Vietnam’s population is over 80 millions, in which more than 70% of them now living in rural areas. While in the 1990s, meat consumption occupied 6%/per year, it is forecasted these days that it will increase at least 5 - 6%/per year in the coming time as population grows 1.25 %. On the other hand, new development achievements of 20-year economic innovation now help to improve people’s income, promoting demand for high - quality foodstuff. According to a report done by IFPRI and Vietnamese Ministry of Agriculture and Rural Development, proportion of income as spending for poultry products (including pork, beef, poultry meat, egg and milk) in Hanoi and Hochiminh cities are relatively high. Consumption spending for poultry products in Hanoi accounts for 25% of the monthly total food expenditure and 21% in Hochiminh city. In which, consumption for fresh meat accounts for 2/3 of total annual meat consumption per capita. Frozen meat, both domestic produced and overseas imported, is initially favored in city dwellers. In Vietnam, although poultry meat is not a main supply source of protein but it is one of favorite foods in the meals menu of each family. Survey data indicates that, consumption demand of poultry meat increases continuously through years. In the 1990s, Vietnamese people only consumed around 3.1 kg of chicken meat/ per person / per year. In 2003, the consumption per capita was 12 kg per year. (Chart 1)
Graphic 1: Average meat comsumtion per capita in Vietnam and some other countries in 2003 (kg/person/year)

Supply capacity for domestic market

Although Vietnam poultry industry has a large number of poultry heads, its production of meat and eggs still low. In 2003, although the total of poultry heads amounted to over 250 millions, Vietnam chicken meat production only ranked in the 35th of and its egg output is in the 31st in the global position, The main reason is that Vietnam still sustains a small - scale production, consuming primarily in local or neighboring markets. It is reported that a few households whose have breeding scale ranges from 1,000 to 10,000 heads. Vietnamese average breeding scale is around 17 poultry heads/ per household.

When the first avian influenza occurred in 2003, Vietnamese poultry industry developed averagely at 8.6%/ per year. In 2004, after the flu, the growth fell 14%, resulting to the reduction of meat output of 15%. In 2005, poultry breeding industry step by step renewed as increasing 0.08% in quantity and 1.7% in meat output. (Table 1).  Slow growth for fear that the danger in chicken flu will resume and the government is rather reserved in poultry development

If we implement a simple calculation of consumption meat per capita and Vietnamese population, we will see that average meat consumption’s demand reaches 996 thousand tons. Whereas, in 2001 - 2005 period, processing capacity of domestic companies only satisfied around 32% of total demand. Over 60% chicken meat providing to the market comes from small - scale breeding households in rural areas. According to the strategic plan of MARD, by the year 2010, processing industry’s capacity will satisfy 60% domestic poultry meat demand with a cluster of 345 million poultry heads, providing 563,000 tons of meat / per year

Oversea poultry producers see Vietnam as an attractive potential market. In 2003, Vietnam imported 1,078-tons of chicken meat, satisfying 0.15% of domestic consumption demand (Table 2). In 2004, The Government of Vietnam granted a ban on importing poultry from epidemic countries, therefore, import volume reduced considerably, remaining only 496 tons.

Table 2: Poultry meat import’s data (tons)

Source: Faostat

In November 2006, on the preparation of Vietnam’s accession into WTO, the “FAS online” of the United State Department of Agriculture announced research results of analyzing the consumption demand of Vietnam market. The report indicated that an increased consumption of 21% in 2005 plus the confined domestic supply capacity, Vietnam would be the potential market for export countries.

Vietnam foodstuff processing enterprises at a glance

Regarding to an investigation in 2003, most of Vietnamese processing firms are small in terms of production line and preservation storehouses.

1. Three enterprises leads with the largest scale are state owned enterprises, including VISSAN, Ha Long canned joint - stock company and Animex . These corporations locates processing plants and frozen storehouses in Hochiminh city, Da Nang, Hai Phong. Capacity of yearly processing reaches over 50,000 ton.

2. There are two companies operates with processing capacity from 5,000 to 50,000 ton/per year. However, as market becomes more competitive, it’s predicted that the trend of M&A among domestic poultry industry with foreign investment corporation will become reality.

3. The third range is those have the processing capacity from 1,000 - 5,000 ton / per year. Presently, Vietnam has around 20-30 companies of this kind, mainly focusing on slaughtered and frozen products.

4. Finally, there are hundreds of enterprises operating in small – scale of below 1,000 tons.  These companies have wide range of operating, from processing, slaughtering to supplying frozen products and high - end products. In Hai Phong, there are more than 20 enterprises of such kind. In Ho Chi Minh city, some of famous names are Huynh Gia Huynh de, Phu an Sinh …