1

Analysis and improvement of beef-cattle value chains in the South

Central Coastal Vietnam

Researcher Team: Ho Cao Viet (PhD.), Huynh Tran Quoc (MSc.), Le Van Gia Nho (MA),

Nguyen Van An (MSc.)

Department of Agricultural Systems Research (DASR); Institute of Agricultural Science for Southern Vietnam

(IAS)

Summary

In the context of project SMCN/2007/109, the study on analysis of beef-cattle and cassava value

chain is carried out since 2009 in 3 provinces of Binh Dinh, Phu Yen and Ninh Thuan.

Key findings of beef-cattle value chain are following: (i) Beef-cattle industry contributes an

important part in income sources of farmer household in SCC region; (ii) Price of live cattle and

beef meat tends to move upward, market force of beef meat is relatively high in southern, especially

in large cities; (iii) Farmers have changed their awareness on capital investment & improvement of

cattle species; (iv) Policies on slaughter houses installation, veterinary service, program of

artificial insermination, enlargement of pasture & forages area, support of government and private

enterprises will improve both quality and quantity of cattle herd in SCC; (v) Cattle husbandry use

cassava product & by-products as a feed source in the dry season whereas shortage of feed and for

fattening. Meanwhile, manure is a fertile component that improved quality of degraded soil in SCC;

(vi) Income generated by cattle keep balance of family budget and cash-flow; (vii) Transparency of

price information is main factors that influenced significantly to farmer; (viii) Cooperation of

farmers, vertical coordination among farmers and enterprises business are best solution to reduce

risk and loss due to of price falling.

Key words: Value chain of beef-cattle, agent, farming systems, market.

1. Introduction In the context of project SMCN/2007/109, the study on analysis of beef-cattle value chain is carried

out in period 2010-2012 in 3 provinces of Binh Dinh, Phu Yen and Ninh Thuan.

The surveys on different agents of beef-cattle value chains were conducted in order to collect

information and analysis of chains. Cattle husbandry has generated important income for farmer in

SCC. However, beef-cattle value chain is dealing with many constraints such as: market price

fluctuation, price competition of imported beef meat, high cost of production, etc. The other reasons

also affected to price fluctuation and indirectly influenced to farmer’s benefit is that vertical

coordination amongs farmers and agents of slaughter houses, small enterprises and distributors.

The purpose of this study is to identify beef-cattle supply chains and improve it in the context of

Vietnam social economic environment.

2. Objectives of study - Analyse markets and positioning beef-cattle value chain in order to identify advantages and

disadvantages of the chain;

- Implement of support activities, policies implementation to improve beef-cattle value chain

performance;

- Identify short-term solutions and long-term strategies for beef-cattle value chains based on

stakeholders and agents engagement.

3. Methodology of study

Approach method

Analytical frameworks were proposed by international organizations such as GTZ, ACDI/VOCA,

M4P (Market for Poors) and were applied because these frameworks are according with context of

research. Methodology of value chain study of FAO (2005) is also applied in this study.

Research method

* The qualitative method: PRA method, formal discussion, key informal panel (KIP), problem tree,

SWOT, Venn diagram were applied in order to identify structure of chain in different provinces,

2

interaction of each factors and agents in the chain, the impacts of institutions and policies on the

chain and so on. Collection and analysis of secondary data (annual reports of people committees,

statistical data, scientific report and information of MARD, DARD, NGO), institutional and

political papers was also performed. Individual depth-interview, case studies and observation were

applied in step of data collection. These databases are updated year by year.

* The quantitative method: face-to-face survey to collection data and information from each agent,

statistical analysis, cost and benefit analysis, value added analysis for each agents and overall chains

based on main sub-chains or products and build up the scenario.

Sampling method for survey: Non-propability sampling method (proportionate quota sampling

combined with convenience sampling) was applied in study. There are 3 reasons that method was

applied: (i) Population of farmers is large in studied regions and not-determined; (ii) Collectors,

middlemen, slaughter houses, semi-industrial slaughter enterprises are relative difficult to contact

and determine. Researcher has to set up a close relationship with them. (iii) Objectives are

identified characteristics of beef-cattle value chain and internal interaction of agents in chain.

