vietnam agribusiness - · pdf file7 livestock: animal feed sector are dominated by foreign...
TRANSCRIPT
Vietnam Agribusiness Sector Overview
Hanoi, Vietnam
March 2014
Presentation and Marketing Material
2
Table of Contents
Our research contacts for
this report are:
Thuan Nguyen, FCCA
CEO
+84 98 389 0000
Harry Hoan Tran, CFA
Senior Analyst
+75 1597 1532
Lan Nguyen
Associate
Research Division
+84 96 494 6760
DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, StoxPlus , its Directors
and employees accept no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and StoxPlus makes no representation of warranty of any kind as to the accuracy or
completeness of any information hereto contained.
Content Page
Sector Structure and Overview 3 – 4
Livestock Sector 5 – 7
Farming Sector 8 – 10
Sector summary 11
About StoxPlus 12 – 17
3
Agriculture has 3 major components: Farming, Livestock, and Agri-service
Agriculture
Farming
Seeds
Plantation
Processing
Livestock
Feeds
Raising
Processing
Agri-service Agrichemicals
Agriproduct Retailing
Sector Structure and Overview
Figure 1: Description of Agribusiness in Vietnam
Source: GSO
4
Vietnam’s agriculture industry was estimated at US$38.9bn in 2011
• Vietnam boasts impressive figures in regards to its agricultural production. It is the world’s second-largest
exporter of rice, and one of the world’s largest exporters of coffee and cashews. It is also a major producer of
various fruits, sugar, rubber and cotton. This high output is mainly due to Vietnam’s climate and geography.
Farming, US$28.1bn,
72.2%
Livestock, US$10.3bn,
26.5%
Agriservice, 0.5US$bn,
1.3%
Farming
Livestock
Agriservice
Figure 2: Breakdown of Vietnamese Agriculture Industry, 2011
Source: StoxPlus from GSO
5
Livestock sector: pig farming is the most dominant segment
• Total market size: Out of total US$10.3bn total
market size of livestock, we have estimated that
total meat production for three categories namely
pork, poultry and beef amounting to
approximately US$6.3bn by 2012.
• Segmentation: Within the Vietnamese livestock
industry, pig farming is by far the most dominant
sector, with pork production comprising about
two-thirds of total meat production in 2011/12.
• Meat consumption: Meat consumption in
Vietnam has risen significantly over the last
decade, with per capita consumption rising by
87% from 2001 to 2011 to reach 36.7kg per year.
000 tonnes Price/kg US$bn
Pork 2,000 1.8 3.52
Poultry 750 1.0 0.75
Beef & Veal 285 7.0 2.00
3,035 6.27
Source: Production volume sourced from USDA. Price data is the average and picked
up from Hanoi market.
2007 2008 2009 2010 2011 2012
Actual Actual Actual Actual Actual Actual
Pork production 1,832.0 1,850.0 1,910.0 1,930.0 1,960.0 2,000.0
Pork consumption
1,822.0
1,826.0
1,891.0
1,912.0
1,940.0
1,980.0
2007 2008 2009 2010 2011 2012
Actual Actual Actual Actual Actual Actual
Poultry production
359.0
417.0
467.0
616.0
708.0
750.0
Poultry consumption
403.0
499.0
502.0
655.0
750.0
793.5
2007 2008 2009 2010 2011 2012
Actual Actual Actual Actual Actual Actual
Beef & Veal production
316.0
320.0
300.0
295.0
290.0
285.0
Beef & Veal consumption
321.0
331.0
306.0
303.0
298.0
295.0
Source: Department of Livestock (MARD), BMI, USDA and StoxPlus
Livestock Sector
Figure 3: Meat Production - 2012 Market Size Estimation
Figure 4: Production and Consumption : Pork, Poultry and Beef (‘000 tons)
6
Livestock: Animal feed sector are dominated by foreign players
• Vietnam's feed industry is one of the world's fastest
growing agribusiness markets. The animal feed industry
has been receiving significant - mainly foreign -
investment in recent years.
