India has stopped exporting animal feed to Vietnam? It’s just intimidation

VNEconomyNews.com - The Vietnam Feed Association has confirmed that the information that India has stopped exporting animal feed to Vietnam is just “news circulated for intimidation”.

The threatening news

Reuters reported that Indian enterprises have stopped exporting maize and soybean cakes to Vietnam after Vietnam decided to re-export nearly 50,000 tons of materials for making animal feed it imported from India before in early February 2010. Halting exportation of animal feed to Vietnam has been described as retaliation by India, one of the biggest animal feed material exporters in the world.

The information immediately worried Vietnamese feed producers, because India is now providing 30 percent of the total feed materials needed for Vietnam. In 2010, Vietnam imported 812,759 tons of oil-cakes, worth $398,069 and 400-500,000 tons of maize worth $108 million. India remains a big material supply source for Vietnam also because the prices of the products are cheaper by $35-40 per ton than those offered by the US and Argentina.

However, Le Ba Lich, Chair of the Vietnam Feed Association, has affirmed the information is just “news circulated for intimidation” which has been released by Indian enterprises in order to threat Vietnamese enterprises. Lich has affirmed that this was not a decision made by the Indian Government, and that Vietnamese enterprises should keep calm when hearing the news. In fact, India also needs to boost exports of farm produce, and it will be not foolish enough to take actions which may lead to the loss of a client like Vietnam.

Sharing the same view, Doan Trong Ly, General Director of Aprocimex, has also confirmed that to date, no Indian partner of the enterprise has informed him of an interruption in the exportation of maize and soybean residues to Vietnam, one of the biggest export markets for Indian enterprises.

The story began from the fact that the Ministry of Agriculture and Rural Development (MARD) released a Decision No 1616 in September 2010 to tighten the control over farm produce imports. Meanwhile, the materials imported from India, though having lower prices are not high quality. A lot of imported consignments from India have contained weevils, an pest which can harm domestic production.

As Decision 1616 took effects immediately, both Vietnamese and Indian enterprises did not have enough time to adapt to the changes. Some import consignments were required to be re-exported, thus causing big losses to enterprises.

In the fourth quarter of 2010 alone, enterprises were forced to re-export nearly 50,000 tons of feed imported from India back to India after some harmful weevils were found, causing an estimated loss of $16-20 million to domestic enterprises.

From the beginning of the year to February 10, 44,500 tons of maize and soybean cakes were detained and re-exported for the same reason.

However, as Vietnamese importers and Indian exporters raised strong opposition to the decision, the Ministry of Agriculture and Rural Development decided to allow enterprises to get customs clearance on February 17 after the consignments of products were treated. However, the imports have caused losses of hundreds of thousands of dollars to enterprises as they had to pay storage fees, fines and for treatment.

Enterprises call for regulation adjustments

Lich, on one hand, said that the issue of the Decision No 1616 is a necessary move to protect domestic production, on the other hand, said that it is necessary to amend the legal document in order to avoid causing losses to enterprises. He said that the imports which have already arrived in Vietnam and contain harmful weevils, should be allowed to clear customs after they are treated.

According to the Vietnam Feed Association, the prices of animal feed materials may increase by 10 percent this year due to price increases in the world market.

Feb 26^th, 2011

Source: vneconomynews.com