Economical and technical parameters are calculated for chain. Five steps of sampling are following:

1. Basing on the availability of budget, timescale, performance to decide the sample size;

2. Select the representative regions for beef-cattle production in 3 provinecs that located in

SCC: district of Phu Cat (Binh Dinh), Tuy An (Phu Yen) and Ninh Phuoc (Ninh Thuan).

3. Select representative communes that located in these districts: Cat Trinh (Phu Cat), An Chan

(Tuy An), Phuoc Dinh (Ninh Phuoc).

4. Select farmers, arrange annual surveys and carry out face-to-face interviews.

5. Select local collectors, middlemen, slaughter houses and enterprises.

The sample is distributed as follow:

30 farmer households (different herd size)

5 collectors (1 & 2 level)

4 slaughter houses (in Binh Dinh, Phu Yen & Ninh Thuan)

2 semi-industrial slaughter companies (in Bien Hoa & Ba Ria-Vung Tau)

Data analysis: Applying the descriptive statistics for data analysis. There is a measurement of

econmic and financial parameters, overall calculation of chain that presented in the table below

(Table 1 & Figure 1 & 2).

Inputs Total production (P)

Intermediate Costs (IC)

Value of main products

Value of by-products Input materials

Value Added (VA)

Hired labor cost

Financial cost

Taxation

Gross Profit

(GPr)

Depreciation

Net Profit (NPr)

Figure 1 - Financial parameters in beef-cattle value chain

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Figure 2 – Financial parameters of overall chain

Table 1 – Economic parameters and cost-benefit analysis

Parameter Formula

Total Production (P) (Productivity x selling price of main product per unit) + Income of

by-products (if any)

Total cost (TC) Variable costs (VC) + Fixed costs (FC) Fixed costs Maintenance + Depreciation + Salary & wage + Tax

Variable costs (VC)

Beef-cattle producers Feeds + Veterinary + Labor wage Collectors/Middlemen Input materials + Labor wage + Transportation + Energy (fuel,

electrivity) + Tax on product (if any)

Slaughter houses Input materials + Labor wage + Transportation + Energy + Tax

Gross Profit (GPr) Total Production (P) – Total cost (TC) Intermediate Costs (IC) Input materials + Energy

Value Added (VA) P – IC

Hired wages + Interest on loan + Communication fee + Tax + Maintenance & Repair + Depreciation + Net Returm of producers

4. The results & discussion 4.1 Production and consumption of beef in global market

United States beef exports are increasing at a rapid pace at 1.3 million tonnes, it would emerge

as the second largest world beef exporter after Brazil. In Europe, euro weakness is facilitating

beef sales from the EU to the Russian Federation and to many Middle Eastern markets, in

particular Turkey. Conversely, the strength of Australian and New Zealand currencies is

expected to depress exports from the two countries. This would allow India to move up,

becoming the fourth largest exporter of beef, as strong demand for low-priced buffalo beef in

Southeast Asian countries, such as Malaysia and Philippines, fosters an increase of bovine meat.

Table 2 - Bovine meat statistics (thousand tonnes, carcass weight equivalent)

Unit: 1,000 tonnes, carcass weight euivalent

Purpose Production Imports Exports Utilization Year 2010 2011 2010 2011 2010 2011 2010 2011

China 5.617 5.517 343 520 121 120 5.929 5.917

India 2.610 2.740 1 1 716 800 1.895 1.941

Indonesia 454 440 120 120 1 1 574 580

Iran 380 385 265 300 - - 645 685

Japan 514 488 725 760 6 7 1.223 1.241

Korea 247 252 366 429 2 1 608 641

Malaysia 28 29 155 165 7 8 176 186

Philippines 287 290 130 145 2 2 415 433

Asia 15.285 15.269 3.183 3.493 952 1.035 17.503 17.690

Source: FAO, 2011.

Asian people eat about 17.7 million tonnes in total of 64.4 million tonnes (2011). Beef meat is

supplied mainly by domestic production (77%), 18% from importation and 5% for exportation.