• Demand exceeds supply: The government has since
placed a high priority on the development of industrial
farming and expects the use of industrial feed to increase
from 56% in 2010 to 70% in 2020 . Currently, the market
is still lucrative as supply only meets 60% of demand,
leaving a big slice of the pie unconsumed.
• Local firms are disadvantaged as foreign firms enjoy
economies of scale. The good prospect of the domestic
animal feed sector has attracted huge interest from
foreign firms with newer technology, build large-scale
operations, lower production cost. In contrast, local firms
are relatively small in terms of production capacity.
• In total, 58 joint ventures and foreign-invested enterprises
produce about 6.9 million tonnes of industrial feed,
controlling 60% of output. The remaining 172 local firms
only produce 4.5 million tonnes (the other 40%).
C.P. Vietnam,
18%
Proconco, 12%
Cargill Vietnam,
8%
East Hope, 10%
Vietnam Green
Feed, 8%
Dabaco, 3%
Other, 41%
56% 67% 70%
14% 13% 12%
18% 20% 18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2015 2020
Industrial feed Self-made Import
Figure 5: Animal feed players market shares by sale
volume 2011
Figure 6: Breakdown of total feed supply
Source: StoxPlus from Vietnam Animal Feed Association
Source: StoxPlus from Vietnam Animal Feed Association
Livestock Sector
7
Livestock: Animal feed sector are dominated by foreign players
• Pricing power in the hands of “Big Four”: In
developed countries such as the US and Canada,
animal feed accounts for 50-55% of the cost of
pork.
• In Vietnam, it is near 75% - underscoring the
impact of animal feed price fluctuations on livestock
breeding.
• With 30% market share combined, the foreign “Big
Four” firms (i.e. C.P., Proconco, East Hope and
Cargill), have enough pricing power to fully pass
through increase in input costs.
• Other smaller, domestic producers like Dabaco,
can generally follow the Big Four’s pricing but are
only able to pass through about three-quarters of
the price increase.
13 15
18 20
2
9 11
16
0
5
10
15
20
25
2000 2005 2010 2015
Demand Supply
66%
100%
44% 48%
80% 82%
67%
0%
20%
40%
60%
80%
100%
120%
0
500
1000
1500
2000
2500
3000
Th
ou
san
d t
on
ne
s
Designed Capacity Sales Volume % Utilisation
Source: StoxPlus from Vietnam Livestock Industry Development Strategy till 2020
Source: Company Data, StoxPlus
Figure 7: Industrial Feed: Demand vs. Supply (mn
tonnes)
Figure 8: Key Players in Animal Feed: Designed
Capacity and Sales Volume, 2012
Livestock Sector
8
Coffee: Vietnam is the largest producer of Robusta coffee with total export value
of US$3.7bn in 2012
Production and Supply
• Vietnam's coffee sector has grown significantly over
the last 20, the area planted expanding from 42,000
hectares (ha) to more than 509,000ha.
• Vietnam is the world's biggest producer of robusta
coffee.
• Coffee plantation is mainly in the Central of Vietnam
(top coffee harvesting provinces are Daklak, Lam
Dong, and Gia Lai).
Coffee consumption and export
• Domestic consumption is about 6% of total
production. The 94% export (mainly robusta coffee)
is amounting to US$3.7bn in 2012.
• Vietnam accounts for approximately 17.7% of the
world’s total coffee exports. Exports made to more
than 80 countries.
• On average, coffee consumption in Vietnam is
1.07kg per capita in 2012. Many forecast that coffee
consumption will reach 1.7kg per capital by 2017.
Farming Sector
19,500 18,000
16,980 18,500
19,600
24,800
750 850 950 1,200 1,335 1,635 0
5,000
10,000
15,000
20,000
25,000
30,000
2007 2008 2009 2010 2011 2012E
'000 6
0kg
ba
gs
Coffee Production Coffee Consumption
Source: Vietnam Coffee Association
Figure 9: Vietnam Coffee Production & Consumption,
2007-2012
9
Rice: Vietnam is the largest rice exporter by volume yielding US$3.7bn value in
2012
Overview
• Rice is the main food staple for Vietnamese.
