Feed Bites

Part One: Looking to Diversify Your Portfolio? Consider Vietnam

Written by: Guest   |   August 24, 2020

Vietnam, Trade, Guest perspective, Member value

Kevin Latner
Senior consultant, Ag Food Consulting

Even before the pandemic, the protracted trade war between the U.S. and China and widespread animal disease outbreaks in Asia left supply chains frayed and sales in question. Since the introduction of COVID-19, the economic slowdown and uncertainty around some of the basics, such as the availability of flights, containers and other logistics to export markets, has further put the pinch on sales. If it is not already in your export portfolio, animal food manufacturers should consider Vietnam and whether there is value and sales opportunities there.

Ag Food Consulting (AFC) has been working with the American Feed Industry Association since 2015 on a variety of projects, including market research in Asia and government affairs and market access in China, and now in Vietnam. This two-part blog series will provide insights into AFC’s findings from a recent market assessment of Vietnam, conducted on the AFIA’s behalf using Emerging Markets Program funding from the U.S. Department of Agriculture’s Foreign Agricultural Service. The market assessment is available to AFIA members at this link.  

Why Vietnam?

It might surprise you to know that Vietnam is one of the fastest growing economies in Asia with three decades of over 6% annual gross domestic product (GDP) growth. Vietnam’s per capita GDP on a purchasing power parity in 2018 stood at $8,065 and is forecast to be over $11,000 by 2024. The Boston Consulting Group estimates that Vietnam has the fastest growing middle class in Asia, currently at 33 million.

Over the past three decades, Vietnam has risen from a food shortage situation to one of food abundance. Pork and fish are the top two consumed animal proteins and consumption of both is up in rural and urban areas. Changing consumption patterns and the outbreak of African swine fever in Vietnam in 2019 has increased poultry demand and production. Even though dairy consumption and production is booming, Vietnam is only 28% self-sufficient in dairy production.

In 2018, Vietnam’s imports of agricultural and related products were estimated at $33.4 billion, up about 1% over 2017. U.S. exports of agricultural and related products to Vietnam hit a record high of $4.5 billion in 2018, up 51% over 2017 and up 341% from 2008, making it the seventh largest agricultural related products market for the U.S. 

Vietnam is also the largest corn importer in Southeast Asia, reaching over 10 million metric tons (MMT) in 2018. It is also the fourth largest importer of dried distillers grains with solubles in the world, among which the U.S. accounts for roughly 98% of the market share. The nation imports over 2 MMT of feed wheat annually, mainly from the Black Sea.

Whether there are export opportunities for your company to do business in Vietnam depends on your export readiness and ability to manage the risks associated with a dynamic emerging market. But with the country’s love of the American market and products, positive attitudes toward trade, an increasing regulatory infrastructure and a relationship culture, now may be a good time to consider Vietnam as an export possibility.

Part two of this blog series will discuss the key regulatory and business considerations for exporting animal feed and pet food to the Vietnamese market.

*Ag Food Consulting is a network of government affairs, trade facilitation and trade marketing experts with decades of experience in U.S. agricultural market research, export promotion and trade policy. AFC can be contacted at info@afcservice.net.

The AFIA is an equal opportunity provider and employer.

Comments See our policy on comments

Post a Comment

Required Field