The largest beef importer is Japan. Vietnam imports annually 40 thousand tons of beef meat

from US. In the 9 first months of 2013, 32,500 live cattle has been imported1 from Australia for

1 http://vietnamnet.vn

IC Farmer

IC Collectors

IC Slaughter houses

P Farmer

P Collectors

P Slaughter houses VA Farmer

VA Collectors

VA Slaughter houses

IC Farmer

IC Collectors

IC Tlaughter houses GPr Trading

VA Chain

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slaughtering and supplying for restaurant, supermarket because price of beef meat imported

from Australia only more expensive than that of Vietnamese beef from 10 to 15 percent2.

Source: Beef Industry Analysis. Agricultural Industries Group. 2012.

Figure 3 – Beef meat exportation in global market (2003-2012)

In April 2011, FAO estimated that price index has moved up 180 points at highest since the last 20

years. Until October 2011, price index went down at 177 points. However, price of beef meat was

still higher than 12% compared to 2010.

Source: FAO (2011)

Figure 3 – Price fluctuation of beef meat in global market, 2008-2012

Reduced supplies in traditional importing markets, such as Indonesia, Japan and the Russian

Federation, are pushing up imports in 2011 to 7.6 million tonnes. Accounting for half of global

imports, countries in Asia are expected to raise their beef imports by nearly 10 percent to 3.5

million tonnes. A lifting of Viet Nam’s eight-year ban on Canadian cattle and beef is supporting

imports, which have risen 100-fold over the past five years. The Australian ban on live cattle

exports to Indonesia will likely stimulate a shift of import demand towards beef in this country.

Following up the evolution of diseases, drought, shortage of pasture area, production, volatility of

price of poultry meat and livestock, these factors affected to price of beef and reached to record

price of 2011 (Food Outlook, 20113).

In recent years, the price of bovine meat keeps increasing in domestic and global market. Price in

Vietnam market fluctuated from 130 to 150 thousand VND/kg in 2005-06 to 180 thousand VND in

2009-2010. In period of 2011-2012, price moved up from 180 to 280 thousand VND/kg (9-13

USD/kg), then moves up to 300-350 thousand in the end of 2013 although economic crisis and

shifting of meat demand from pork and chicken meat due to antibiotic residues in these kinds of

meat. Quality of beef meat quality of domestic-species in Vietnam is highly evaluated, adapted with

2 http://vneconomy.vn 3 Food Outlook. Global Market Analysis. FAO (2011)

Trade-weighter international price

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food safety and organic farming. Although the both of quality and quantity of beef-cattle are

increased, Vietnam had to import 200 to 300 thousands tonnes of beef meat yearly (MARD, 2011).

These factors bring to beef-cattle value chain a golden opportunity. Agroviet (2012)4: production of

beef meat has gone down in first 6 months of 2012, equivalent of 1.5% compared to 2011 (174.8

thousand tonnes), bovine herd has 5.3 million heads (reduced by 7% compared to 2011). Price of

beef meat in Vietnam central region tend to increase and restored again in the end of 2012 at level

of 160 to 250 thousands VND per kg5. On the contrary, buying price of live cattle in Australian

market is only 2 USD per kg, plus 5% of taxation and transportation fee, imported price in HCM

port is 58 thousands VND/kg, whereas domestic cost price is 70 thousands VND (#3 USD)/kg6.

Beef-cattle are key animal of farmer households in SCC region, particularly in dry season because

income of cattle could help farmer to balance family’s budget as well as to pay debt. By-products of

crops are feed of cattle husbandry and it does not compete with human food. The manure can be

used to improve degraded-soil quality and generate extra-income for household as selling. This

sector employed mainly source of under-employed family that is very available in central rural area.

