Báo cáo khoa học nông nghiệp " Developing a strategy for enhancing the competitiveness of rural small and medium enterprises in the agro-food chain: the case of animal feed - Use of Industrial and Mixed Feed by Livestock Producers in Vietnam " doc

CARD Project 030/06 VIE: Developing a strategy for enhancing the
competitiveness of rural small and medium enterprises in the agro-food
chain: the case of animal feed

Policy Brief May 2010

Use of Industrial and Mixed Feed by Livestock Producers in
Vietnam

For Information of the Minister of
Agriculture, and relevant Departments of
the Ministry of Agriculture and Rural
Development and Provincial
Departments of Agriculture and Rural
Development.

Purpose
• To report on research findings
relating to the use of livestock feeds
by pig and chicken producers in
Vietnam, and
• To suggest implications from the
research relating to the current and
future use of industrial and mixed
feeds by livestock producers.

Background
A survey in six provinces of 300 pig and
chicken livestock producers of mixed

production scale was conducted by the
Center for Agricultural Policy in 2009.
One of the aims of the survey was to
investigate feed use by large and small
scale livestock enterprises. Producers
were classified as small, medium or
large based on their per head production
in 2008. For pig producers, small
producers were classified as those
raising less than 50 head per year, and
large more than 120 head per year. The
classification of chicken producers was
different for layer and broiler production.
For layer production, small firms were
classified as those producing less than
1000 head per year, and large as those
producing more than 4000 head per year.
For broiler production, small firms were
classified as those producing less than
500 head per year, and large as those
producing more than 3000 head per year.
The cost of animal feed is known to be
the largest percentage of total production
costs of livestock producers, and in this
survey it was found on average that feed
costs accounted for 79% of total
production costs for chicken producers
and 83% of total production costs for pig
producers. It is this high share of feed
costs in total production costs that makes

efficient feed use important in livestock
production. In this Policy Brief results
from the research related to feed use and
feed use efficiency in livestock
production are discussed.

Use of feed by livestock producers
Industrial feed is more often used by
large producers, and more commonly in
early production stages
In general, it was found that industrial
feed was used more by larger producer
groups, and in the early production stage
rather than later stages. These
differences by scale were also true for


2
the amount of industrial feed used: that
is, larger producers used more industrial
feed (i.e quantity fed per head).
Industrial feed produced by foreign
companies was generally more favored
than that produced by domestic
companies, with more than 90% of the
surveyed households choosing both
complete and concentrate feed with a
foreign company brand. The main reason
given by producers for this choice was
that foreign brand feeds were of better

quality and gave greater productivity.
For chicken production: Most surveyed
households used complete feed for
chicken production in all three
production stages
1
: however, the
proportion commonly tends to decrease
from stage 1 to stage 3 (90%, 63% and
52% for broiler and 82%, 80% and 74%
for layer). Overall, the larger the
production scale, the more likely that
households used complete feed, and this
was generally true for all production
stages. For medium and large groups, the
proportion of broiler households using
complete feed was high for all
production stages (over 60%), while only
about 26% and 43% of small households
used complete feed in the second and
third production stages respectively.
Households with exotic/cross breeds
were more likely to use complete feed
than those with local chicken, and
households raising free-range chickens
also tended to use less complete feed.
For pig production: More households
used complete feed for raising porkers
compared to sow production. For raising
sows, the percentage of households using

complete feed was generally highest in
the lactating period at 65%. For porker
production, more households used


1
A chicken batch normally has 3 feeding
production stages. For broilers, stage 1 lasts on
average for about 29 days, stage 2 is the next 48
days and stage 3 is the last 40 days. For layers,
the respective length of the 3 stages is 94 days,
172 days and 250 days.
complete feed in the piglet stage (85%)
than in the later stages
2
. Similar to
chicken production, many more large
scale producers fed their pigs using
complete feed compared to small scale
producers, and this was generally true
for all different stages of porker and sow
production.
Use of mixed raw feed only diets is no
longer prevalent; instead more complete
only and diets using mixed industrial
and raw feeds are used
Except for a few households that fed
only mixed feed to their chickens (9%
for broiler and 18% for layer), a large
percentage of both pig and chicken

producers used complete feed only: 53%
for broiler and 64% for layer; and 43%
for sow, 77% for piglet and 45% for
porker production. The remainder used
both complete and mixed feed in the
daily diet for livestock. The ratio of
concentrate feed in the total mixed feed
was found to be about 27% overall for
chicken producers, and 17% for porker
produecion. Mixed feed was used much
more than complete feed by pig
households for all production stages.
Efficiency of industrial versus mixed
feeds
Using the survey data for the on-farm
feed use and liveweight gain, Feed
Conversion Ratios (FCRs) were
calculated for similar farm outputs:
broilers and porkers. For broiler
production it was found that on-farm
FCRs – the kg of feed fed per kg of bird
produced - decreased as production scale
increased. The FCRs for broiler
production on all farms decreased from
local to cross to exotic breed (3.94, 2.45
and 2.24 respectively). The FCR was
much lower in households using
complete feed only rather than mixed

2
A porker batch consists of two main feeding
stages: stage 1 (piglet production) lasts for 60
days and stage 2 (grower plus finisher stage) is
98 days.


3
feed, and also significantly lower in
households using foreign brand complete
feed than those using domestic brands in
the case of chicken (2.94 versus 4.18).
FCRs for pig production using complete
feed were significantly lower for small
scale producers (2.08) compared to large
scale producers (2.92). The FCR was
also significantly lower for complete
feed diets (2.65) compared to mixed feed
(4.06), but FCR for pig producers using
foreign brand complete feed, however,
was not significantly different from
those using domestic brands.
FCRs may be used as a standard measure
of feed use efficiency. However if a
more productive feed costs more per kg,
it may be worthwhile for farmers to use
the cheaper feed with the higher FCR if
the net cost per kg of liveweight gain is
lower. The results of this research show
some interesting differences between

chicken and pig households using
different feed types, indicating there may
need to be different policy
recommendations for each product type
and system.
For chicken production: Overall,
although the mean cost per day for
complete feed only was statistically
higher from that for mixed feed, the
overall feed cost per kg of liveweight
gain between households using complete
only and mixed feed was statistically
lower for complete feed only diets
(22,686 VND versus 27,888 VND)
(Table 1). This result supports the use of
industrial feed for cost efficient
production. Note that cost efficient
production should also consider the sale
price of the product, which might reflect
product differences in taste and quality
affected by livestock diets, however this
has not been taken into consideration in
the analysis. Differences in costs by feed
type were not significant for the small
and medium scale farms, but for the
large scale farms the cost of the
complete only diet per day was
significantly lower than for mixed feed.
The effect of brand type on the cost of
feed per kg of liveweight gain was also

