Red Meat Market Report. Vietnam. Vietnam market update. Hanh Hoang May

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1 Red Meat Market Report Vietnam Vietnam market update Hanh Hoang May

2 May Figure 1 Vietnam meat consumption kg per person cwt pork poultry beef sheepmeat Source: OECD-FAO Consumer Vietnam s economy slowed in to 5.4%, down from the 7% growth registered in 212. The economy was in part weighed down by a decline in property values, weak banks and debt burdened State Owned Enterprises. In contrast, the fast growing export-oriented sector is transforming Vietnam into an export manufacturing powerhouse. Vietnam s economy is expected to recover Currency with 6% growth in, and continue to expand at an average 7.3% between 215 and 22 (IMA Asia). Like in China, urbanisation is occurring quickly in Vietnam, with major cities expected to become a centre of foodservice and modern retail development. Meat consumption in Vietnam has risen significantly over the last decade. Demand for animal protein in Vietnam will continue to be strong over the next five years, led by a growth in consumption of poultry, followed by beef (from a low base) and pork. After years of decline, the Vietnam Dong has been stable since late 211. Currently, the Dong is worth.47us, and averaged.48us in. In Vietnam, international trade is based on US dollars, with the stable Vietnam Dong helping enterprises limit upside risk on prices transferred to end-users. Figure 2 Retail meat prices ' Vietnam Dong/kg Australia Domestic Beef prices As at 12 May, retail prices of domestically produced beef fillet (tenderloin) in major cities (Hanoi, Ho Chi Minh City, Hai Phong and Da Nang) averaged VND25,/ kg (A$12.77/kg). This compared to pork fillet (tenderloin) at VND1,/kg (A$5.11/kg), pork belly at VND9,/kg (A$4.6/kg), and whole free-range chicken at VND13,/kg (A$6.64/kg). Prices for meat have come off the seasonal peak in early February, when demand for Lunar New Year celebration pushed prices higher. 2 1 ribeye tenderloin ribeye tenderloin brisket chicken pork fillet January - Tet May Source: Vietnam market survey Prices of imported beef are not significantly influenced by seasonal consumption, as the proportion of imported beef sold at retail is relatively small. In fact, the two weeks prior to Lunar New Year saw domestic beef prices averaging near imported beef price levels. Overall beef market The majority of beef consumption in Vietnam is derived from local cattle and live cattle imports from Thailand, Laos and Cambodia and since 21 a growing number from Australia. Strong demand from China in the past two years has reportedly attracted a significant number of live cattle from Thailand, Laos and Cambodia away from Vietnam, with importers noting the reduction in live cattle supply from these countries. From 21, Vietnamese live cattle importers and consumers welcomed the entry of Australian live cattle. Increased live cattle export from Australia from helped alleviate the supply shortage of live cattle. MLA Market Information 2

3 May In, Australia exported 66,953 head of cattle to Vietnam. The number of cattle imported through Vietnam s border with Thailand, Laos and Cambodia during (official and unofficial) varies significantly across sources, ranging from 3, head to 1 million head in. Imported beef market Due to insufficient import statistics, the evaluation of Vietnam s imported beef market is difficult. Estimating the import market share using data on beef exports from supplying countries is challenged by a significant proportion of beef imports from low cost suppliers for further trade into China. It is widely acknowledged among importers that about 7% of imported beef for utilisation in the Vietnamese market is cleared in Ho Chi Minh City, with the remaining 3% proportion released in Hai Phong (sea freight) and Hanoi (air freight). Vietnam imports beef from a wide range of suppliers, including Australia, Argentina, Brazil, Canada, India, Japan, NZ, Paraguay, US and Uruguay. The fastest growing supplier to Vietnam over the past five years has been India. The majority of this growth has been attributed to increased demand from China. Export data indicated that around 475, tonnes of Indian buffalo meat was exported to Vietnam in (Global Trade Atlas). Trade sources indicated that approximately 5% of Indian buffalo meat had been consumed in Vietnam. Figure 3 Australian live cattle exports to Vietnam ' head Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 Source: ABS Imported live cattle Following reduced supply of cattle from Thailand, and growing consumer demand, Vietnamese importers sought opportunities to import Australian cattle. After a slow start in , imports of Australian cattle for slaughter increased rapidly from January. Coincidently, from that time, exports of Australian feeder and slaughter cattle are underpinned by the Exporter Supply Chain Assurance System (ESCAS). Under this requirement, the number approved supply chains has in Vietnam increased. The rise in demand for Australian cattle has been sustained, despite higher export prices due in part to increased demand from Indonesia from October to March this year. Demand from China for beef produced in Vietnam is also an important factor. During January to March, Australia exported 44,217 head to Vietnam, the highest quarterly volume on record. Vietnam also imported about 95 dairy cattle from New Zealand in (Global Trade Atlas). Beef processing and distribution Vietnam s animal processing sector is at a primary stage, and dominated by a large number of manual, small scale abattoirs. While the number of centralised slaughter houses is small, underdeveloped infrastructure and logistic conditions saw these facilities remain under-utilised. A small proportion of industrialised plants are currently processing pigs and poultry, whereas a vast majority of cattle slaughter is reportedly done through scattered small private slaughterhouses. MLA Market Information 3

