Illustrative image (Photo: VNA) Theconflict has disrupted the supply of fuels and materials to Vietnam, affectingbusinesses’ operations, they added.
Othercountries around the world have banned or restricted the export of food andfarm produce until the end of 2022, of which the conflict is the main cause.
India,the world’s second-largest wheat producer, has banned wheat exports to ensurefood security for its 1.4 billion people, leading to a surge in the world’swheat prices globally.
Russiaand Ukraine are among the biggest exporters of the grain, accounting for 29 percentof global exports, according to the World Bank. A western embargo means Russiais unable to export wheat.
Indonesiaalso halted palm oil exports.
Malaysiawill halt the export of chicken from June 1 as it faces a supply shortage andrising prices.
MalaysianPrime Minister Ismail Sabri Yaakob said on May 23 the chicken export ban wouldbe effective until production and prices stabilise.
Thecountry used to export 3.6 million tonnes of chicken a month.
Inthis context, most businesses in Vietnam, especially in the food and foodprocessing industry, are directly affected by the hike in prices of food andraw materials, petrol and logistics.
OnMay 23, domestic gasoline prices jumped to an eight-year high. The price ofRON92 gasoline increased to 29,639 VND from 28,959 VND per litre, and the priceof RON95 gasoline increased to 30,653 VND from 29,983 VND per litre.
TranVu Khanh, Director of Hiep Quang Company which imports wheat, corn andsoybeans, said the price of these raw materials has increased by 30–40 percentsince the conflict began, as they are the major wheat suppliers of the world.
ThoughVietnam is currently not facing a shortage of wheat supply, as most wheatimports come from Australia, the US and Canada, the price has surged.
Theprice of ordinary wheat is now 510 USD per tonne, up 160 USD since thebeginning of February, pushing the price of bread and instant noodles.
Thecountry’s animal feed industry, which imports 90 percent of its raw materials,has also been affected by the price of animal feed increase, according toKhánh.
Whilethe price of raw materials typically accounts for about 80-85 percent of theproduction cost, the price of animal feed already increased from 16 to 36 percentin the 2020-21 period, he said.
Thelivestock industry this year is expected to grow negatively or by only 1–2 percentdue to the high input cost.
Lookingfor a way out
Expertshave recommended that Vietnamese companies be prepared to deal with any ramificationsof the ongoing conflict. Adding diversification to both export and importmarkets would be a key aspect of the preparation.
Speakingat a recent conference on the impacts of the crisis on Vietnamese firms, Dr TranQuoc Hung, Director of the US-based Institute of International Finance, saidthe disruptions to agricultural activities of two major exporters of staplecommodities could seriously escalate food insecurity globally.
Arepresentative of Acecook Vietnam Company said the company would continue tomonitor the global market and work closely with suppliers to respond to thesupply disruptions.
BuiPhuong Mai, Chairwoman of the Board of Directors of the Vietnam Food IndustryJoint Stock Company (Vifon), said the company would cut costs and increaselabour productivity to offset the damage caused by skyrocketing raw materialprices.
Thehike in prices of raw materials in the world has directly affected foodproduction enterprises, especially those which use a lot of flour and cookingoil.
“Wehave to buy raw materials, especially flour and cooking oil, at a very highprice, which has increased by 30 -50 percent.”
NguyenNgoc Luan, General Director of Global Trade Link Co, Ltd, said his companywanted to sign a long-term contract to ensure stable prices but the suppliershave refused for fear of possible fluctuations in prices.
NgoTran Ngoc Quoc, Chairman of the Young Entrepreneurs Association of Tây NinhProvince, said businesses are now also struggling to repay social insurance,corporate income tax and VAT, which they were allowed to suspend during thelockdown period under Directive 16.
Herecommended the Government continue to offer support to help enterprisesovercome the challenges, he recommended.
Accordingto the Food and Agriculture Organisation, international food and feed pricescould rise by up to 20 percent as a result of the conflict.
Theconflict has seriously impacted the commodity markets around the world, whichcould keep prices at historically high levels through the end of 2024,according to the World Bank’s latest Commodity Markets Outlook released onApril 26.
Opportunityfor Vietnam
However,a ban on export of items such as poultry and rice by some countries hasbrought great opportunities for Vietnamese exporters since food supply isabundant in the country.
Vietnamhas no concerns related to food security and is also one of the world's leadingfood exporters.
LeXuan Huy, Deputy General Director of the CP Livestock Joint Stock Company, saidthe company has increased the number of pigs it raises by 5-10 percent a yearand could supply 19,000 - 20,000 a day to the market. This is more than enoughto meet domestic demand, and a part could be exported, he said.
TruongKien Tho, Deputy Director of An Giang province’s Department of Agriculture andRural Development, said the province’s annual rice output is huge at over fourmillion tonnes, enough for the domestic market as well as exports.
LeQuoc Dien, his counterpart in Dong Thap, said the rice production target forthe year is over 3.2 million tonnes, and the province exported over 136,000tonnes for 71.2 million USD in the first five months of this year.
Withmany countries restricting exports, causing prices to rise rapidly, Vietnamneeds to take advantage and penetrate deeper into the world's food supplychain, experts said./.
VNA