tested but there was no significant
difference in the means. Thus, while
FCR was lower for the foreign brand
feeds, the higher price of this feed
balanced out the economic benefits
compared to the domestic feed, such that
the cost per kg of liveweight gain was no
worse than for foreign feed. The mean
values were 22,900 VND for foreign
feed and 25,300 VND for domestic feed
but the differences were not statistically
significant.
For pig production: In this case there
are significant differences in cost per day
between complete only and mixed feed
overall (19,230 VND versus 14,370
VND), and for all three production
scales (Table 2). Similarly, it was also
found that the feed cost per kg of
liveweight gain was significantly higher
for households using complete feed only
compared to those using mixed feed
overall (23,580 VND versus 20,150
VND), and those located in the north.
These results for pig production support
mixed feed use (often using local
residual feeds) as households can reduce
their feed cost by about 3,400 VND per
kg liveweight gain overall. As before,
possible differences in sale prices

associated with stock raised on different
diets have not been considered.
Implications for feed use by livestock
producers
• Generally, larger pig and chicken
producers are more likely to use a
higher percentage of industrial feed
in their livestock diets. As the
livestock production sector develops
and trends towards larger production
units, the demand for industrial feed
will increase.
• Industrial feed is shown by the
results to be a more cost-effective


4
diet for chicken producers. However,
there is some evidence supporting
the cost effective use of mixed feed –
particularly for pig production.
Mixed feeds are more widely used by
small-medium producer enterprises,
and the results support the idea that
this feed use strategy can be cost-
effective. Mixed feeds may also be
associated with produce that has a
price premium for taste and/or
quality, e.g. local chicken.
• SME livestock feed producers tend

to supply small producers directly,
and domestic feed brands were
shown in these results to be as cost-
effective for liveweight gain as
foreign brands. Higher FCRs were
offset by the lower price of domestic
brand feeds. The feasibility of
establishing a cluster of animal
livestock production and livestock
feed producers in rural areas by
linking smallholder farmers and
SMEs could be investigated.

Further reading
Center for Agricultural Policy, 2010. Small-
Medium Enterprises in the Livestock Feed
Sector in Vietnam: Vol 1. Livestock feed
production. Report for CARD Project
030/06 VIE, Section 6.3.
Center for Agricultural Policy, 2010. Small-
Medium Enterprises in the Livestock Feed
Sector in Vietnam: Vol II. Feed use by pig
and chicken livestock producers. Report for
CARD Project 030/06 VIE, Chapter 5.



5
Table 1 Feed cost per day and per kg liveweight gain for broiler production: by
region, scale and by diet (Source: CARD producer survey 2009)

Feed cost per broiler per
day (thousand VND)
Feed cost per kg meat gain
(thousand VND)
Complete
only
Mixed -
complete
Complete
only
Mixed -
complete
ANOVA
#
(cost/kg vs
feed type)
Overall
a
0.64 0.54 22.69 27.89 10%
By region
b

North 0.90 0.57 18.67 27.09 12%
South 0.59 0.47 23.69 30.30 2%
By broiler scale
c


Small 0.34 0.52 25.43 25.36 nsd
#

Medium 0.64 0.50 24.69 26.13 nsd
Large 0.72 0.82 20.90 . * 1%
a. Cost per day between feed types at the aggregate level is significant at 10%
b. Complete only feed cost per day is significantly higher in the north, nsd for mixed feed; cost per kg
liveweight gain significantly higher in south for mixed feed but nsd for complete only
c. Cost per day nsd between scale for either feed types, cost per kg gain nsd by scale for complete only feed,
mean cost per kg for mixed feed significantly higher for large farms
* Only two producers in large group use mixed feed so the result is not shown here.
# ANOVA is Analysis of Variance, nsd is No Significant Difference.

Table 2 Feed cost per day and per kg porker liveweight gain, by region, scale and
diet type (Source: CARD producer survey 2009)


Feed cost per day
(thousand VND)
Feed cost per kg meat gain
(thousand VND)

Complete
only
Mixed -
Complete
Anova
(cost/day vs
feed type)
Complete
only
Mixed -
Complete

ANOVA
(cost/kg vs
feed type)
Overall 19.23 14.37 1% 23.58 20.15 5%
By region:

North 16.99 13.83 nsd 26.62 20.38 10%
South 19.44 15.08 1% 23.28 19.84 nsd
#

By scale:

Small 18.11 12.84 1% 18.72 18.44 nsd
Medium 19.75 15.60 5% 24.96 21.70 nsd
Large 19.41 14.92 5% 24.92 20.66 nsd
# ANOVA is Analysis of Variance, nsd is No Significant Difference




CARD Project 030/06 VIE: Developing a strategy for enhancing the
competitiveness of rural small and medium enterprises in the agro-food
chain: the case of animal feed

Policy Brief May 2010

Constraints Facing Small-Medium Enterprises in the Livestock Feed
Production Sector in Vietnam

For Information of the Minister of

Agriculture, and relevant Departments of
the Ministry of Agriculture and Rural
Development and provincial
Departments of Agriculture and Rural
Development, Vietnam Association of
Small and Medium Enterprises.

Purpose
• To inform you of major constraints
facing small-medium enterprises
(SMEs) operating in the livestock
feed sector in Vietnam, and
• To suggest policy initiatives needed
to address these constraints.

Background
Large enterprises dominate the market in
the livestock feed manufacturing sector,
but there are many small-medium size
firms also operating in the sector. There
is pressure on these smaller domestic
companies to remain competitive,
however there has been little research on
the competitiveness of the small and
medium mills, compared to the larger
ones, and constraints facing their
operations. In this Policy Brief we report
on a number of constraints facing SMEs
in the sector. Recent research has found
that credit assistance currently provided

by the government to SMEs is not
effective as it mainly targets SMEs
located in the two largest cities, HCMC
and Hanoi (Thanh, 2010). Since many
livestock feed SMEs are located in rural
areas, the Credit Assistance Fund will be
ineffective in reaching these SMEs.
Furthermore, it was found that 75% of
SMEs accessed loans from informal
sources (Thanh, 2010).
Data come from a survey of 62 feed mill
enterprises conducted in 2008 by the
Center for Agricultural Policy. In the
analyses, the mills have been categorized
in the following way: small mills are
those producing less than 10,000 tonnes
per annum; medium mills are those
producing from 10,000 to less than
60,000 tonnes per annum, and large mills
are those producing 60,000 or more
tonnes per annum. In this Policy Brief,
SMEs refer to mills producing at both
the small and medium scale, although
some results are reported separately for
small scale and medium scale mills.