However, because of small scale each family has 2 to 5 heads of cattle the beef-cattle value chain

has been faced many challenges and constrains. Cooperation and collaboration of each agent along

the chain is very loose. Chain from “plough to fork” is facing many constrains, so that farmers are

most suffered and faces frequently with risks of falling down price of meat and volability of input

materials price. Beef-cattle husbandry should be based on the signal of market and demand and

through policy implementation of master plan for beef-cattle supply chain from pasture, veterinary,

species, breeding facilities, feed processing, husbandry techniques, credit systems, slaughter house,

marketing & distribution. In order to connect all these factors and agents, it’s necessary to have a

“conductor” to coordinate all agents together to drive chain towards effectiveness, adaptation with

natural – ecological – economical condition and farmers’ custom in SCC region.

Animal husbandry, particularly beef-cattle breeding is a farmers’ longstanding customs in Phu Yen.

Local species called “bò vàng” is very famous in region. Weather condition is relative convenient,

there are natural pasture and cropping by-products. Provincial policies and strategies have planned

beef-cattle will be a key animal in crop-animal systems transition. Herd scale increased from 3-6%

yearly, ordered after Binh Dinh. At present, there are 233.6 thousand beef-cattes, mainly in

mountainous districts Son Hoa, Song Hinh and Đong Xuan, occupied of 60% whole herd.

According Centre of Animal Varieties and Techniques of Phu Yen province: amount of beef

exported to other provinces is 30 thousand heads per year. Of which, 70-75% supply to Ho Chi

Minh city market where is main consumption place. The ratio of breeding beef occupied 34.5%,

most of herd has small body, low weight (180-220 kg, 230-270 kg per head of cow and bull,

respectively), and far away standard of exportation. There are many problems that farmers facing

such as: lack of forage in dry season, illness and diseases, loss of weight.

The provincial government has strategy to develop herd of beef-cattle to 2015 focusing on issues:

(i) Improving beef species and services for animal husbandry; (ii) Controlling epidemics and

diseases effectively; (iii) Advocacy and complaining farmers to leave grazing and switch to

intensive breeding; (iv) Investing on input composed feed and fattening; (v) Introducing high-

biomass grass varieties to farmers; (vi) Training local staff, technician, veterinarian to support

farmers in artificial insemination and purebred bulls (enhance crossbred beef-cattle ratio of 70% of

herd in 2015)7.

According to Binh Dinh DARD: in 2011, the herd has 251.485 heads, occupied of 26.6% of herd in

SCC region. The average of growth is 10.7% yearly. (this figure is 6.8%/year in SCC). The ratio of

crossbred cattle occupied of 29% of herd in 2001, up to 68% in 2012. Production of live beef to

consume in domestic market is 23,327 tons, increased 14,341 tons compared to 2001. The main

4 Báo cáo kết quả thực hiện kế hoạch 6 tháng năm 2012 ngành NN & PTNT (Report of agricultural & rural

development sector in first 6 months 2012). 5 www.phuyen.gov.vn, www.stc.binhdinh.gov.vn, www.thuongmai.vn

6 http://vietnamnet.vn 7 http://www.baomoi.com

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market of Binh Dinh beef meat is in southern: Ho Chi Minh City, Dong Nai, Da Nang. Beef-cattle

husbandry brings a stable income source for farmers and creates job for rural areas. There are some

issues as following: (i) Small-size herd and scattered; (ii) Constrains in technical application at

farmer household level; (iii) Too difficult in approaching to credit and small-financial source for

husbandry; (iv) Frequently happening epidemics and diseases in beef breeding; (v) Unstable for

outputs and consumption market; (vi) Low benefit and inefficiency. The policies of Binh Dinh

province: (i) Adjusting and building up master plan for beef-cattle breeding from farmers to

slaughter house and industrial processing; (ii) Reorganizing the slaughter systems; (iii) Investing on

facilities, exotic species, zebu-blood bulls ratio of 82.5% for insemination; (iv) Priority budget for

agricultural extension and demonstration of animal feed processing; (v) Exempting land tax for

large-scale cattle farm, modern slaughter house, animal-feed factory; (vi) Supporting animal

feeders/farmers credit and feasibility to approach small financial sources and market; (vii) Building

up brand name for beef-cattle of Binh Dinh; (v) Organizing the vertical coordination among farmers

– middlemen – scientists – local government8.

