of two main feeding stages: stage 1 (piglet production) lasts for 60 days and stage 2 (grower plus finisher stage) is

98 days

feed, and also significantly lower in

households using foreign brand complete

feed than those using domestic brands in

the case of chicken (2.94 versus 4.18)

FCRs for pig production using complete

feed were significantly lower for small

scale producers (2.08) compared to large

scale producers (2.92) The FCR was

also significantly lower for complete

feed diets (2.65) compared to mixed feed

(4.06), but FCR for pig producers using

foreign brand complete feed, however,

was not significantly different from

those using domestic brands

FCRs may be used as a standard measure

of feed use efficiency However if a

more productive feed costs more per kg,

it may be worthwhile for farmers to use

the cheaper feed with the higher FCR if

the net cost per kg of liveweight gain is

lower The results of this research show

some interesting differences between

chicken and pig households using

different feed types, indicating there may

need to be different policy

recommendations for each product type

and system

For chicken production: Overall,

although the mean cost per day for

complete feed only was statistically

higher from that for mixed feed, the

overall feed cost per kg of liveweight

gain between households using complete

only and mixed feed was statistically

lower for complete feed only diets

(22,686 VND versus 27,888 VND)

(Table 1) This result supports the use of

industrial feed for cost efficient

production Note that cost efficient

production should also consider the sale

price of the product, which might reflect

product differences in taste and quality

affected by livestock diets, however this

has not been taken into consideration in

the analysis Differences in costs by feed

type were not significant for the small

and medium scale farms, but for the

large scale farms the cost of the

complete only diet per day was significantly lower than for mixed feed The effect of brand type on the cost of feed per kg of liveweight gain was also tested but there was no significant difference in the means Thus, while FCR was lower for the foreign brand feeds, the higher price of this feed balanced out the economic benefits compared to the domestic feed, such that the cost per kg of liveweight gain was no worse than for foreign feed The mean values were 22,900 VND for foreign feed and 25,300 VND for domestic feed but the differences were not statistically significant

For pig production: In this case there

are significant differences in cost per day between complete only and mixed feed overall (19,230 VND versus 14,370 VND), and for all three production scales (Table 2) Similarly, it was also found that the feed cost per kg of liveweight gain was significantly higher for households using complete feed only compared to those using mixed feed overall (23,580 VND versus 20,150 VND), and those located in the north These results for pig production support mixed feed use (often using local residual feeds) as households can reduce their feed cost by about 3,400 VND per

kg liveweight gain overall As before, possible differences in sale prices associated with stock raised on different

diets have not been considered

Implications for feed use by livestock producers

• Generally, larger pig and chicken producers are more likely to use a higher percentage of industrial feed

in their livestock diets As the livestock production sector develops and trends towards larger production units, the demand for industrial feed will increase

• Industrial feed is shown by the results to be a more cost-effective

diet for chicken producers However,

there is some evidence supporting

the cost effective use of mixed feed –

particularly for pig production

Mixed feeds are more widely used by

small-medium producer enterprises,

and the results support the idea that

this feed use strategy can be

cost-effective Mixed feeds may also be

associated with produce that has a

price premium for taste and/or

quality, e.g local chicken

• SME livestock feed producers tend

to supply small producers directly,

and domestic feed brands were

shown in these results to be as

cost-effective for liveweight gain as

foreign brands Higher FCRs were

offset by the lower price of domestic

brand feeds The feasibility of establishing a cluster of animal livestock production and livestock feed producers in rural areas by linking smallholder farmers and SMEs could be investigated

Further reading

Center for Agricultural Policy, 2010 Medium Enterprises in the Livestock Feed Sector in Vietnam: Vol 1 Livestock feed production Report for CARD Project 030/06 VIE, Section 6.3

Center for Agricultural Policy, 2010 Medium Enterprises in the Livestock Feed Sector in Vietnam: Vol II Feed use by pig and chicken livestock producers Report for CARD Project 030/06 VIE, Chapter 5

Table 1 Feed cost per day and per kg liveweight gain for broiler production: by

region, scale and by diet (Source: CARD producer survey 2009)

Feed cost per broiler per day (thousand VND)

Feed cost per kg meat gain (thousand VND)

only

Mixed - complete

Complete only

Mixed - complete

ANOVA# (cost/kg vs feed type)

a Cost per day between feed types at the aggregate level is significant at 10%

b Complete only feed cost per day is significantly higher in the north, nsd for mixed feed; cost per kg

liveweight gain significantly higher in south for mixed feed but nsd for complete only

c Cost per day nsd between scale for either feed types, cost per kg gain nsd by scale for complete only feed,

mean cost per kg for mixed feed significantly higher for large farms

* Only two producers in large group use mixed feed so the result is not shown here