Constraints facing SMEs operating in
the sector
Restricted access to adequate credit
The research results show that small

mills have some disadvantages in
accessing loans from formal credit
sources. Fewer small mills were able to
access enough funds compared to


2
medium and large mills. Nearly 70% of
feed mills surveyed in the CARD project
had a loan but only 56% of them could
obtain as many funds as they wanted.
Less small firms were able to acquire
loans with sufficient funds compared
with medium and large enterprises (40%,
64% and 67% respectively). Compared
to large firms, SMEs tend to have loans
from commercial banks (over 60%)
rather than VBARD where they can
obtain lower interest rates. This means
that they have to pay higher costs for
loans which increases their costs of
production.
In the survey, having no collateral was
selected by all large mills and two thirds
of small enterprises as the most
important reason for not having enough
funds. Half of the mills in the medium-
size group mentioned high interest rates
as the most important reason for not
being able to access sufficient funds, and

the rest were divided equally between
having no collateral and lacking the right
connections.
Many of the mills stated that the
Government should give more support to
enterprises to access credit. This was the
most important role for government
identified by the surveyed mills. This
finding reflects the difficulties faced by
enterprises, especially SMEs, when
borrowing (e.g. high interest rates,
official procedures, lack of collateral,
and loan limits), and the high priority
that these firms put on the need for
policy to address credit constraints
Procurement and storage of raw materials
There was no statistical evidence to
indicate that small enterprises paid more
for the key raw material inputs used in
production of feed. It should be noted
that these data did not take account of
the quality of purchased feed. However,
it is clear from the survey data that small
and medium enterprises rely more
heavily than large mills on domestic
sources of raw materials, particularly
fish meal.
Small and medium enterprises have less
storage capacity, and are able to store for
a shorter period than large mills. This

means they must make material input
purchases at more frequent intervals.
This makes them particularly vulnerable
to changing input prices. Under unstable
raw material market conditions, larger
storage capacity and ability to store for a
longer period helps to ensure that mills
can effectively plan and budget ahead.
Access to adequate land for business
purposes
Both small and large mills were more
likely to report that they faced
difficulties accessing adequate land to
operate their business. Access to land for
business purposes was the second most
common issue (after access to credit)
nominated by SMEs as needing support
from Government (over 20% of mills).
Restrictions on the movement of goods
Forty two percent of firms overall
reported being adversely affected by
restrictions on the movement of goods,
although more large firms (61%) than
SMEs reported these restrictions. Tolls,
inter-district and inter-provincial
roadblocks and “police conduct” were
reasons given for restrictions on the
movement of goods. Of these, “police
conduct” was nominated as the most
important restriction on movement of

goods by 67% of small firms, 33% of
medium firms and 75% of large firms.
Lack of capacity to undertake adequate
quality control
In the survey of 62 livestock feed mills
conducted by CAP in 2008, better
quality control processes for both input
materials and output products were
evident in foreign/joint-venture and
larger firms. It was apparent that there
were quality control issues for smaller,
domestic firms. Few of the surveyed


3
firms nominated either quality control or
technical support and training as needing
support from the Government. This may
be a perspective that is detrimental for
SMEs in the livestock feed sector. Better
quality control is needed in the sector,
and it seems unlikely that this will be
achieved voluntarily by the large number
of domestic mills. Quality control issues
are explored further in Policy Brief
“Quality Control in the Livestock Feed
Sector in Vietnam”.

Recommendations
1. Further loan support should be

provided to SMEs. Access to credit
was nominated by over 50% of mills
as needing Government support.
Further research is needed to identify
the specific operational areas in
which SMEs need credit support, and
how best to provide credit support.
The focus of the support should be in
areas where SMEs need support to be
competitive with larger firms (e.g.
raw material purchases, improving
quality control facilities)
2. Improve standards of quality control
of small domestic mills. There is
currently a large difference between
quality control procedures operating
in domestic and foreign mills. To
compete in the sector in the long
term, quality control standards of
domestic SMEs must improve. More
detailed recommendations to
improve quality control are given in
the Policy Brief “Quality Control in
the Livestock Feed Sector in
Vietnam”.
3. Build better market linkages between
SMEs and raw material suppliers.
This strategy, along with improved
management of the supply chain,
could increase the quality and

decrease costs of domestic raw
materials, which would benefit
SMEs operating in the livestock feed
industry. The aim would be to
improve quality (for example, of
domestic fishmeal products) and
reduce prices of these local raw
material inputs.
4. Promote the role played by SMEs in
rural employment. SMEs are more
likely to be located in rural areas and
therefore offer employment
opportunities in rural areas. The
location of SMEs in rural areas could
be encouraged by Government
through provision of land,
infrastructure and subsidized credit.
5. Restrictions on the movement of
goods due to irregular police conduct
need to be addressed. Unnecessary
restrictions and costs associated with
the movement of goods add costs to
the livestock feed sector in Vietnam,
which result in higher production
costs for smallholder and commercial
agriculture. Corruption associated
with police activities needs to be
addressed and prevented.
6. Support a stronger role for the
Vietnamese Animal Feed

Association (VAFA). The VAFA
could play a strong and useful role
for SMEs in the sector. The
Association is already used by SMEs
for feed ration recipes, and advice on
various aspects of production, and
this role could be expanded to
include assistance in providing
information on domestic and world
markets, raw material procurement
(for example, importing of raw
materials) and improving quality
control procedures. Both SMEs and
large feedmills should play a role in
debating and developing a future role
for the VAFA. Policy advocacy for
the feed sector in general and SMEs
in particular should be considered.
Membership of the VAFA could be
required for all registered feedmills,
and the Association should be


4
strengthened with Government and
private sector support.

References and further reading
Center for Agricultural Policy, 2010. Small-
Medium Enterprises in the Livestock Feed

Sector in Vietnam: Vol 1. Livestock feed
production. Report for CARD Project
030/06 VIE, Section 7.3.
Thanh, Vo Tri, 2010. Seminar on “Strategies
for SMEs to Overcome the Economic
Crisis”, Association of Chartered Certified
Accountants and Saigon Business, HCMC,
4
th
May 2010




CARD Project 030/06 VIE: Developing a strategy for enhancing the
competitiveness of rural small and medium enterprises in the agro-food
chain: the case of animal feed

Policy Brief May 2010

Competitiveness of Small-Medium Enterprises in the Livestock Feed
Production Sector in Vietnam

For Information of the Minister of
Agriculture, and relevant staff of the
Ministry of Agriculture and Rural
Development and provincial
Departments of Agriculture and Rural
Development, Vietnam Animal Feed
Association, Vietnam Association of

