TPP trade deal could trample Vietnam's livestock industry

By Bui Hong Nhung June 21, 2016 | 03:28 am PT

Ethnic children herding cows in the Central Highland province of Kon Tum. Photo by VnExpress Photo Contest/Do Phong

Price and quality are the two factors confronting Vietnam's livestock industry in the battle with foreign rivals under the Trans-Pacific Partnership Agreement (TPP), Doan Xuan Truc, vice chairman of the Animal Husbandry Association of Vietnam told the Vietnamese government portal on June 18.

The vice chairman said that under the TPP, Vietnam will be able to reduce production costs in the livestock industry as import tariffs on animal feed, veterinary medicine and livestock will be cut. In addition, the industry will be able to access advanced methods.

However, Vietnam’s livestock industry will also face challenges from prices and quality after the country joins the TPP.

Truc said that prices of Vietnamese livestock products are 25 to 30 percent higher than other TPP members like the U.S., Canada, Australia and New Zealand.

One of the main reasons is that Vietnamese farmers often operate on a small scale, resulting in high production costs and low productivity. In addition, high interest bank loans and the lack of cooperation in the production chain also exacerbate the problem.

Beside the problem of price, the quality of Vietnamese livestock products is not good enough to enter foreign markets or compete with foreign products once they access Vietnam’s market.

The vice chairman said that many Vietnamese farmers and livestock farms are yet to comply with the Global GAP (Good Agricultural Practices) standard, the world's leading farm assurance program that provides strict rules for farmers to follow.

Truc said that the industry needs to increase its restructuring efforts and choose suitable production methods for each type of animal.

He also emphasized that farmers should focus on building production chains as this will cut production costs by up to 22 percent, reduce the risk of disease and make it easier for importers to trace the origin of products.

The Ministry of Agriculture and Rural Development and the Ministry of Finance are currently checking and eliminating fees and charges that are unreasonable or overlap in the livestock industry.

Vietnam's national legislature intends to ratify the TPP at its first plenary session from July 20 to August 9. The deal will create a free-trade zone among 12 nations around the Pacific region that accounts for 40 percent of the world’s economic output. However, for the pact to take effect only if it is agreed on by half of the participating countries representing 85 percent of the trade zone’s gross domestic product. Therefore, if the U.S. doesn't approve the TPP, the trade accord won’t come into effect.

> Vietnam to shake up supporting industries to seize TPP opportunities