# ANOVA is Analysis of Variance, nsd is No Significant Difference

Table 2 Feed cost per day and per kg porker liveweight gain, by region, scale and

diet type (Source: CARD producer survey 2009)

Feed cost per day (thousand VND)

Feed cost per kg meat gain (thousand VND)

Complete only

Mixed - Complete

Anova (cost/day vs feed type)

Complete only

Mixed - Complete

ANOVA (cost/kg vs feed type)

CARD Project 030/06 VIE: Developing a strategy for enhancing the competitiveness of rural small and medium enterprises in the agro-food chain: the case of animal feed

Constraints Facing Small-Medium Enterprises in the Livestock Feed

Production Sector in Vietnam

For Information of the Minister of

Agriculture, and relevant Departments of

the Ministry of Agriculture and Rural

Development and provincial

Departments of Agriculture and Rural

Development, Vietnam Association of

Small and Medium Enterprises

Purpose

• To inform you of major constraints

facing small-medium enterprises

(SMEs) operating in the livestock

feed sector in Vietnam, and

• To suggest policy initiatives needed

to address these constraints

Background

Large enterprises dominate the market in

the livestock feed manufacturing sector,

but there are many small-medium size

firms also operating in the sector There

is pressure on these smaller domestic

companies to remain competitive,

however there has been little research on

the competitiveness of the small and

medium mills, compared to the larger

ones, and constraints facing their

operations In this Policy Brief we report

on a number of constraints facing SMEs

in the sector Recent research has found

that credit assistance currently provided

by the government to SMEs is not

effective as it mainly targets SMEs located in the two largest cities, HCMC and Hanoi (Thanh, 2010) Since many livestock feed SMEs are located in rural areas, the Credit Assistance Fund will be ineffective in reaching these SMEs Furthermore, it was found that 75% of SMEs accessed loans from informal sources (Thanh, 2010)

Data come from a survey of 62 feed mill enterprises conducted in 2008 by the Center for Agricultural Policy In the analyses, the mills have been categorized

in the following way: small mills are those producing less than 10,000 tonnes per annum; medium mills are those producing from 10,000 to less than 60,000 tonnes per annum, and large mills are those producing 60,000 or more tonnes per annum In this Policy Brief, SMEs refer to mills producing at both the small and medium scale, although some results are reported separately for

small scale and medium scale mills

Constraints facing SMEs operating in the sector

Restricted access to adequate credit

The research results show that small mills have some disadvantages in accessing loans from formal credit sources Fewer small mills were able to access enough funds compared to

medium and large mills Nearly 70% of

feed mills surveyed in the CARD project

had a loan but only 56% of them could

obtain as many funds as they wanted

Less small firms were able to acquire

loans with sufficient funds compared

with medium and large enterprises (40%,

64% and 67% respectively) Compared

to large firms, SMEs tend to have loans

from commercial banks (over 60%)

rather than VBARD where they can

obtain lower interest rates This means

that they have to pay higher costs for

loans which increases their costs of

production

In the survey, having no collateral was

selected by all large mills and two thirds

of small enterprises as the most

important reason for not having enough

funds Half of the mills in the

medium-size group mentioned high interest rates

as the most important reason for not

being able to access sufficient funds, and

the rest were divided equally between

having no collateral and lacking the right

connections

Many of the mills stated that the

Government should give more support to

enterprises to access credit This was the

most important role for government

identified by the surveyed mills This

finding reflects the difficulties faced by

enterprises, especially SMEs, when

borrowing (e.g high interest rates,

official procedures, lack of collateral,

and loan limits), and the high priority

that these firms put on the need for

policy to address credit constraints

Procurement and storage of raw materials

There was no statistical evidence to

indicate that small enterprises paid more

for the key raw material inputs used in

production of feed It should be noted

that these data did not take account of

the quality of purchased feed However,

it is clear from the survey data that small

and medium enterprises rely more

heavily than large mills on domestic

sources of raw materials, particularly fish meal

Small and medium enterprises have less storage capacity, and are able to store for

a shorter period than large mills This means they must make material input purchases at more frequent intervals This makes them particularly vulnerable

to changing input prices Under unstable raw material market conditions, larger storage capacity and ability to store for a longer period helps to ensure that mills can effectively plan and budget ahead