Vietnam currently has about 4 million ha rice farming
with total production volume of about 26.9 million
tonnes in 2012.
• Vietnam becomes the largest exporter of rice
recently with total export volume of 7.5mn tonnes in
2012. However rice export prices are normally 20-
25% discount comparing to peers such as Thailand
and India.
• In fact, there are 264 rice export companies by 2012
in Vietnam. However, there will be a consolidation
because of the new government’s regulation about
exporter.
Foreign restriction removed
• After 2011, foreign traders are allowed to directly
undertake rice trading in the country.
• Under WTO commitments, the Vietnamese rice
market opening up to foreign traders from 2011.
Large scale rice farming program
• The Cultivation Department of the Ministry of
Agriculture and Rural Development of Vietnam is
endeavoring to develop a large-scale rice farming
model whereby neighboring farmers work with
businesses and government officials to increase
rice yields.
22,922 24,375 24,393 24,993
26,300 26,900
18,775 19,400 19,000 19,150 19,400 19,788
0
5,000
10,000
15,000
20,000
25,000
30,000
2007 2008 2009 2010 2011 2012E
'000 t
on
ne
s
Rice Production Rice Consumption
Source: Ministry of Agriculture and Rural Development of Vietnam
Figure 10: Vietnam Rice Production & Consumption,
2007-2012
Farming Sector
10
Sugar: Vietnam has 40 mills with annual of 1.3mn tonnes in 2012
Overview
• Vietnam has 40 sugar mills with total refining
capacity of 129,200 tonnes of sugarcane per day.
• Total production volume in 2011/2012 is 1.3m
tonnes of sugar, a 13.5% y.o.y increase.
• Vietnam sugarcane yield is 61.7 tonnes/ha in the
2011/2012 crushing season which is 25% lower
than the Thai’s yields. Main reasons for this is the
low sugarcane quality from the fragmented
farmland.
Sugar distribution in Vietnam and cross-holding
issue
• About two-thirds of Vietnam’s sugar is consumed
in the south of the country. The Vietnamese sugar
market is highly underdeveloped, with no formal
distribution systems.
970
820
1,150 1,148
1,000 980
1,090
1,330
1,600
1,230
1,420 1,425 1,450 1,400 1,398 1,370 1,400
1,500
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2005 2006 2007 2008 2009 2010 2011 2012 2013E
'000 t
on
ne
s
Sugar Production Sugar Consumption
Figure 12: Vietnam Sugar Production & Consumption,
2007-2013
Source: StoxPlus from Ministry of Agriculture and Rural Development of Vietnam
Figure 13: Key Sugar Players and Capacity as of YE2012
Ticker Company name Market Cap Capacity
US$mn tons/day
SBT Bourbon Tay Ninh 85.9 9,800
LSS Lam Son Sugar 31.2 10,500
BHS Bien Hoa Sugar 22.4 6,000
NHS Ninh Hoa Sugar 20.3 3,400
SEC Gia Lai Sugar & Thermoelectric 12.2 3,500
172.0 33,200
Source: StoxPlus from Bloomberg, MBKE
Farming Sector
11
No Content Sector Summary
1 Sector Structure
and Overview
In this report, we focused on Agribusiness. Vietnam is the world’s second-largest
exporter of rice, and one of the world’s largest exporters of coffee and cashews.
2 Sector
Livestock
Base on our a research, pig farming is the most dominant segment with total size of this
sector is estimated at US$10.3bn in 2012. And the Animal feed market is still lucrative as
supply only meets 60% of demand, leaving a big slice of the pie unconsumed that
attracted huge interest from foreign firms.
3 Sector Farming
Vietnam is the largest exporter of Rice and Robusta coffee with total Rice’s export
volume of 7.5mn tons and total Robusta coffee’s export value of US$3.7bn in 2012.
Sugar is also a Vietnam potential exported product but Its yield is not high (only 61.7
tons/ha in 2011/2012, 25% lower than the Thailand’s yield) because of the fragmented
farmland.
Sector summary
Introduction about StoxPlus Corporation
and Research Capability
13
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14
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15
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‹#›
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