Agriculture companies, farmers in hot water over rising costs

By Tat Dat   May 6, 2022 | 12:42 am PT
Agriculture companies, farmers in hot water over rising costs
Fertilizer production at a factory in southern Ba Ria - Vung Tau province. Photo courtesy of Petrovietnam Fertilizer & Chemicals Corporation
Many agriculture companies and farmers are facing losses amid surging input and operation costs.

HAGL Agrico reported a losing streak in four consecutive quarters with losses of VND113 billion ($4.92 million) in the first quarter this year. It reported profits of VND7 billion in the same period last year.

Meanwhile, the agricultural branch of steel giant Hoa Phat posted losses of VND56 billion against profits of VND392 billion last year.

Dabaco Vietnam saw its profits shrink 98 percent to VND9 billion, the lowest in 10 recent quarters, while dairy giant Vinamilk reported profits slipped 12 percent.

HAGL Agrico management attributed the losses to higher costs of fertilizer and raw materials, whose prices have surged 130 percent since the beginning of this year.

Transportation further financially burdened the company, as sea freight costs skyrocketed by 237 percent to $2,650 per container. It also faced a shortage of refrigerated containers, while custom clearance time prolonged from 12 to 35 days.

Higher input costs and supply shortage were also considered the main factors bringing Vinamilk’s profits down.

Animal feed prices jumped 30-40 percent last year and are set to continue to rise this year; while transportation costs rose 20 percent domestically and 500 percent globally last year, the company said.

In the last three years, the company has seen its gross profit margin declining from 49 percent to 42.5 percent.

Dabaco's management said the industry is being hit hard by the Russia-Ukraine crisis, which disrupted supply chains and raised prices of animal feed.

Higher input costs also drained many farmer's wallets.

Kim Thuy from southern Tra Vinh Province said she is struggling to feed 30 pigs, as feed prices have been adjusted upward at least three times since the beginning of this year.

"Animal feed prices have surged faster than pig prices since the end of 2020. At the current costs, I only break even if no problem occurs," she said.

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