Small and Medium Enterprises, and
managers of small-medium enterprises
operating in the livestock feed sector.
Purpose
• To report on research findings
relating to the competitiveness of
small-medium enterprises (SMEs)
operating in the livestock feed sector
in Vietnam, and
• To suggest implications from the
results relating to the sustainable
development of SMEs in the sector.
Background
Large enterprises dominate the market in
the livestock feed manufacturing sector,
but there are many small-medium size
firms also operating in the sector. There
is pressure on these smaller domestic
companies to remain competitive, and
perceptions that they are not competitive,
but there has been little research on the
competitiveness of the small and
medium mills, compared to the larger
ones. In this Policy Brief findings of a
study on the competitiveness of SMEs in
the sector are reported and discussed.
Data come from a survey of 62 feed mill
enterprises conducted in 2008 by the
Center for Agricultural Policy. In the
analyses, the mills have been categorized

in the following way: small mills are
those producing less than 10,000 tonnes
per annum; medium mills are those
producing from 10,000 to less than
60,000 tonnes per annum, and large mills
are those producing 60,000 or more
tonnes per annum. In this Policy Brief,
SMEs refer to mills producing at both
the small and medium scale, although
some results are reported separately for
small scale and medium scale mills.
Competitiveness in the livestock feed
sector is affected by more than just the
relative costs of production of
enterprises of different scale. The
research focused on comparing SMEs
and large enterprises with regards to
their production and business activities,
including: material input use, storage,
product types, quality control, supply
and distribution chains, market share,
services provided and type of customer.
These activities give broader indications
of how SMEs compete with larger feed
mill enterprises.


2
Findings on the competitiveness of
small-medium mills

Production characteristics and costs of
production
In this study, statistical evidence was
found to show that cost of production
was inversely related to scale of
production, with small enterprises
having significantly higher costs of
production per kg of output than medium
enterprises, which had higher costs of
production than large enterprises. During
2007, the mean costs of production per
kg of output were 8420 VND, 6340
VND and 5380 VND for small, medium
and large firms respectively. This alone
is not necessarily an indicator of greater
efficiency of larger enterprises. For
example, small-medium enterprises were
found to produce a higher share of
concentrate as percentage of total
production than large enterprises. On
average, small mills made 37% of their
revenue from concentrate production,
compared to 18% for medium mills and
only 11% for large mills. Over 80% of
revenue for medium and large mills was
made from sale of complete feed.
Concentrate production has higher raw
material input costs per kg of output, so
cost of production per kg of total output
would necessarily be higher for those

firms producing more concentrate.
The research findings indicated that raw
material costs made up about 80% of the
total cost of production in feed mills. An
analysis of costs other than raw material
costs showed that large mills had
significantly lower unit costs than small
mills (970 versus 2,050 VND per kg in
2007), indicating scale efficiencies
associated with larger enterprises.
Small firms used 19 labor units for one
unit of output, compared to around 11
labor units used by both medium and
large firms, and this difference was
significant. This may indicate under-
utilisation of labor by small firms, or
capital substitution by larger firms. It
does indicate that small firms play a role
in providing employment.
Profitability of small-medium
enterprises
There were insufficient data to compare
profitability at the level of individual
products. However, for overall
production, we found that small firms
made a loss of 70 VND per kg of output
while the medium and large ones made a
profit of 120 VND and 100 VND per kg
output respectively. The result for small
firms was statistically different from the

medium and large firms, whilst the mean
profit of the large firms is not
statistically different from the medium
size firms.
These results indicate that small mills
(i.e. those producing less than 10,000
tonnes per annum) are likely to be
struggling to remain competitive. The
data indicate that they face significantly
higher costs, and sell pig complete feed
at significantly lower prices, resulting on
average in a significantly lower profit.
Anecdotally, this is supported by reports
of small mills ceasing business, and
observations when conducting the survey
of many previously listed small mills no
longer in business.
Strategies used by SMEs to compete
for market share against larger firms
Provision of credit to purchasers
SMEs rely more than large firms on
provision of credit to clients purchasing
their products. Credit, or delayed
payment options for their products, was
not the usual method of payment made
to large firms, whereas both these
options were usual methods of payment
made to SMEs. Almost all sales of
complete feed, and 75% of concentrate
feed sales to wholesalers by large

enterprises is usually paid for in advance
by the purchasers. Costs associated with
providing credit to customers are a


3
further cost that SMEs must carry,
compared to larger enterprises, but
providing credit to customers can be a
strategy to secure sales.
Medium-scale firms were the only group
who stated that they purchased inputs
using “payment in advance” with 15% of
purchase quantity being paid for in
advance. This purchasing method helps
ensure a stable supply, especially when
raw materials are scarce, and could be a
strategy used by SMEs to ensure raw
material supply. The strategy, however,
is used at a financial cost.
Location
SMEs are more likely to be located in
rural rather than urban areas, and
medium-size mills in particular tend to
supply customers further from their
production site, and this customer is
more likely to be a smallholder. This
indicates that some SMEs are focused on
supplying smallholders in areas further
from major cities. SMEs also used a

higher percentage of domestically
sourced raw materials for production.
Location in rural areas may assist SMEs
to source these domestic supplies of raw
material inputs, including raw materials
used less often, such as broken rice,
groundnut, and cottonseed meal.
Supply chain differences
The research showed that the
supply/distribution chains operating for
SMEs and large firms in the livestock
feed sector are quite different, indicating
that they are sourcing materials from and
targeting distribution to different market
segments. Unlike large mills, SMEs
source some inputs and distribute
products directly from/to small
households. Large mills are more
dependent on imports (e.g. maize) to
meet their raw material requirements,
whereas SMEs are more likely to be able
to source sufficient raw materials in the
domestic market.
SMEs are more likely to diversify their
business into trading activities, and in
addition they sell to a wider range of
customer types including other
companies, agents and households.
Small mills in particular will sell direct
to farm households, and medium mills

target mainly retail agents for their
products. By contrast, large mills
distribute their products almost
exclusively for on-selling by wholesale
agents and traders, and source raw
materials from private processing
businesses and state-owned enterprises.
Services to agents and farm households
SMEs provide different services
associated with the sale of feed products
to agents and farm households. Small
mills are more likely to provide delivery
services to agents (compared to both
medium and large mills), and just as
likely to provide delivery services to
producers as large mills. As mentioned
previously, SMEs are also more likely
than large mills to offer credit/delayed
payment option to agents.
SMEs are less likely to provide
veterinary and nutrition advice and
extension material to producers,
although a considerable percentage of
SMEs do offer these services. However,
SMEs are almost as likely as large firms
to offer these services to agents.
Implications for the sustainable
development of SMEs in the sector
The research results indicate approaches
that could be considered to ensure the

sustainable development of SMEs in the
sector.
1. There is a need for small mills to
increase production size
The results support the idea that
medium-size mills (i.e. those producing
between 10,000 and 60,000 tonnes per
annum) are remaining competitive; with
costs, product mix and prices similar to
large mills. They have a sales strategy


