VietNamNet Bridge – Many Vietnamese believe that creating a closed production line is the only effective solution to confront foreign competitors in the domestic market.

Two years ago, the Masan Group bought a 40 percent stake in Proconco, an animal feed producer, an important step in implementing its plan on setting up a closed production line of breeding, processing and distribution.

Vissan also recently announced a VND3.1 trillion investment in a closed food processing complex involved in animal slaughtering, meat cutting, processing and packing. The project is expected to be completed by 2015.

In late 2014, the Ranee brand of cod-liver oil products unexpectedly turned up in the market. This is a product of Sao Mai, a seafood group, which set up a factory making oil from catfish fat.

Le Thanh Thuan, president of Sao Mai, said that as sales had been going well, Sao Mai would set up a second factory soon to make the most of the catfish fat left after catfish processing, estimated at 140,000 tons. The fat has been used to make animal feed or biodiesel, which does not bring high value.

It is expected that food demand in Vietnam would increase by 5.1 percent per annum from now to 2016.

Food consumption per capita is expected to be VND5.8 million, or $316 by that time.

Australia-based Ausfeed has learned from a survey that the pork demand in Vietnam totalled VND2.24 million tons in 2014, an increase of 1.8 percent over 2013.

However, the meat processing industry in Vietnam is still very small with only 20 companies nationwide having factories with high technology. The total capacity of the factories is less than 200,000 tons per annum.

The promising processed food market has prompted Vietnamese enterprises to spend more money to scale up their production.

Ba Huan Company, a meat and poultry egg supplier, has invested VND320 billion in a farm and animal feed factory.

Pham Thi Huan, director of Ba Huan Company, said that with the new closed production line, Ba Huan would be able to control input material costs, which would allow products at competitive prices.

Pham Thi Ngoc Ha, director of the San Ha Company, which now runs three animal slaughter factories, decided that San Ha should not only provide live fowl but also processed poultry meat to optimize profits.

Ha admitted that the investments would be very costly.

“The competition in the market is cutthroat, especially with the presence of big foreign  companies,” she said. “You will not be able to earn a living if you undertake only one job.”

DNSG