Chicken war with US shows free trade threat to Vietnamese farmers
Japan Times, Tokyo
Chicken war with U.S. shows free trade threat to Vietnamese farmers
by John Boudreau, Bloomberg
17 August 2015
HANOI – Hanoi chicken farmer Nguyen Huu Tuyen blames inexpensive poultry imported from the U.S. for the loss of almost $14,000 (¥1.7 million) this year.
Farmers such as Tuyen say the only way American companies can undercut Vietnamese poultry prices is if they export chicken at artificially low prices or ship damaged meat to the Southeast Asian country.
The chicken flap is a wake-up call for Vietnam as it embraces free trade agreements. Some sectors will be vulnerable to competition from foreign corporate giants benefiting from economies of scale and sophisticated supply chains. Vietnam, which announced a free trade agreement with the European Union Aug. 4 and signed one with South Korea in May, wants to be part of the 12-nation Trans-Pacific Partnership now being negotiated.
“It drives home the impact of trade with the rest of the world for Vietnam,” Vu Tu Thanh, chief Vietnam representative of the U.S.-Asean Business Council, said by phone. “Many people are still unaware of what the free trade agreements will mean for the country and the economy.”
Vietnam expects exports to soar with the reduction of tariffs on products such as seafood, shoes and clothes once the TPP is signed.
The chicken controversy signals that some industries, including agriculture, automobiles and machinery, will not fare as well as others, said Fred Burke, managing partner of Baker & McKenzie (Vietnam) Ltd. in Ho Chi Minh City.
“It’s a good example of the difficulties Vietnamese, especially small household farms, will face, whether it’s chickens, beef or pigs,” he said by phone. “There will be a lot of competition.”
Vietnam’s trade and agriculture ministries are investigating complaints by the Southeastern Livestock Association, which says frozen U.S. chicken imports have caused $62.3 million in losses for its chicken breeders over the last 11 months, VnExpress online newspaper reported Aug. 14, citing Le Van Quyet, the group’s vice chairman.
Vietnam imported 45,651 metric tons of chicken, mostly thighs, from the U.S. in the first seven months of 2015, accounting for 49 percent of total meat imports in the period, the Ministry of Agriculture’s newspaper, Bao Nong Nghiep, reported Aug. 10.
“U.S. chicken meat sold in Vietnam that cheaply, I believe, is either low-quality due to being close to expiration dates or from bird-flu chickens,” Tuyen, owner of a 15,000-chicken farm in Hanoi’s Thanh Binh commune once known as northern Vietnam’s chicken capital, said by phone. “The government needs to take serious actions to save poultry farmers from dying.”
Vietnamese authorities are investigating a complaint by a domestic poultry association that frozen U.S. chicken is being sold in Vietnam for 91 cents per kilo (2.2 pounds), said Tong Xuan Chinh, deputy head of the livestock production department at the agriculture ministry. Production costs for the same type of chicken in Vietnam is $1.31-$1.36 a kilo, Chinh said.
U.S. companies don’t sell chicken in Vietnam for less than they do in America, said James Sumner, president of the Stone Mountain, Georgia-based USA Poultry & Egg Export Council.
“It’s just trumped up allegations,” he said. “A lot of facts are getting distorted.”
U.S. breeders usually export leg quarters, which are not popular among U.S. consumers and sell for about half the price of chicken breast in supermarkets, Sumner said.
U.S. farmers also pay less for animal feed than their Vietnamese counterparts, said Adam Sitkoff, executive director of the American Chamber of Commerce in Vietnam.
“Vietnam chicken farmers have to pay more for their grains,” he said. “There are a lot of things that are more expensive here. Vietnam is not a cheap place except for labor.”
Vietnam’s livestock sector will struggle to compete with foreign companies, Nguyen Duc Thanh, head of the Vietnam Institution for Economic and Policy Research, said by phone. The sector’s weaknesses include heavy dependence on imported feed and seed, inadequate food safety and low productivity with about 50 percent of livestock coming from small family farms.
Most U.S. imported chicken is bought by large companies, such as garment makers, to feed tens of thousands of employees in cafeterias, Thanh said. Vietnamese consumers prefer fresh chicken slaughtered shortly before meals over frozen poultry.
Vietnamese poultry farmers are looking for financial relief as they face increasing competition from imported beef and pork, he said.
“Because the U.S. is richer and its incomes are a lot higher than those of Vietnamese, it is believed it can’t have things cheaper than Vietnam,” Thanh said. “But that’s not the case.”