4
that targets a different customer base to
large mills (i.e. retail agents rather than
wholesale agents). Small-sized mills
(producing less than 10,000 tonnes per
annum) appear to be under pressure to
survive, and many will need to increase
their scale of operation to remain in
business.
2. Consider advantages to be gained
from a cooperative structure
SMEs should investigate possible
advantages associated with a cooperative
structure, which might enable them to
act more like a larger enterprise and
achieve scale efficiencies in costs of
production. A cooperative structure
could also offer advantages associated

with diversification. Some SMEs in the
feed sector in Thailand offer a diverse
range of services (such as credit
provision, fuel, farm output purchases)
to small farm households and/or
commercial farms that are members of a
cooperative and either supply and/or buy
directly to/from the feed mill. This
strategy could be used to ensure supply
of raw materials and a customer base for
livestock feed products.
3. Further develop small, niche market
opportunities
The results indicate that SMEs are more
likely to be located in rural areas and
tend more than large firms to sell outputs
in areas far from key livestock
production regions. More research is
needed to trace the supply of livestock
feed in rural areas distant from major
livestock feed production areas, and
investigate how to expand this market as
a niche opportunity for SMEs.
Opportunities may also exist for the
production of niche feed products for
smaller livestock industries (such as
duck, local chicken and pig, and beef
cattle) rather than competing against
foreign companies to supply feed for pig
and chicken production.

4. The domestic supply of raw material
inputs is important for SMEs
SMEs are more likely to source input
materials from local sources, indicating
that the domestic material market is very
important for SMEs. Better management
of the supply chain could increase the
quality and decrease costs of domestic
raw materials, which would benefit
SMEs operating in the livestock feed
sector. Further study of input material
supply chain management of medium
scale feed mills could provide
experiences and lessons learnt for
sustainable development of raw material
supply for SMEs producing animal feed.
5. Improve quality control of feed
products produced by SMEs
Better quality of products produced by
SMEs is essential if they are to be
competitive in the sector. Policy
initiatives needed to improve quality
control of feed outputs are addressed in a
separate Policy Brief: “Quality Control
in the Livestock Feed Sector in
Vietnam.”
6. Address constraints facing SMEs
A number of constraints were found to
be affecting SMEs in the livestock feed
sector. These include access to credit,

procurement and storage of raw material
inputs, and lack of capacity to implement
quality control. Policy approaches
needed to address constraints are
addressed in a separate Policy Brief:
“Constraints Facing Small-medium
Enterprises in the Livestock Feed Sector
in Vietnam.”
Further reading
Center for Agricultural Policy, 2010. Small-
Medium Enterprises in the Livestock Feed
Sector in Vietnam: Vol 1. Livestock feed
production. Report for CARD Project
030/06 VIE.
Center for Agricultural Policy, 2008.
Thailand Study Tour Report. Report for
CARD Project 030/06 VIE.




CARD Project 030/06 VIE: Developing a strategy for enhancing the
competitiveness of rural small and medium enterprises in the agro-food
chain: the case of animal feed

Policy Brief May 2010

Quality Control in the Livestock Feed Sector in Vietnam

For Information of the Minister of

Agriculture and relevant staff of the
Departments of Livestock Production
and Animal Health, Ministry of
Agriculture and Rural Development and
provincial Departments, relevant staff of
the National Institutes of Animal
Husbandry and Veterinary Research,
Vietnam Animal Feed Association.
Purpose
• To inform you of current issues
facing the quality control of livestock
feed products manufactured in
Vietnam, and
• To suggest policy initiatives to
improve the quality control of
livestock feed products.
Background
Quality control is considered as one of
the most serious weaknesses of the
Vietnamese livestock feed industry.
Despite regulations (see below) there is a
perception of low quality of livestock
feed manufactured in Vietnam,
particularly from domestic companies,
and overall poor quality control
standards (specifically in relation to
contaminants and the use of additives)
by firms in the sector.
Responsibility for quality control in the
production of livestock feed includes

responsibilities derived to state agencies
(e.g. Department of Livestock
Production), and also responsibilities of
the feed processing firms themselves.
There are a number of Government of
Vietnam decisions related to the quality
of livestock feeds manufactured in
Vietnam. These include:
• Decree 15-CP (March 1996). This
decree provides that the State will
exert unified management over the
production of animal feeds. Along
with other things this Decree provides
for specific labeling of animal
feedstuffs.
• Decision 104/2001/QD-BNN
(October 2001). This decision
provides the minimum and maximum
content of substances (such as
aflotoxins, calcium, phosphorus, iron,
vitamins) in 1 kg of animal feed for
each type of animal, including
poultry, pig and cattle.
• Decision 113/2001/QD-BNN
(October 2001). This decision
identifies 15 criteria (e.g. moisture
content, protein, energy, calcium,
aflotoxins) for six animal feed
products including complete feed,
concentrate feed and other products.

Issues
Enforcement of good feed quality control
standards and confidence in the quality of
livestock feed manufactured in Vietnam
is essential for the sustainable


2
development of the livestock production
sector. Results from a survey of 62 animal
feed producers conducted by the Center
for Agricultural Policy in 2008 show that
concerns about the quality of animal feed
manufactured in Vietnam are well
founded.
1. Few firms in Vietnam apply advanced
international standards for quality control.
Of those surveyed only 7% of
foreign/joint-venture firms and no
domestic firms had HACCP certification.
Fifty percent of foreign/joint-venture
firms had ISO certification compared to
23% of domestic firms.
2. Better quality control processes for
both input materials and output products
were evident in foreign/joint-venture
firms compared to domestic ones. A
higher percentage of foreign firms had
their own quality control laboratories
doing various tests of raw materials and

feed products (94% versus 46%), had
separate production lines for different
animal feed products (35% versus 23%),
had automatic cleaning systems (91%
versus 20%) and used least-cost feed
ration software (94% versus 80%). By
production scale, only 65% of small firms
(producing less than 10,000 tonnes per
year) and 70% of medium-sized firms
(producing between 10,000 and 60,000
tonnes per year) said that they tested for
aflotoxins, compared to a 100% of large
firms (producing more than 60,000 tonnes
per year). Clearly there are quality control
issues for smaller, domestic firms.
3. The survey found no statistical
difference in the declared protein content
of specific animal feeds between
foreign/joint-venture and domestic firms.
However, anecdotally it is claimed that
labeling of livestock products is often not
correct. The project did not have
sufficient funds to investigate the
accuracy of animal feed labeling.
4. It appears that no State agency is
particularly responsible for feed quality
control in Vietnam despite government
regulations on the main responsibility of
the Department of Livestock Production,
which then delegates responsibility to

provincial Departments of Agriculture
and Rural Development to implement all
tasks/activities, as well as the supervisory
responsibility to ensure hygiene and
safety in production and use of animal
feed in their own provincial area. This is
in contrast to Thailand where feed quality
is tightly controlled by the Department for
Livestock Development. In Thailand, this
Department has responsibility for testing
all animal feed produced by mills on a
regular basis, free-of-charge to the mills.
The Department also runs free training
courses in GMP (Good Management
Practices) and HACCP systems.
5. There is insufficient laboratory
capacity in Vietnam to test regularly for
the 15 nutrition parameters required for
registration of livestock feed products in
Vietnam. The Thai Department of
Livestock Development (Bureau of
Livestock Standards and Certification)
only specify a minimum of four
parameters for each type of livestock
feed: protein, moisture, fat and fibre
percentages. These are the minimum
requirements for registration of a
commercial formulated feed, and all
products must be registered with the Thai
Department of Livestock Development

and the percentages that will be in the
label specified.
6. Few of the surveyed firms nominated
either quality control or technical support
and training as needing support from the
government. This is a perspective that
may be detrimental for the livestock feed
sector. Better quality control is needed in
the sector, and it seems unlikely that this
will be achieved voluntarily by the large
number of domestic mills.





