The risk of imported inflation is becoming increasingly clear as the prices of many imported raw materials rise sharply. At this time, it becomes evident that many industries are overly dependent on imported raw materials.
Even for production inputs that are Vietnamese agricultural products, self-sufficiency has not been achieved. There are many solutions to this problem, but according to many experts, a capable "conductor" (coordinator) is needed.
Farmers suffer due to various reasons for price increases
The livestock and crop cultivation sectors are facing difficulties because animal feed and fertilizer prices have both risen sharply recently.
For the livestock sector, over the past year, prices of raw materials like soybeans and corn have increased by 50-60%, and retail feed prices have increased more than 10 times. Also during the past year, prices of livestock products have continuously decreased. The poultry industry (including industrial chickens, Tam Hoang chickens, meat ducks, and laying hens and ducks) mostly suffered losses throughout the year because products were sold below production costs.
According to animal feed production companies, although prices have been raised 6-7 times since the beginning of the year, this is still lower than the price increase of input materials. Therefore, in the coming time, animal feed selling prices will continue to rise before stabilizing again.
Mr. Pham Duc Binh, Vice Chairman of the Animal Feed Association, stated that Vietnam currently has to import 70-80% of raw materials for domestic animal feed processing. Therefore, the recent global price increases of materials like corn, soybeans, and wheat greatly affect domestic production costs.
With such a high degree of dependence, it is very difficult for Vietnam to reduce costs; the only way is to live with it and adapt to the world market.
Farmers in the cultivation sector are equally struggling as input prices such as fertilizers, plant protection chemicals, and transportation costs skyrocket. According to fertilizer dealers, the selling price of urea has recently been increased by domestic manufacturing companies to 10,300 VND/kg. Consequently, the retail price to farmers will be at 11,300 VND/kg.
Mr. Nguyen Duc An Son, director of SSG International, a fertilizer trading company in Ho Chi Minh City, believes this is the highest price ever.
"If DAP or phosphorus can be justified by increased imported raw material prices, urea is entirely domestically produced with domestic materials, so companies taking advantage to push up prices recently is completely unreasonable," Mr. Son said.
Businesses are also struggling
Mr. Nghiem Xuan Da, Chairman of the Vietnam Steel Association, said that although the Government has taken measures to control steel prices, global prices are still trending upward. "With the hot growth of the market while the State's adjustment tools are limited, it can only be partially restrained," Mr. Da said.
Many express concerns that the construction industry will face disruption and stagnation due to excessively high cost increases; many businesses accept penalties and stop working because continuing to work means heavier losses. Even public investment projects are affected as contractors are deadlocked by rising prices.
"Therefore, a good conductor is needed to boost supply and coordinate to avoid the price tornado," said a leader of a large enterprise.
Steel is also the main raw material for many basic manufacturing industries such as mechanics, processing and manufacturing, and supporting industries...
Ms. Truong Thi Chi Binh, Vice Chairwoman and General Secretary of the Vietnam Association of Supporting Industries, said that since the Lunar New Year, the prices of many input materials have increased by up to 50%, with steel prices rising the most. Many component suppliers, such as those for motorcycle companies, have to "bite the bullet" because most partners do not agree to increase purchasing prices.
Not easy to be self-sufficient, fundamental solutions needed
Achieving self-sufficiency in raw materials for animal feed is not easy, because according to Mr. Pham Duc Binh, despite years of calling for raw material autonomy for the animal feed industry, it has been impossible to achieve.
For instance, mechanization for growing corn failed in many provinces like Son La and Dong Nai; farmers all had to abandon corn to plant fruit trees that yield higher economic returns. Cassava acreage also dropped sharply, domestic soybeans are of low quality, and production costs cannot compete with imported goods.
Mr. Nguyen Tri Cong, Chairman of the Dong Nai Livestock Association, believes that self-sufficiency in animal feed ingredients is impossible for Vietnam because the country's land area is limited, the population is large, and meat consumption demand will continue to rise. Therefore, the best way for the pig farming industry is to improve the quality of breeding stock.
There were times when Vietnam had a sow herd of over 4 million to produce enough breeding pigs and pork for domestic consumption. Meanwhile, if pig breeds can be improved to 80-90% of the quality in advanced countries, Vietnam could reduce more than 1 million sows while still ensuring enough pork for domestic consumption.
"Reducing more than 1 million sows means we save millions of tons of animal feed each year," Mr. Tri Cong analyzed.
"Many sectors already have international divisions of labor, so it is very difficult for us to handle everything ourselves. But we need to focus investment on industries where we have strengths, such as agricultural products and rice for export, to create added value, and import products where we lack an advantage, accompanied by industry restructuring policies to enhance competitiveness," Mr. Binh proposed.
Sharing the same view, Ms. Truong Thi Chi Binh also stated that cooling down input material prices in the short term is very difficult because most components are imported and dependent. Therefore, besides controlling prices, the State needs to focus on support policies for businesses to reduce input costs, such as tax deferrals and extensions, or even tax exemptions for priority sectors.
"In the long run, there must be policies to create a push for the basic materials manufacturing industry to develop and achieve partial self-sufficiency. For example, there must be a plan to produce manufacturing steel, rather than having none and relying entirely on imports; restructuring basic manufacturing industries will increase autonomy and reduce risks during market fluctuations," Ms. Binh recommended.
Source: https://tuoitre.vn/lo-lam-phat-vi-qua-phu-thuoc-nuoc-ngoai-20210606221656998.htm