Access to adequate land for business purposes

Both small and large mills were more likely to report that they faced difficulties accessing adequate land to operate their business Access to land for business purposes was the second most common issue (after access to credit) nominated by SMEs as needing support from Government (over 20% of mills)

Restrictions on the movement of goods

Forty two percent of firms overall reported being adversely affected by restrictions on the movement of goods, although more large firms (61%) than SMEs reported these restrictions Tolls, inter-district and inter-provincial roadblocks and “police conduct” were reasons given for restrictions on the movement of goods Of these, “police conduct” was nominated as the most important restriction on movement of goods by 67% of small firms, 33% of medium firms and 75% of large firms

Lack of capacity to undertake adequate quality control

In the survey of 62 livestock feed mills conducted by CAP in 2008, better quality control processes for both input materials and output products were evident in foreign/joint-venture and larger firms It was apparent that there were quality control issues for smaller, domestic firms Few of the surveyed

firms nominated either quality control or

technical support and training as needing

support from the Government This may

be a perspective that is detrimental for

SMEs in the livestock feed sector Better

quality control is needed in the sector,

and it seems unlikely that this will be

achieved voluntarily by the large number

of domestic mills Quality control issues

are explored further in Policy Brief

“Quality Control in the Livestock Feed

Sector in Vietnam”

Recommendations

1 Further loan support should be

provided to SMEs Access to credit

was nominated by over 50% of mills

as needing Government support

Further research is needed to identify

the specific operational areas in

which SMEs need credit support, and

how best to provide credit support

The focus of the support should be in

areas where SMEs need support to be

competitive with larger firms (e.g

raw material purchases, improving

quality control facilities)

2 Improve standards of quality control

of small domestic mills There is

currently a large difference between

quality control procedures operating

in domestic and foreign mills To

compete in the sector in the long

term, quality control standards of

domestic SMEs must improve More

detailed recommendations to

improve quality control are given in

the Policy Brief “Quality Control in

the Livestock Feed Sector in

Vietnam”

3 Build better market linkages between

SMEs and raw material suppliers

This strategy, along with improved

management of the supply chain,

could increase the quality and

decrease costs of domestic raw

materials, which would benefit

SMEs operating in the livestock feed

industry The aim would be to improve quality (for example, of domestic fishmeal products) and reduce prices of these local raw material inputs

4 Promote the role played by SMEs in

rural employment SMEs are more likely to be located in rural areas and therefore offer employment opportunities in rural areas The location of SMEs in rural areas could

be encouraged by Government through provision of land, infrastructure and subsidized credit

5 Restrictions on the movement of

goods due to irregular police conduct need to be addressed Unnecessary restrictions and costs associated with the movement of goods add costs to the livestock feed sector in Vietnam, which result in higher production costs for smallholder and commercial agriculture Corruption associated with police activities needs to be addressed and prevented

6 Support a stronger role for the

Vietnamese Animal Feed Association (VAFA) The VAFA could play a strong and useful role for SMEs in the sector The Association is already used by SMEs for feed ration recipes, and advice on various aspects of production, and this role could be expanded to include assistance in providing information on domestic and world markets, raw material procurement (for example, importing of raw materials) and improving quality control procedures Both SMEs and large feedmills should play a role in debating and developing a future role for the VAFA Policy advocacy for the feed sector in general and SMEs

in particular should be considered Membership of the VAFA could be required for all registered feedmills, and the Association should be

strengthened with Government and

private sector support

References and further reading

Center for Agricultural Policy, 2010

Small-Medium Enterprises in the Livestock Feed

Sector in Vietnam: Vol 1 Livestock feed

production Report for CARD Project 030/06 VIE, Section 7.3

Thanh, Vo Tri, 2010 Seminar on “Strategies for SMEs to Overcome the Economic Crisis”, Association of Chartered Certified Accountants and Saigon Business, HCMC,

4th May 2010

CARD Project 030/06 VIE: Developing a strategy for enhancing the competitiveness of rural small and medium enterprises in the agro-food chain: the case of animal feed