3
Options
Foreign-owned and mills owned by joint
venture partners have higher standards of
quality control. Questions that need to be
investigated and answered are:
• Why do domestic firms not pay
enough attention to quality control?
• Why is there different behavior with
regard to quality control shown by
FDI and private foreign-owned
firms?
• Are there adequate and effective
policies to ensure quality control?

• Is enforcement of quality control
regulation carried out in an effective
and appropriate way?
• Are there adequate incentives for
firms and government officers to
implement quality control
regulations?
It would appear from the data obtained in
the survey that that all the issues raised in
these questions constrain domestic mills
from taking effective quality control
measures to some extent. To overcome
this, pro-active policies are needed to
assist domestic feed mills to improve
their standards of quality control. If
satisfactory long term food safety
standards are to be reached, the
Government of Vietnam needs to address
quality control issues associated with the
production of livestock feed. A number
of options could be considered:
1. Invest in improving the capacity for
adequate quality control testing:
• Domestic firms could be assisted (for
example, through subsidized loans) to
improve their own laboratory
capacity to test raw materials and
products.
• The Government of Vietnam could
invest in improving laboratory

facilities and skills in the Department
of Livestock Production, so that
regular and adequate testing of
livestock products can be undertaken.
• A policy of government subsidization
of quality control testing should be
considered. For example,
compulsory quality control testing of
livestock feed products could be free
of charge.
2. Tighten up on enforcement of quality
control regulations. This option is
dependent on having responsibility for
livestock feed quality control assigned to
a specific agency/department with
adequate facilities, staffing resources and
skills to undertake testing. Possible areas
in need of review include:
• A review of which quality control
tests can feasibly be conducted is
needed. Currently 15 tests (under
Decision No. 113/QĐ/BNN October
2001 about the list of technical
indicators for animal feed) are
mandated, but the ability to conduct
these tests is limited. The Thai
Department of Livestock mandates
far fewer quality control tests, but
carries these out rigorously three
times a year. The number of required

product tests and frequency of testing
should be specified at a level that is
able to be carried out.
• Corruption associated with non-
reporting of failure to meet quality
control standards needs to be
addressed.
• It is possible that there would be
value in investigating quality control
systems for livestock feed currently
operating in Thailand.
• A policy to implement random tests
of feed products in the market to
check labeling accuracy could also be
developed. It would need to include
procedures for enforcement of strict
sanctions if labeling was inaccurate.



4
3. Actively promote the adoption of
international quality control standards.
Training in Good Management Practices
and HACCP could be offered to
small/domestic firms, accompanied by a
schedule for adoption of which ever
standard is more appropriate for specific
firms. The assistance of large foreign
firms in the sector and the VAFA could

be sought to promote and conduct this
training, but it should be under the
control of the Department of Livestock
Production (or other relevant State
department). This training could be
subsidized by the State.

Recommendations
1. Government investment in better
equipped government testing
laboratories, and trained personnel to
carry out testing procedures, is
warranted.
2. Responsibility for testing of livestock
feed products should be clearly
assigned to a specific agency (e.g.
Department of Livestock Production)
to carry out relevant tasks/activities,
and investment made in their capacity
(skills and resources) to undertake
adequate quality control testing of
livestock feed products.
3. Livestock feed quality control
systems operating in Thailand (and
other relevant neighbouring countries
with advanced livestock feed
production sectors) should be
studied.
4. Training in international quality
control standards should be required

of firms operating in the livestock
feed sector, and this should be
accompanied by a schedule for
adoption by firms of appropriate
standards. A deadline for meeting at
least GMP accreditation for mills
over a certain production capacity
should be considered. Subsidisation
of training by the Government should
be considered.

Further reading
Center for Agricultural Policy, 2010. Small-
Medium Enterprises in the Livestock Feed
Sector in Vietnam: Vol 1. Livestock feed
production. Report for CARD Project 030/06
VIE. Section 6.6.
Center for Agricultural Policy, 2008.
Thailand Study Tour Report. Report for
CARD Project 030/06 VIE. Section 2.3.






INSTITUTE OF POLICY AND STRATEGY FOR AGRICULTURE AND RURAL DEVELOPMENT
CENTER FOR AGRICULTURAL POLICY

CARD Project 030/06 VIE: Developing a strategy for enhancing the
competitiveness of rural small and medium enterprises in the agro-
food chain: the case of animal feed




Discussion Paper: CARD project 030/06 VIE


Policy Pathways in the Livestock Sector:
the role of IPSARD/CAP

Hanoi, June 2010

2
1. Introduction
Various documents and external foreign agencies have expressed concern about
policy formulation in Vietnam, especially the “top-down” approach and lack of input
from the private sector into policy (e.g. Vu, 2003; Weaver, undated). IPSARD/CAP
exists within the Ministry of Agriculture and Rural Development (MARD) and plays
a major role as a “policy think-tank” for the Ministry. As such, IPSARD/CAP plays a
role in policy review, and hence the formulation of revised and/or new policy. This
discussion paper briefly reviews livestock policy in Vietnam, and comments on
IPSARD/CAP’s role in policy review and input to further policy in the livestock
sector. It also explores IPSARD/CAP’s approach to encouraging private sector
participation in livestock policy. IPSARD/CAP have also been involved in a review
of policy input in the livestock sector associated with ACIAR Project LPS/2005/063
“Improving the Competitiveness of Pig Producers in an Adjusting Vietnam Market”,
and this discussion paper does not intend to duplicate this work, but rather add some
complementary insights into the role of IPSARD/CAP in policy formulation and
review in the livestock sector.
2. Existing policy regulating the livestock sector
2.1 Livestock policies (2000-2010)
A number of decrees and decisions of the Government of Vietnam (GoV) relate to
policy for the livestock production and livestock feed sectors. These are divided
below under policies concerning development strategies, input control and quality
control.