Hoang Manh Quan (2005) and Le Duc Ngoan (2008)9 pointed out status quo of cattle production in

SCC region as following: (i) Reduction of amount of cattle due to uncontrolled diseases; (ii)

Shortage of feed & forage, particularly in dry season; low nutrients in feed; (iii) High rate of local

species (occupied of 85.7% in Hue), crossbred species occupied of low rate (14.3% in Hue)

compared to figures of whole country; (iv) Number of technician and veterinarian not meet demand

of animal husbandry, program of insemination inefficiency; (v) Natural pasture for grazing is

narrowing in recent years, lack of water for irrigating; (vi) from 70-76,7% of farmers in Quang Ngai

sells beef through middlemen, over 90% of farmers sells cattle at home, non-transparent price is

very popular; (vii) Income of beef-cattle husbandry occupies of 21.9-26.2% of family income; 61,5-

64,4% of animal husbandry income; (viii) Intermediate costs occupies of 6,376 million VND, of

which, 88% of species cost and 10.7% of feed (in 2007); (ix) In 2007, annual gross return of cattle

is 10.9 million VND, cost-benefit ratio is 0,7; net profit is 4.5 million VND per year.

Generally, production of beef-cattle has moved down from 2007 to 2010 in SCC region, particularly

in 3 provinces of Binh Dinh, Phu Yen and Ninh Thuan. In 2009-2010, cattle heads reduced from

2,489 to 2,391 (equivalent 3.9%). In which, reduction took place mainly in Binh Dinh (12

thousands of heads; occupied 4%), then in Phu Yen (2 thousands of heads) and least in Ninh Thuan.

Main reasons of problem are diseases, ineffective technical impacts (veterinary, artificial

insemination), especially short-term price falling of beef meat. However, in SCC provinces, herd

has recoverd in middle of 2011 because meat demand exceeds internal supply in large cities such as

Ho Chi Minh, Ha Noi, Da Nang, Nha Trang, Vung Tau, etc.

100

150

200

250

300

350

2005 2006 2007 2008 2009 2010 2011

Beef-

catt

le (

1000 h

ead)

Bình Định Phú Yên Ninh Thuận

Source: General Statistic Office (2011 & 2012)

Figure 4 – Herd of beef-cattle in central Vietnam, 2005-2011

8 www.baobinhdinh.com.vn. Workshop “Nâng cao năng lực cạnh tranh chăn nuôi bò thịt” (Enhancement of

competition of beef–cattle sector), 2012 9Hoàng Mạnh Quân (2005), et al. ; Lê Đức Ngoan & Trần Thị Hường (2008)

7

Fluctuation of beef meat price occurred in 2010-2011 that varied from 180 to 250 thousands

VND/kg, and was double to triple folds much higher than price of pork. As a result, buying price of

live cattle moved up, improved beef meat market force, and cattle keepers recived higher income

than in previous year. Further, this sector still contributes an important part in farmers’ income; it

also generates available capital source, budget cash-flow, and effectively use by-products from

crops (cassava leaf, manioc peel and root, peanut stems, paddy straw, green forage etc.).

4.2 Positioning and analyzing the value chain of beef-cattle and the agents of chain Chain in domestic market

Products line

Beef-cattle value chain in SCC region includes four agents: (i) Farmersr; (ii) Collectors/middlemen;

(iii) Slaughter houses; (iv) Dealer/distributors and other agents.