Competitiveness of Small-Medium Enterprises in the Livestock Feed

Production Sector in Vietnam

For Information of the Minister of

Agriculture, and relevant staff of the

Ministry of Agriculture and Rural

Development and provincial

Departments of Agriculture and Rural

Development, Vietnam Animal Feed

Association, Vietnam Association of

Small and Medium Enterprises, and

managers of small-medium enterprises

operating in the livestock feed sector

Purpose

• To report on research findings

relating to the competitiveness of

small-medium enterprises (SMEs)

operating in the livestock feed sector

in Vietnam, and

• To suggest implications from the

results relating to the sustainable

development of SMEs in the sector

Background

Large enterprises dominate the market in

the livestock feed manufacturing sector,

but there are many small-medium size

firms also operating in the sector There

is pressure on these smaller domestic

companies to remain competitive, and

perceptions that they are not competitive,

but there has been little research on the

competitiveness of the small and

medium mills, compared to the larger

ones In this Policy Brief findings of a

study on the competitiveness of SMEs in the sector are reported and discussed Data come from a survey of 62 feed mill enterprises conducted in 2008 by the Center for Agricultural Policy In the analyses, the mills have been categorized

in the following way: small mills are those producing less than 10,000 tonnes per annum; medium mills are those producing from 10,000 to less than 60,000 tonnes per annum, and large mills are those producing 60,000 or more tonnes per annum In this Policy Brief, SMEs refer to mills producing at both the small and medium scale, although some results are reported separately for small scale and medium scale mills

Competitiveness in the livestock feed sector is affected by more than just the relative costs of production of enterprises of different scale The research focused on comparing SMEs and large enterprises with regards to their production and business activities, including: material input use, storage, product types, quality control, supply and distribution chains, market share, services provided and type of customer These activities give broader indications

of how SMEs compete with larger feed mill enterprises

Findings on the competitiveness of

small-medium mills

Production characteristics and costs of

production

In this study, statistical evidence was

found to show that cost of production

was inversely related to scale of

production, with small enterprises

having significantly higher costs of

production per kg of output than medium

enterprises, which had higher costs of

production than large enterprises During

2007, the mean costs of production per

kg of output were 8420 VND, 6340

VND and 5380 VND for small, medium

and large firms respectively This alone

is not necessarily an indicator of greater

efficiency of larger enterprises For

example, small-medium enterprises were

found to produce a higher share of

concentrate as percentage of total

production than large enterprises On

average, small mills made 37% of their

revenue from concentrate production,

compared to 18% for medium mills and

only 11% for large mills Over 80% of

revenue for medium and large mills was

made from sale of complete feed

Concentrate production has higher raw

material input costs per kg of output, so

cost of production per kg of total output

would necessarily be higher for those

firms producing more concentrate

The research findings indicated that raw

material costs made up about 80% of the

total cost of production in feed mills An

analysis of costs other than raw material

costs showed that large mills had

significantly lower unit costs than small

mills (970 versus 2,050 VND per kg in

2007), indicating scale efficiencies

associated with larger enterprises

Small firms used 19 labor units for one

unit of output, compared to around 11

labor units used by both medium and

large firms, and this difference was

significant This may indicate

under-utilisation of labor by small firms, or

capital substitution by larger firms It does indicate that small firms play a role

in providing employment

Profitability of small-medium enterprises

There were insufficient data to compare profitability at the level of individual products However, for overall production, we found that small firms made a loss of 70 VND per kg of output while the medium and large ones made a profit of 120 VND and 100 VND per kg output respectively The result for small firms was statistically different from the medium and large firms, whilst the mean profit of the large firms is not statistically different from the medium size firms

These results indicate that small mills (i.e those producing less than 10,000 tonnes per annum) are likely to be struggling to remain competitive The data indicate that they face significantly higher costs, and sell pig complete feed

at significantly lower prices, resulting on average in a significantly lower profit Anecdotally, this is supported by reports

of small mills ceasing business, and observations when conducting the survey

of many previously listed small mills no longer in business

Strategies used by SMEs to compete for market share against larger firms

Provision of credit to purchasers

SMEs rely more than large firms on provision of credit to clients purchasing their products Credit, or delayed payment options for their products, was not the usual method of payment made

to large firms, whereas both these options were usual methods of payment made to SMEs Almost all sales of complete feed, and 75% of concentrate feed sales to wholesalers by large enterprises is usually paid for in advance