4 May Immediately after slaughter, beef is mostly distributed to surrounding wet markets. Wet markets remain an important distribution channel, with consumers perceiving them the main location for fresh produce. While freshness is an important factor in consumer minds, food safety and origin have heightened and driven more consumers to shop at supermarkets over the past five years. A small proportion of imported beef from Australia, US and live cattle are distributed through supermarkets, as well as special meat stores. Foodservice takes the majority of beef imports, including quality beef (Australia and US) for the high-end dining and lower cost product (India) for the low-end segment. Supply outlook Domestic supply Vietnam had a cattle herd of about 5.31 million head in 212. The buffalo herd is estimated at 2.66 million head. Both cattle and buffalo contribute to the bovine meat supply. The meat is commonly called beef, with no differentiation between beef and buffalo meat. Figure 4 Australian beef exports to Vietnam tonnes swt 2,5 2, 1,5 1, * * * January to April While official data on Vietnam s bovine meat production is dated and unavailable, participants in the beef industry strongly believe that the local cattle and buffalo herds are contracting. Like in China, urbanisation and increasing input costs have seen more small household producers exit the cattle raising business. Live cattle supply Australia exported 66,953 head to Vietnam in and an additional 44,217 head during the first three months of. Australian live cattle exports to Vietnam are expected to remain strong for the rest of. Figure 5 Indian beef exports to Vietnam ' tonnes swt Australia Assisted by established demand from five-star hotels and fine-dining restaurants, Australian beef exports to Vietnam for this segment (mostly loin cuts) is expected to be firm over the coming months. The booming midscale restaurants (Western, Japanese and Korean styles) already seen in major cities will also assist exports of Australian beef to the market * * Source: GTA * January to February India Barring unforeseeable barriers, Indian buffalo meat exports to Vietnam are expected to remain strong in the short to medium term. MLA Market Information 4

5 May Figure 6 US beef exports to Vietnam ' tonnes swt * * Source: GTA * January to March US Together with Australia, the US is one of the major suppliers of quality imported beef in Vietnam, for use in the high-end foodservice segment. Over the first three months of, the US exported 662 tonnes swt of beef to Vietnam, down 71% on the same period in. US beef exports to Vietnam are expected to remain subdued over the coming months, as the US prioritise product for higher value markets. Table 1 Australian beef exports to Vietnam (tonnes shipped weight) Calendar year vs CHILLED % Blade % Bone in other 1 Brisket % Carcase % Chuck 183% Chuck & blade 1 Chuck roll % Cube roll/rib eye roll % Fullset Intercostals -6% Leg Loin Manufacturing % Neck Other Rack Ribs 1 1 Ribs prepared % Rump % Shin shank % Short ribs Shortloin Shoulder Silverside/Outside % Striploin % Tenderloin % Thick flank/knuckle % Thin flank % Topside/Inside % MLA Market Information 5

6 May Table 1 Australian beef exports to Vietnam (tonnes shipped weight) continued.. Calendar year vs FROZEN ,149 1,869 1, % Blade % Bone in other Brisket % Carcase Chuck % Chuck & blade 19 7 Chuck roll % Cube roll/rib eye roll % Fullset 1 Intercostals 2 4 Leg Loin Manufacturing % Neck 1 Other % Rack 2 Ribs Ribs prepared % Rump % Shin shank % Short ribs % Shortloin Shoulder 1 3 Silverside/Outside % Striploin % Tenderloin % Thick flank/knuckle % Thin flank % Topside/Inside % Calendar year vs TOTAL ,475 2,212 2, % Blade % Bone in other 1 Brisket % Carcase % Chuck % Chuck & blade Chuck roll % Cube roll/rib eye roll % Fullset 1 Intercostals % Leg Loin Manufacturing % Neck 1 Other % Rack 2 Ribs Ribs prepared % Rump % Shin shank % Short ribs % Shortloin Shoulder 1 3 Silverside/Outside % Striploin % Tenderloin % Thick flank/knuckle % MLA Market Information 6

