|        
               The price of        
              animal feed, on the rise since December, dramatically surged in        
              May, said Le Ba Lich, Chairman of the Viet Nam Feed Association.        
                     
                     
                       
                         
                           
                        |        
                            
                           
                      | The        
                        owner of an animal feed store in Quang Binh Province. |        
                            
                         
                        
                      
              Mixed-feed prices have gone up by 19%; chicken        
              feed has increased from VND2,400 per kilo to VND7,200; pig feed        
              from VND3,800 to VND4,300, and shrimp feed from VND11,000 to        
              VND16,000.        
              Mr Lich said the        
              higher costs would eat into producers' profit margins. He said        
              many feed makers have reduced production and are hesitant to sell        
              existing stocks, adding that domestic animal feed output had        
              dropped by 20% in the past year.        
              The Chairman        
              explained Vietnam imports almost all raw materials for its feed        
              production - approximately 1mil tonnes per annum - from North        
              America, Argentina and the EU.        
              Animal feed has        
              become more expensive because the costs of its key ingredients        
              have soared: soybean price has increased from US$220 per tonne in        
              2002 to the current price of $380; gluten from $334 to $520 a        
              tonne, and corn prices soared a whopping 180% to $140 per tonne in        
              just a year.        
              These prices are        
              due a combination of poor crops in source countries, slow        
              turnaround of goods at ports in Argentina and Brazil, and higher        
              international freight charges.        
              An additional        
              factor is prices of locally available materials such as bran, corn        
              and cassava have also risen.        
              Nguyen Dang Vang,        
              head of the Livestock Breeding Institute, warned the feed price        
              increases will ravage the animal breeding sector, in particular as        
              the country's poultry stocks recover after the avian flu.        
              Vietnam's breeding        
              industry churns through about $1mil worth of manufactured feed        
              annually.        
              Mr Vang said the        
              increasing costs had obviously affected confidence as first-level        
              distribution agents are reluctant to supply product to second-tier        
              agents and breeders, worried that payments will be defaulted        
              because of the higher prices.        
              He said soaring        
              feed costs have seen many large-scale breeders in southern        
              provinces and HCM City stop rearing and take up other jobs.        
              Some fish breeders        
              in An Giang Province said the 20-30% spike in costs makes them        
              less profitable.        
              Mr Lich said only        
              when raw material price decreases on the world market, will prices        
              go down.        
              Mr Vang forecasted        
              the cost of animal feed will remain high until August when        
              countries offer fresh soybean supplies on the market and prices        
              are expected to drop by $10-12 per tonne.        
              (Source: Viet        
              Nam News)        
             |