Big investors jump into growing poultry market

VietNamNet Bridge - Hundreds of poultry farming companies provide meat and eggs, and tens of thousands of household-run farms are operating throughout the country. However, no powerful company has yet to lead the market.

Egg processing chain
Large corporations have made big investment in farming

In 2017, Bel Ga, a startup in poultry breeding, got a $4 billion loan from International Finance Corporation (IFC) to expand poultry farming. With the loan, Bel Ga can receive support from global groups with many years of experience and professional management systems in the field, including Belgabroed and De Heus.

Before receiving the loan, Bel Ga was known as the first chicken company that received a Global GAP certificate in poultry farming.

CP Vietnam, Ba Huan, Vinh Thanh Dat, Dabaco, 3F Viet. Thanh Duc and DKT are the best known poultry and egg suppliers in the domestic market.

An analyst said that poultry meat and eggs have a short life cycle, therefore, risks always exist. Only companies with good logistics which lowers costs can be competitive. 

He said that the market is being restructured as consumers now prefer higher requirements for food safety. 

Big investors who have joined the market recently are developing large-scale projects with modern and professional farming technology.

One of the investment deals expected to change the face of the industry is VinaCapital’s investment of $32.5 million in Ba Huan JSC, announced last week. 

With the deal, VinaCapital became the strategic investor in Ba Huan and will pour more capital in the next 12 months if the business targets can be met.

Established as a household-run company 17 years ago, Ba Huan is one of the leading fresh poultry meat and egg suppliers. 

Ba Huan runs a closed production and business chain with traceable products and has a large distribution network of 2,000 agents and retail points throughout the country.

According to IFC, food consumption in Vietnam amounts to 15 percent of GDP and has annual growth rate of 18 percent. 

However, the low food safety standards have hindered the industry’s growth and blocked opportunities to join modern food supply chains.

According to DBS Bank, the amount of chicken consumed in Vietnam each year has a CAGR of 8.6 percent. 

It is expected that the consumption level will reach 17 kilograms of meat per head per annum by 2021, or double the eight kilogram level in 2015. 

The figure was predicted based on the pace of urbanization and the expansion of the middle class.

The optimistic forecast has prompted corporations to make investments in poultry meat and egg production. 

Hoa Phat, a steel manufacturer, unexpectedly announced it will produce 300 million eggs a year from 2020.

Source: VietnamNet