Since September 2021, HealthyFarm partnered with egg farmers to set up humane chicken farms and grow cage-free egg production in Central and Southern Vietnam. While turbulence from Covid-19 has caused many economic disruptions in various sectors, the egg industry has undergone many important changes and our partner farms have made a lot of needed adjustments as a result. In this article, we will have Q&A session with Mr. Hai – our technical expert to better understand how Covid-19 has affected the egg industry.
Question #1: Typically feed is the most important cost component in egg production. Can you detail how the feed price has altered since the start of the pandemic?
Mr. Hai: “During the period of more than 8 months, the price of feed increased rapidly due to the influence of the crop in China, corn exporting countries such as Brazil, Argentina, etc. International transportation prices increased due to the impact of Covid-19 and large countries like China focused on buying raw materials. In Vietnam, almost all raw materials for animal feed are imported, especially corn and soybeans, which are the two main ingredients for poultry feed.
Despite the surge in feed price, most producers still attempted to keep the egg price at the same price to be able to sell their products, considering the egg demand has decreased considerably and the market was really competitive. Many producers came to terms with the reality that they can just break even for that time being and would wait for the decrease in feed and the recovery of egg demand later on to be able to earn better profit.”
Question #2: With the recent traveling limitation due to lockdowns in big cities, do you see any significant impact on the egg value chain so far?
“Definitely veterinary services, veterinary drugs and transportation of feed to farms have become much more challenging. The price of intercity transportation services is high because the trucks must comply with the state’s regulations on safety and prevention of the pandemic and they cannot flexibly carry any goods like before. This further drove the increase in egg production cost.
In the past three months, the Covid-19 pandemic in the South, especially Ho Chi Minh, Binh Duong, Dong Nai, Long An and Tien Giang has exploded with thousands of cases per day. When directives 15 and 16 were applied, consumers were more inclined to buy reserve eggs so the total demand for eggs surged suddenly, the price of eggs increased by about 60% compared to a few months ago.”
Question #3: With the increase in egg price, do you think it is good news for the egg producers? Should they all increase their flock now?
“Firstly we need to look at the fact that the volume of poultry and egg production mainly originates from companies and large private farms which have been able to maintain their production despite the disruptions in the egg value chain. Small and medium livestock households have eliminated their flocks more than 2 months ago and have not had enough time to re-herd yet. Also, the price of pullets to start a new flock is currently very high so this is a hindrance for them to return to raising egg-laying hens.
This temporary increase in price only benefits a certain group of farmers who have hens producing at productivity peak. For those farmers that have hens at the end of production period and need to be discarded as chicken meat, they will experience further loss. We need to put all the factors of the value chain into perspective here. Regarding limited operation of slaughterhouses, limited or stopped operation of factories, and restaurants not being allowed to operate, the price of discarded chickens hit the bottom price and the discharge rate is very slow. The price of discarded chickens is even much lower than the cost of raising them, causing heavy losses to farmers and slowing the ability to re-herd.
It is the above factors that severely affect the raising of hens for eggs. Although the current egg price is very high, many of the egg farmers are still not really profitable due to the very high production cost and the impact of the egg price fluctuation. The prolonged low price before despite the increased feed makes the current profit not enough to compensate for the previous loss.”
With the insightful comments from Mr. Hai, we hope you gain a better understanding into how the egg industry operates and the recent disruption that it has experienced. Small and medium farmers once again experience tremendous challenges due to the pandemic and let’s hope the Covid-19 situation will settle down and the egg industry will stabilize soon so small and medium farmers can resume their farming operations.