2.1.1 Policy concerning development strategies
Decree 15-CP (19 March 1996): On the Management of Animal Feeds.

This decree provides that the state will exert unified management over the production,
business, export and import of animal feeds, in order to protect the interests of
producers, business people and the end users of animal feeds. It provides for State
investment in the animal feed production system and provides for the adoption of
appropriate credit policies for the sector. It provides a list of requirements that the
businesses must fulfill in order to undertake feed processing. It provides for specific
labeling of ingredients of feedstuffs.
Decision 166/2001/QD-TTg (26 October 2001): On a Number of Measures and
Policies to Develop Pig Farming for Export in the 2001-2010 Period.
This decision encourages the development of zones for export of high quality pigs. It
provides that the Ministry of Agriculture and Rural Development will coordinate with
other government levels and concerned Ministries and branches in appraising the
situation of animal feed production in Vietnam and develop proposals for expanding
and improving production. It directs the expansion of the area planted to hybrid maize
with a view to reducing production costs.
Decision 167/2001/QD-TTg (26 October 2001): On a Number of Measures and
Policies to Develop Dairy Cow Farming in Vietnam in the 2001-2010 Period.
This decision encourages the development of dairy cow production in Vietnam and
provides guidance for the development of diary cow feedstuffs based on improved
pastures and agricultural byproducts.

3
Decision 1506/QĐ-BNN-KHCN (15 May 2008): On Vietnamese Good Animal
Husbandry Practices (VIET GAHP) for pig production.
This decision encourages pig raising safety to prevent and limit risks from the hazards
of pollution affecting pork quality, environment, health, and safety of consumers. It
specifies steps to have high quality products, including selecting the location to build
cages and equipment and raise breeding stock; feed and veterinary medicine
management; disease control; waste management and environment protection; and
personnel management.

Decision 1504/QĐ-BNN-KHCN (15 May 2008): On Vietnamese Good Animal
Husbandry Practices (VIET GAHP) for poultry production.
This decision provides similar guidelines for poultry production.
Decision 10/2008/QĐ-TTg (16 January 2008): On livestock development strategy
toward 2020.
According to this decision, from 2008 to 2020, the livestock sector will concentrate on
developing the livestock sector into a goods industry, to gradually meet the demands
for domestic consumption and export; reorganizing the livestock sector towards
production associated with the market, ensuring veterinary hygiene, environmental
protection and improving social security conditions to enhance productivity, quality,
efficiency and food safety; developing livestock products that have advantages and
competitiveness such as pig, poultry, cattle and local specialties; encouraging
organizations and individuals to invest in developing livestock raising activities in the
direction of industrial farms.
2.1.2 Policy concerning input control
The animal feed industry in Vietnam mainly heavily on the import of raw materials
for the production of industrial feed. In order to control those inputs, MARD has
issued seven decisions related to “List of animal feed and feed material inputs
permitted to be imported in Vietnam”, including:
- Decision 35/2000/QĐ-BNN-KNKL (05 April 2000)
- Decision 55/2001/QĐ-BNN/KNKL (11 May 2001)
- Decision 80/2002/QĐ-BNN (06 September 2002)
- Decision 41/2004/QĐ-BNN (30 August 2004)
- Decision 01/2006/QĐ-BNN (06 Jannuary 2006)
- Decision 65/2007/QĐ-BNN (03 July 2007)
- Decision 88/2008/QĐ-BNN (22 August 2008)
These decisions provide specific names as well as technical requirements (levels for
humidity, protein, toxin, etc.) for each type of animal feed and raw material input
imported into Vietnam for each year.
Decision No. 83/2008/QĐ-BTC dated on October 3, 2008 deals with levels of import

tax for animal feed and some raw materials for the manufacture of animal feeds.
Circular No. 77/2009/TT-BTC dated on 14 April 2009 regulated adjustment of the
import tax rate for some materials and animal feed in privileged import tariff.
According to this circular, tariff rates for produce items used for producing complete
feed for pig and poultry production are reduced from 5% to 4% and from 5% to 0%
for complete feed for shrimp and other types. Additionally, import tax on some raw

4
materials for producing animal feed, such as buckwheat, have been reduced to 3%
instead of 5%, with import tax on millet reduced from 5% to 0%. Import tariff is also
adjusted to 0% for premix and additive groups.
2.1.3 Policy concerning output quality control
Decision 104/2001/QĐ-BNN (31 October 2001): On promulgating list of
temporary technical regulations for animal feed.
This decision provides the minimum and maximum content of substances (Aflotoxin,
Ca, P, Fe, Vitamin, etc.) in 1kg animal feed for each type of animal including poultry,
pig and cattle.
Decision 113/2001/QĐ-BNN (28 October 2001): On promulgating list of
minimum technical criteria required as standards for the production of animal
feed.
The decision identifies 15 criteria (e.g. humidity, protein, energy, Ca, Aflotoxin,
hormones, etc.) for six livestock feed products including: complete feed, concentrate
feed, vitamin premix, mineral premix, hormones and additives.
Decision 54/2002/QĐ-BNN (20 June 2002): On forbidding the production,
importation, transportation, and use of certain chemical substances in producing
and trading animal feed.
The decision identifies 18 chemical substances forbidden in the manufacture of
animal feeds.
Decision 3762/QĐ-BNN-CN (28 November 2008): On management of Melamine
in animal husbandry and aquaculture.

The decision prohibits the import, production and use of materials and animal feed
contaminated with melamine. The acceptable level of melamine is less than 2.5mg/kg
(≤ 2,5ppm). In addition, the decision also provides steps to identify melamine in
materials and animal feed.
2.2 Departments responsible for enforcing and overseeing livestock policies
A number of Government departments are responsible for various aspects of GoV
livestock policy. Various departments have responsibility in different areas of
livestock policy as detailed below:

Policy Formulation
Only Departments which are directly managed by MARD are involved in policy
formulation. Livestock policy formulation is the responsibility of the:
• Department of Livestock Production,
• Department of Animal Health,
• Department of Cooperatives and Rural Development, and
• National Agro-Forestry-Fishery Quality Assurance Department

Adoption of Policy
Facilitating the adoption of policy is the responsibility of the:
• Department of Livestock Production,
• Department of Animal Health,
• Planning Department,
• Finance Department,
• Ministry of Finance,

5
• Ministry of Planning and Investment,
• National Institute of Animal Husbandry (NIAH), and
• National Institute of Veterinary Research.

Implementation of Policy
In contrast to the large number of ministries and departments who must work together
to facilitate processes that will enable the adoption of livestock policy, overseeing
livestock policy implementation is the sole responsibility of the Department of
Agriculture and Rural Development at the provincial level.

Evaluation of Policy
Evaluation of livestock policy is the responsibility of the:
• Department of Agriculture and Rural Development,
• Institute of Policy and Strategy for Agriculture and Rural Development,
• National Institute of Animal Husbandry, and
• National Institute of Veterinary Research.