7 May Table 2 Australian lamb exports to Vietnam (tonnes shipped weight) Calendar year vs CHILLED % Backstrap Bone-in loin Boneless loin % Breast & flap Carcase 1-1% Chuck Chump Forequarter -15% Leg % Manufacturing 2 Neck Other Rack % Ribs Shank % Shortloin % Shoulder % Trunk Calendar year vs FROZEN , , % Backstrap 4 Bone-in loin Boneless loin % Breast & flap , , % Carcase % Chuck Chump % Forequarter 1 Leg % Manufacturing % Neck % Other 1 Rack % Ribs Shank % Shortloin % Shoulder % Trunk 1 Calendar year vs TOTAL % Backstrap 4 Bone-in loin Boneless loin % Breast & flap , , % Carcase % Chuck Chump % Forequarter 1-15% Leg % Manufacturing % Neck % Other 1 Rack % Ribs Shank % Shortloin % Shoulder % Trunk 1 MLA Market Information 7

8 May Table 3 Australian mutton exports to Vietnam (tonnes shipped weight) Calendar year vs Total , % Boneless loin % Breast & flap 28 9 Carcase , % Chump Forequarter 22 Leg % Manufacturing Neck 2 23 Other Rack % Shank % Shortloin 17 Shoulder % Table 4 Australian offal exports to Vietnam (tonnes shipped weight) Calendar year vs Total ,679 4,255 2,995 3, % Brain Cheek meat % Head 23 Heart % Intestine 9 Kidney Liver Manufacturing 5 Other Skin 13 Skirt Spleen 1 Stomach 4 Sweet bread Tail Tendon Tongues Tripe 1,58 3,83 2,742 2, MLA Market Information 8

9 May Table 5 Beef exports from other countries to Vietnam (tonnes shipped weight) Argentina vs. Chilled Frozen % Total % Brazil Canada India Japan NZ Paraguay Singapore US vs. Chilled 4 - Frozen 2,921 1,345 5, % Total 2,925 1,345 5, % vs. Chilled Frozen , % Total , % Jan-Feb Jan-Feb vs. Chilled , Frozen ,146 1,19 17,345 37,773 9,868 18,782 9, , ,53 474,953 84,179 91,831 9% Total ,173 1,33 17,617 38,457 91, ,17 9, ,75 284, ,953 84,179 91,831 9% vs. Chilled Frozen Total vs. Chilled % Frozen % Total % vs. Chilled - Frozen ,11 6,141 3,83 1, , % Total ,11 6,141 3,83 1, , % Jan-Feb Jan-Feb vs. Chilled 2 - Frozen Total vs. Chilled ,2 5,392 11,823 2,755 1, % Frozen ,472 1,886 1,943 37,78 44,133 27,682 4,56 38,578 3,877 2, % Total ,148 2,57 11,14 39,81 49,525 39,55 43,315 39,683 3,946 2, % Uruguay Chilled Frozen Total MLA Market Information 9

10 May Table 6 Vietnam Import Tariffs on bovine meat, sheepmeat and offal (%) HS codes Product Description Unit MFN ATIGA ACFTA AANZFTA AIFTA VCFTA VJEPA* VAT 21 Meat of bovines, fresh or chilled Carcase or half-carcase kg Bone-in kg Boneless kg Meat of bovines, frozen Carcase or half-carcase kg Bone-in kg Boneless kg Meat of sheep or goat, fresh, or chilled or frozen Whole lamb or half-carcase, fresh or chilled kg Sheep, fresh or chilled Carcase or half-carcase kg Bone-in kg Boneless kg Whole lamb or half-carcase, frozen kg Sheep, frozen Carcase or half-carcase kg Bone-in kg Boneless kg Goatmeat kg Offals Offals from bovine animals, sheep and goat, fresh, chilled or frozen From bovine animals, fresh or chilled kg From bovine animals, frozen Tongues kg Livers kg Other kg From others, fresh or chilled kg From others, frozen kg Abbreviations MFN Most Favoured Nation ATIGA ASEAN Trade In Goods Agreement ACFTA ASEAN-China Free Trade Agreement AANZFTA Australia-ASEAN-New Zealand Free Trade Agreement AIFTA ASEAN-India Free Trade Agreement VCFTA Vietnam-Chile Free Trade Agreement VJEPA Vietnam-Japan Economic Partnership Agreement * From 1 April to 3 March 215 VAT Value Added Tax Source: Vietnam Ministry of Commerce ISSN Free to MLA members For further information please call toll free or or fax Also available on Meat & Livestock Australia,. ABN MLA makes no representations as to the accuracy of any information or advice contained in Red Meat Market Report and excludes all liability, whether in contract, tort (including negligence or breach of statutory duty) or otherwise as a result of reliance by any person on such information or advice. MLA Market Information 1