Figure 5 – Beef-cattle supply chain in SCC

Farmer producing at small-scale, having 2 to 5 cattle heads with mixed litters at different ages

feeding together in farm. 1 to 2 years-old beef or few-months veal is often traded though local

collectors or middlemen during dry season (April to August) and holiday occasion. In recent years,

they invest capital on cattle species and fatterning. Transaction based on negotiation between

farmers and collectors in informal market. Therefore, farmers faced several problems: (i) Can not

decide selling price and don’t know clearly market demand; (ii) Do not measure accurately (farmer

Agricultural Extension Centre, Veterinary Services, Animal Varieties Centre, Private Services

DARD

Bank, Public Services, Processing and Trade Sector

Farmers

Collectors

Dealers,

distributors

Retailers,

processing units

Slaughter

houses

Live cattle

Live cattle

Meat, Born & by-

products

Meat, Born & by-

products

70%

cattle

75%

cattle

25% cattle

Meat & by-

products

Meat

Leather

Farmers Slaughter

houses

Leather

(10%)

Meat

(30%)

Bone,

blood

Slaughter houses in Biên

Hòa, HCM city

Local

market

Provincial

Dealer

Distributors

Factories in

HCMC

Retailers

Distribution systems in

HCM city

30% cattle

Middle-

men

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lost 5-10 kg per live cattle); (iii) Assess live cattle quality based on quantity factors and having no

doubtless among farmers and middlemen; (iv) 70% of farmers sell live cattle directly to local

collectors and 30% to small-scale slaughter houses.

Assume that farmer bought 1 year-old calve, this calve will be sold at two-years old, as beef-cattle,

for local middleman. Total production (P) includes value of cattle, that accounts for 60%, and

manure (by-product) is 31%. Intermediate cost (IC) accounts for 65% of P, including supplement

feed accounts for nearly 34% of IC. Value added (VA) accounts for 35% of P, which contributes

mainly by family labor. Net profit (NPr) generates only 230,000 VND per cattle per year (Table 3).

Table 3 - Financial analysis of live cattle husbandry of farmer, 2010-2012

Items Total (1,000VND) Proportion (%)

1. Total production (P) 5,800 100

- Cattle 4,000 69

- Manure 1,800 31

2. Intermediate cost (IC) 3,753 64.7

- 1 year-old calve 2,500

- Rice straw, peanut stems 433

- Cassava pulp, flour, salt 820

3. Value added (VA) 2,047 35.3

Labor 1,800

Gross profit (GPr) 247

- Depreciation 17

- Net profit (NPr) 230

Source: Survey data, DASR, 2010-2012

Collectors and middlemen: transaction through this network was formed spontaneously between

farmers and middlemen who are agents to decide buying-selling price of live cattle. Amount of

collectors and structures of network depend on regional and purchasing-power factor. Almost

transaction occurs mainly during December to nearly Tet festival. There were 60 to 70% of live

cattle selling in local slaughter houses and 25-30% was transported to the southern market. Market

force of live cattle is affected by southern meat market.

Local collector often has on-farm and off-farm activities, therefore income from cattle purchase

accounted for 20% of their income. 1-2 family members engaged to business. They usually invest

40 to 50 million VND for buying, transaction and stockage. Clients are farmers in village or inter-

villages. Payment is mainly by cash. Table 4 - Financial analysis of collector agent, 2010-2012

Items Total value (1,000VND) Proportion (%)

1. Total production (P) 4,500 100 Selling cattle 4,500

2. Intermediate cost (IC) 4,000 88.9

Buying cattle 4,000

3. Value added (VA) 500 11.1

- Transportation & communication cost 180

- Brokerage commission 50

- Veterinary control 10

Gross Profit (GPr) 260

- Net Profit (NPr) 260 Source: Survey data, DASR, 2010-2012

Average number of live cattle purchased monthly varies from 7 to 15, of which, 20% buying

directly from farmers, 80% must buy through middlemen. Then, cattles were sold to wholesalers or

local slaughter houses. December to January (Lunar calendar) are peak months for cattle

purchasese, estimated of 15 cattles per month in average. In which, crossbred Sind occupies of 60%

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and local species (called”Bò Vàng) is 40%. Purchase oral agreement among trader and farmer live

cattle will be deliveried at farmer’s gate between 7 to 20 days. Buying price is various depending on

to cattle breed, Crossbred Sind live cattle has higher price than local one, because it gives more

carcass weight than others. In recent year, price is also growing up yearly from 3 to 5 %.