3. The role of IPSARD in policy review/formulation for the livestock
sector
As outlined in the previous section, IPSARD/CAP only has an “official role” in policy
consulting/advice and “policy evaluation” for the livestock sector. Policy formulation,
adoption and implementation are the responsibility of other State agencies. As part of
CARD project 030/06 VIE, members of the project team conducted informal face-to-
face interviews with a number of senior IPSARD staff about the input of IPSARD
into policy, issues regarding private sector input into policy, and satisfaction with
current policy input. These issues are discussed under the questions that were asked to
explore IPSARD/CAP’s role in these policy areas.
3.1 Policy role and procedures
The question asked for discussion was: Does the Centre for Agricultural Policy (CAP)
provide policy advice in response to questions or directions from government – or
does CAP/IPSARD initiate policy advice to government on matters they think are
important? What percentage of policy advice is initiated by IPSARD/CAP.

Responses indicated that IPSARD’s main functions are to provide long term policy

advice, on matters with a strategic, inter-locality and inter-government focus.
Advising on short-term and more technical matters is not regarded as part of
IPSARD’s role. Currently MARD seems to have more focus on technical issues
which belong to specific Departments (e.g. livestock/crop) than strategic issues.

A senior IPSARD staff outlined official procedures that frame the context of
IPSARD’s role in policy advice. On agriculture and rural issues, MARD will issue
official documents to specify objectives, requirements and working content and send
these to an “in-charge” office for classification. Accordingly, IPSARD takes relevant
work from this source. However, IPSARD can choose not to have input in
circumstances when it believes it does not have the capability (i.e. resources or
information) to undertake the required work.


6
CAP/IPSARD mainly provides policy advice in response to questions from MARD
while it very occasionally gives advice on matters which they think are important.
Therefore, only around 2% of policy advice is initiated by IPSARD, out of total
advice to MARD. However, if only advice on strategic issues is taken into account,
the advice initiated by IPSARD increased to about 40%. Occasionally, if IPSARD
considers there are important matters which need reporting to higher agencies for
timely policy responses, IPSARD leaders will report to a higher level. However, this
happens rarely.

Other IPSARD staff talked about the ways, within a working context, in which they
engage in and provide policy advice.
• IPSARD/CAP are involved in some research, with various projects funded by
MARD, the World Bank, ACIAR, FAO (PPLPI – Pro-poor Livestock Policy
Initiative), AusAID’s CARD program and the Ford Foundation. This research
provides information that often has policy implications.

• Some senior members of IPSARD/CAP are members of Policy Advice
Groups, which discuss and provide input into three key policy strategy areas –
agriculture, farmers and rural development aspects. IPSARD supports the
policy dialogue in these areas. Example of websites which support these
policy dialogues are www.vietpigs.com.vn
and
/> . Furthermore, the Minister for Agriculture
and Rural Development talks directly with the director of IPSARD and the
Policy Advisory Group (PAG).
• IPSARD/CAP writes policy briefs based on information from their research
and involvement in policy groups.
3.2 Role of the private sector in policy advice
A number of questions were discussed to try and explore this issue. The first question
discussed was: How does IPSARD/CAP engage with the private sector when
formulating policy advice? Are these arrangements formal or informal? Give some
examples of current engagement with the private sector.

A senior staff member gave a formal response to this question in line with official
policy, saying that IPSARD is responsible for long-term strategy issues so there is no
engagement with the private sector when formulating policy advice. The main reason
for this is that policies/strategies are considered as confidential documents during their
formulation, as they affect interests and benefits of different relevant stakeholders and
opinions from consultation may prevent the policy formulation. As a result, discussion
and opinions only appear in the later stage when policies are relatively completed, and
opinions from different stakeholders are just for reference and perhaps a small
revision in the policies. Consultation with the private sector is usually related to and
more appropriate for short-term policies, and these are not the responsibility of
IPSARD.

Another staff member commented that while this reason was true, it is only one

reason. Other reasons relate to the way policy formulation is done: i.e using a “top-
down” or “at desk” approach without the participation of the private sector.

Other staff in the organisation mentioned some ways in which IPSARD/CAP did seek
opinions in the private sector to inform their policy advice. Businessmen are

7
sometimes invited to take part in both formal and informal conversations about policy
issues. This is especially so if larger businesses are likely to be affected by policy.
Private sector participants, from both national and provincial levels, are also invited to
workshops where research results and policy issues are discussed. For example, at the
stakeholder workshop held in HCMC in January 2010 for this project, private sector
participants expressed many strong views related to policy for the animal feed sector.
Some of these ideas were incorporated into final reports.

An example of private sector input into livestock policy was mentioned as occurring
during the Pro-Poor Livestock Policy Initiative (PPLPI) (see Vu 2003 for a discussion
of policy issues associated with the Initiative). A further example occurred during an
IFPRI study on policy options for the livestock sector (IFPRI, 2000). Private sector
participants were involved in workshops and discussions. One aspect that came out
was the influence of the large foreign-owned livestock feed company CP through the
banks. Farmers with contracts with CP have better access to credit, as CP is seen as
providing loan security.

Another example of an attempt to get private sector input into policy is provided
through the Four-Market–Actor (Chính sách 4 nhà) linkage policy (the four market
actors being the state – farmers – scientists – enterprises) through Decision 80
(Decision No. 80/2002/QĐ-BNN, 06 September 2002). This decision promotes
contract farming during production, processing and consumption. However, the
relationship between the actors has proved to be very ill-defined and there have been

difficulties promoting contract farming (e.g. contracts being broken by both
enterprises and farmers, ambiguous mechanism for involvement of scientists, loan
difficulties). Some websites promoting this policy exist at a provincial level, e.g.
www.lienket.4nha.vn


Some senior IPSARD staff preferred not to comment on two further questions
exploring possible ways in which the private sector could have more input into policy;
however some staff did discuss these questions. The questions for discussion were:
Does IPSARD/CAP think there is enough private sector input into policy advice to the
GoV? If not, what strategies could be developed to improve their input? and Do
senior IPSARD/CAP staff think there is any potential role for private sector “lobby
groups” in Vietnam to contribute to policy making?

Some staff felt there was not enough private sector input into policy advice, and that
policy was largely “top down”. However, they stressed that the involvement of the
private sector in policy was a sensitive issue. An idea expressed was that draft policy
could be passed to enterprise associations for comment. An example given of an
appropriate association was the Aquaculture Association which was considered strong
and involved heavily in exporting, and hence could potentially have valuable input
into policy for that sector. The Thai Feed Mill Association was also mentioned as an
enterprise association that had policy input in Thailand. A further idea was that the
Government could consider calling for “bids” to develop policy.

In answer to the second question, it was suggested that lobby groups do exist (there is
newspaper evidence to support this) but this is not openly discussed or acknowledged.
The main difficulty is that the concept of “lobby groups” does not fit with the