by the purchasers Costs associated with providing credit to customers are a

further cost that SMEs must carry,

compared to larger enterprises, but

providing credit to customers can be a

strategy to secure sales

Medium-scale firms were the only group

who stated that they purchased inputs

using “payment in advance” with 15% of

purchase quantity being paid for in

advance This purchasing method helps

ensure a stable supply, especially when

raw materials are scarce, and could be a

strategy used by SMEs to ensure raw

material supply The strategy, however,

is used at a financial cost

Location

SMEs are more likely to be located in

rural rather than urban areas, and

medium-size mills in particular tend to

supply customers further from their

production site, and this customer is

more likely to be a smallholder This

indicates that some SMEs are focused on

supplying smallholders in areas further

from major cities SMEs also used a

higher percentage of domestically

sourced raw materials for production

Location in rural areas may assist SMEs

to source these domestic supplies of raw

material inputs, including raw materials

used less often, such as broken rice,

groundnut, and cottonseed meal

Supply chain differences

The research showed that the

supply/distribution chains operating for

SMEs and large firms in the livestock

feed sector are quite different, indicating

that they are sourcing materials from and

targeting distribution to different market

segments Unlike large mills, SMEs

source some inputs and distribute

products directly from/to small

households Large mills are more

dependent on imports (e.g maize) to

meet their raw material requirements,

whereas SMEs are more likely to be able

to source sufficient raw materials in the

domestic market

SMEs are more likely to diversify their business into trading activities, and in addition they sell to a wider range of customer types including other companies, agents and households Small mills in particular will sell direct

to farm households, and medium mills target mainly retail agents for their products By contrast, large mills distribute their products almost exclusively for on-selling by wholesale agents and traders, and source raw materials from private processing businesses and state-owned enterprises

Services to agents and farm households

SMEs provide different services associated with the sale of feed products

to agents and farm households Small mills are more likely to provide delivery services to agents (compared to both medium and large mills), and just as likely to provide delivery services to producers as large mills As mentioned previously, SMEs are also more likely than large mills to offer credit/delayed payment option to agents

SMEs are less likely to provide veterinary and nutrition advice and extension material to producers, although a considerable percentage of SMEs do offer these services However, SMEs are almost as likely as large firms

to offer these services to agents

Implications for the sustainable development of SMEs in the sector

The research results indicate approaches that could be considered to ensure the sustainable development of SMEs in the sector

1 There is a need for small mills to increase production size

The results support the idea that medium-size mills (i.e those producing between 10,000 and 60,000 tonnes per annum) are remaining competitive; with costs, product mix and prices similar to large mills They have a sales strategy

that targets a different customer base to

large mills (i.e retail agents rather than

wholesale agents) Small-sized mills

(producing less than 10,000 tonnes per

annum) appear to be under pressure to

survive, and many will need to increase

their scale of operation to remain in

business

2 Consider advantages to be gained

from a cooperative structure

SMEs should investigate possible

advantages associated with a cooperative

structure, which might enable them to

act more like a larger enterprise and

achieve scale efficiencies in costs of

production A cooperative structure

could also offer advantages associated

with diversification Some SMEs in the

feed sector in Thailand offer a diverse

range of services (such as credit

provision, fuel, farm output purchases)

to small farm households and/or

commercial farms that are members of a

cooperative and either supply and/or buy

directly to/from the feed mill This

strategy could be used to ensure supply

of raw materials and a customer base for

livestock feed products

3 Further develop small, niche market

opportunities

The results indicate that SMEs are more

likely to be located in rural areas and

tend more than large firms to sell outputs

in areas far from key livestock

production regions More research is

needed to trace the supply of livestock

feed in rural areas distant from major

livestock feed production areas, and

investigate how to expand this market as

a niche opportunity for SMEs

Opportunities may also exist for the

production of niche feed products for

smaller livestock industries (such as

duck, local chicken and pig, and beef

cattle) rather than competing against

foreign companies to supply feed for pig

and chicken production

4 The domestic supply of raw material inputs is important for SMEs

SMEs are more likely to source input materials from local sources, indicating that the domestic material market is very important for SMEs Better management

of the supply chain could increase the quality and decrease costs of domestic raw materials, which would benefit SMEs operating in the livestock feed sector Further study of input material supply chain management of medium scale feed mills could provide experiences and lessons learnt for sustainable development of raw material

supply for SMEs producing animal feed

5 Improve quality control of feed products produced by SMEs

Better quality of products produced by SMEs is essential if they are to be competitive in the sector Policy initiatives needed to improve quality control of feed outputs are addressed in a separate Policy Brief: “Quality Control

in the Livestock Feed Sector in Vietnam.”

6 Address constraints facing SMEs

A number of constraints were found to

be affecting SMEs in the livestock feed sector These include access to credit, procurement and storage of raw material inputs, and lack of capacity to implement quality control Policy approaches needed to address constraints are addressed in a separate Policy Brief:

“Constraints Facing Small-medium Enterprises in the Livestock Feed Sector

in Vietnam.”

Further reading

Center for Agricultural Policy, 2010 Medium Enterprises in the Livestock Feed Sector in Vietnam: Vol 1 Livestock feed production Report for CARD Project 030/06 VIE

Small-Center for Agricultural Policy, 2008 Thailand Study Tour Report Report for CARD Project 030/06 VIE