Analyzing transaction of one live cattle, collector profits 260,000 VND within 20 days. Average

monthly profit of collector is estimated about 1.8 million VND. VA generated by collector occupies

of 11% of P, of which, 30% from transportation cost, and 10% from brokerage commission. Table 5 - Financial analysis of slaughter house, 2010-2012

Items Total (1,000VND) Proportion (%)

1. Total production (P) 5,305

1.1 Main products 4,345 81.9 1

st grade meat 1,540

2nd

grade meat 1,980

3rd

grade meat 825

1.2 By products 960 18.1 - Blood & Offal 555

- Bonne, skin, horn, hoof… 405

2. Intermediate costs (IC) 4,506 84.9

- Cattle 4,500 - Feedstuff 5

- Electric & water 1

3. Value added (VA) 799 15.1

- Labor 150

- Transportation & communication costs 80

Gross Profit (GPr) 569

- Depreciation 3

- Net Profit (NPr) 566

Source: Survey data, DASR 2010-2012.

Slaughter houses: small-scale slaughter houses located in local areas and equipped by simple tools.

They often buy live cattle directly from farmers (occupies of 30%) and local collectors (70%). Final

products of slaughter houses are beef-meat in various grades and consume by provincial distributors

and consumed in southern region. By-products of slaughtering (bone, blood, intestine, etc.) are sold

in local markets. Leather consumes by dealers and end-users are leather factories in Hochiminh city.

In present, in Binh Dinh, Phu Yen and Ninh Thuan, there are not existing industrial-scale slaughter

houses. Consequently, about 25% of live cattle is transported to slaughter houses that located in

Bien Hoa (Dong Nai province, 25 km far from Hochiminh city) and Hochiminh city.

In the case to slaughter a cattle weight of 170 kgs, slaughter house obtains about 5.3 million VND,

in which meat products keeps 82% of P, by-products (blood, tripe, bone, skin, etc.) occupies of

18%. Proportion of IC is 85% of P and other agents created 15% of VA. NPr occupies of 71% of

VA. If slaughter houses buy directly cattle from farmers/producers, they can profit 1 million VND.

Slaughter in Bien Hoa, Dong Nai, an external agent of beef-cattle value chain of SCC region

Survey in 2010-2012 covered agents of chain of SSC region. However, investigation of slaughter

houses that located in Dong Nai provinces, southern Vietnam also carried out in 2012.

In recent years, beef meat market in southern of Vietnam is very large and growing up. In Bien

Hoa, Dong Nai, there are slaughter houses that have capacity to slaughter from small to medium

scale and supply a large demand of meat in surrounding areas, especially HCM city. There are 6

slaughters that can process 50 to 100 heads of cattle per day in average (Trung Dong slaughter)10

that cattles are bought from different regions (SCC provinces, Tay Ninh, Cambodia, An Giang, Cu

10 Bureau of Veterinary of Dong Nai issued the licence papers for 42 slaughters and animal business enterprises in

2011.

10

Chi). Until to October 2011, 12,300 cattles are imported from SCC provinces (compared to 14,000

in 2010). Figures pointed out cattle husbandry in central is affected largely by the southern market.

Market access would be well arrangement if there were a network of slaughter houses & processing

factories installed along the chain. Furthermore, transportation cost among central-southern

interprovinces is also a big problem to reduce competition if live cattle carrying out to southern.

Analysis of profit sharing in chain Contribution of agents is respectively following: farmers 61%, collector 15% and slaughter houses

24%. Share of profit: slaughter houses 54% in 1-5 days, collector received 25% in 7-20 days and

farmer shared 22% in 1-3 years. Feeding cattle still exists and necessary because family labor and

by-products are used and generates income in overview of animal cropping systems. If these

resources are no longer or farmers must hire or purchase, they would not receive any profit. Table 6 – Profit contribution of each agent in beef-cattle value chain

Agents of supply chain

VA GPr NPr

Value

(1,000VND)

Proportion

(%)

Value

(1,000VND)

Proportion

(%)

Value

(1,000VND)

Proportion

(%)

Farmer/Producer 2,047 61.2 247 23 230 21.8

Collector/Middleman 500 14.9 260 24.2 260 24.6

Slaughter house 799 23.9 569 52.9 566 53.6

Total 3,346 100 1,076 100 1,056 100

Source: Calculated from survey data, 2010-2012.

