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NEWS UPDATES Asean Affairs    20 July 2012

Laos pig farmers face pressure from foreign competitors


Foreign companies eager to enter the Lao food market have been pouring capital into large pig farms and have already forced a number of locally-owned operations out of business.

Minister of Industry and Commerce Dr Nam Vinhaket warned that local pig farmers will continue to suffer unless they develop strategies to remain competitive in an increasingly integrated economic region.

A large Thai-based company working in partnership with local people is engaging in what Dr Nam called "a long term market strategy" in which the company sells pork at subsidised prices that local farmers are unable to compete with. After local farms collapse, the company can raise prices due to the lack of competition, Dr Nam explained.

The minister has recently reported the situation to President Choummaly Sayasone when he visited leading officials of the ministry and spoke with them.
"Our farmers can't compete with the Thai company's pork prices," Dr Nam said.

He added that unlike local farmers on limited budgets, the company has large amounts of capital which allow it to focus on a long-term market strategy. In addition, the company breeds piglets, produces its own animal feed, and a raises larger numbers of pigs than local operations. All of these things reduce the total cost of raising an adult animal.

"The company lowers pork prices to levels local farmers cannot compete with, often forcing them out of business," Dr Nam told the president.

The number of pig farms owned and operated by local farmers in the central province of Khammuan, one of the primary sources of pork in Vientiane markets, has decreased nearly 50 per cent, compared to a few years ago when local farmers were operating more than 300 farms, Dr Nam said.

Deputy Director of Khammuan Provincial Agriculture and Forestry Department Viengkham Xayaphone said that about 400 pigs per day used to be sent to Vientiane markets two years ago, but that number is now less than half of what it was.

President of the Pig Farm Association in Vientiane Neuang Sombounkhan admitted that several pig farmers in the capital have already been forced out of business, most of whom used to run small farms with around 60-100 animals.

He said that it was challenging for local producers who buy both piglets and pig feed, especially those forced to borrow from banks in order to compete.

However, many local farmers who are working in partnership with the Thai-based company see its presence as an opportunity.

A pig farmer in Vientiane said that he could run a pig farm despite having a limited budget because the company provides piglets, feed, veterinary services and a guaranteed market for his pork.

"I spent money to only buy land and build the farmhouse, everything else is covered by the company," he said, asking not to be named.

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