Cambodian farmers squeezed out

Small-scale pig raisers can’t compete on price with Thai imports and big local farms.(Photo: Reuters)

01/10/2012
Bangkok Post

Cambodians like pork. The average Cambodian consumes 9.29 kilogrammes of the meat a year and local farmers have long supplemented their incomes by selling an average of two pigs a year.

Cambodian pig prices are down 5% but feed costs are up 25%. As well, Thai firms use hormones and only need to feed pigs for three months instead of six.

In 2008, Cambodian farmers supplied around 2 million pigs, more than 90% of domestic demand. But the market for small-scale pig farmers is vanishing. Most of the pork local people now eat is imported from Thailand, or comes from large-scale producers who have seized the market once dominated by local farmers.

Though bad for the farmers, the changes have been good for consumers: live pig prices have fallen 53.5% to about 7,000 riel (53 baht) per kilogramme in just one year, pork industry executives say.

Since last year, about 30% of all subsistence pig farmers have called it quits, and if the government is unable to stem the flood of cheap pork from Thailand, they will be completely wiped out in five years, said Prathna Preap, a swine market expert at the USAID-funded micro, small and medium enterprise strengthening project.

“Our local pigs sell for cheaper and cheaper prices because of all the importing happening now,” said Lim Oun, a 45-year-old farmer in Kandal province, adding that he could get 8,000 riel per kg of live pig, a 5% drop since the start of the month.

To make matters worse, feeding pigs is increasingly expensive, as feed costs have risen 25% to 2,500 riel, or 21 baht, per kg, said Mr Preap. Feed constituted 80% of the production cost among subsistence pig farmers last year, according to USAID data.

Mr Oun accused the Thai pig exporters of using hormones that increase the size of pigs twice as fast as their counterparts in Cambodia, which are raised on feed only. Because of the chemicals, Mr Oun said, the Thai produces are “only raising them for three months and spend less money on feed that we invest over six months”.

Since Thailand lifted its moratorium on pig exports to Cambodia in September 2011, Thai producers are now bringing in half of the country’s estimated consumption of 6,000 pigs per day at a rate below production cost — a form of dumping, said Mr Preap.

Where most developed countries have safeguards to protect local industries from dumping practices, Cambodia does not. A draft law is in front of the Council of Ministers but experts question whether it would be enforced if it passes.

Without the law, Cambodia’s industries are at the mercy of foreign dumping practices.

Such was the case in 2010, when China and Vietnam allegedly sold shoes in Cambodia well below costs, cutting into the profits of local factories.

“Aside from pork consumers, those benefiting from the cheap prices the most are the traders and butchers since there are only a limited number licensed slaughterhouses, where there are a huge number of pig raisers,” said Mr Preap.

And with subsistence pig raisers on the way out, corporate processors such as M’s Pig ACMA (Cambodia) Co. Ltd, 91% owned by the local conglomerate Mong Reththy Group Co Ltd, are claiming stakes. According to the Mong Reththy website, it plans 16 commercial farms and 15 feed mills and four slaughterhouses able to fill 35-38% of the market’s total demand by 2015.

The other large player is Thailand’s gigantic Charoen Pokphand (CP) Group. It has pig and poultry feedmills and livestock farming plants in the country worth a total $37.22 million, according to its 2011 financial report, but pig production numbers were not available.

“The pigs [produced by the companies] are better quality than those of the local farmers because of better breeding, hygiene and feeding practices, making the meat leaner,” said Mr Preap. “Companies have also begun delivering the pigs to slaughterhouses directly, where before, pig collectors would have to come to the villages to buy them.”

In fact, local corporate swine operations have more than doubled in capacity over the past year and have gone from holding only a minor stake in the market to supplying 33-50% of the total market, producing 2,000 to 3,000 pigs a day, he said.

Srun Pov, president of the Cambodian Pig Raisers Association, said that without an anti-dumping law, it is up to the companies to provide quality pork and stabilise prices.

“I think that if they can produce enough local pigs then it would be a good thing since we would stop importing from Thailand. I don’t think those companies can produce enough though,” he said.

The local conglomerate Bivol Bopha (BVB) is one company that believes it can. It aims to double the number of pigs it produces to 100 by November at its farm in Kompong Thom province, said farming manager Ky Chanarith.

“Our farm is growing and we hope later to include pigs from local farms as well. This way the business does not affect them,” he said.

But it is too late for that, said Mr Preap.