4.3 Strategy to improve beef-cattle supply chain Table 7 - Technical solutions to improve beef-cattle supply chain in SCC region

Problems Technical solutions Involved agents 1.Beef-cattle species

and grass varieties

2. Nutrient and feed

3.Veterinary

4.Marketing skill and

capacity

4. Quality of beef

meat

-Higher performance programs for breeding and artificial insertion

-Introducing high-biomass grass varieties and adapting with

extreme weather condition in south central coastal

-Apply nutrients-balance techniques, modify micro-elements & salt

in dry season, fattening by cassava flour and pulp, fermented rice

straw and cassava leaf, etc.

-Increase ratio of vaccination and mapping for disease prediction

-Training farmers on marketing skill and capacity

-Apply husbandry techniques towards organic farming and GAP

Extension service

Veterinary service

Media agency

Private enterprise

Research institute

University

Non-government

organization

Table 8 - Economic and market solutions to improve beef-cattle supply chain in SCC region

Problems Economic solutions Involved agents Economic

1.Capital

2. Beef-cattle husbandry

area

3.Import of bovine meat

4.Cordination of agents

5.Slaughter and

processing factory

-Credit program for beef-cattle husbandry (high loan and low interest

rate, combine technical support)

-Master plan for bovine husbandry accordance with purchasing

power and available resources (land, labor)

-Imported quota of bovine meat, flexible tariff and non-tariff barriers

to protect bovine in domestic

-Organize contract farming, horizontal coordination to purchase input

materials and beef meat consumption -Plan & build up slaughter houses and processing factories in SCC

Credit agency

Bank for society welfare

Seft-help group

Private enterprise

Department of trade

Market

1.Beef collect and

distribution

2.Market fragmentation

3.Production strategy

4.Export

-Transparence in price and transaction method between farmers and

collectors, upload website to inform market-price information

-Organize auction and distribution systems for bovine

-Policies to encourage beef-cattle husbandry towards high-quality,

safety and competitive price with imported meat, target to high-

income domestic market in Da Nang, HCMC, Ha Noi, Bien Hoa etc.,

and oversea countries

-Improve scale of herds and develop specialized-farm

-Find out, market studies new high-competitive markets with

competitive-price and high quality (organic- farming, natural grazing,

nonuse chemicals and industrial feeds)

Government

Enterprise

Research Institute

University

Non-Government

Organization

11

5 Conclusions and suggestions

5.1 Conclusions

In SCC region, cattle husbandry contributes an important part in family income, keep balance of

family budget and cash-flow of farmer households though the year. Price of live cattle and beef

meat tends to move upward, the market force of beef meat is relatively high in southern,

especially in large cities that affected overall beef-cattle supply chain of SCC region.

A major part of farmers has changed their awareness on cattle husbandry; especially they invest

capital on cattle species, feed, forage, and fatterning.

Lack of forage in dry season is a constraint that influenced to scaling up herd.

Policies on installation of slaughter house, veterinary service, program of artificial insemination,

enlarge of pastures & forages area, etc. with government and private enterprises’ support could

improve quality and quantity of cattle herd in 3 studied provinces.

Cattle husbandry use cassava products & crop by-products as a feed source in dry season

whereas shortage of feed and for fattening. Meanwhile, cow manure is a fertile source that is

very useful for degraded soil and has high value. 5.2 Suggestion

Maintain and strengthen beef species improvement program, focus on remote areas whereas

farmer is difficult to access veterinary service.

Introduce high potential bio-mass and drought tolerance grass varieties. Encourage farmer use

crop by-products (fermented straw, maize & peanut stem, cassava leave & peel), and modify

nutrients & micro-elements (nutrient lick block) in dry season (other project’s component).

Organize a vertical coordination amongs farmers and local collectors.

Plan a master-plan of slaughter house, processing factories targeting to southern market.

Improve skills of marketing and market access for farmers and extension staffs.

12

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