THE taste for Australian cattle has ignited an investment boom in Vietnamese feedlots and abattoirs.
Leading steel manufacturer in Vietnam, Hoa Phat Group, which had an annual turnover of more than US$1.2 billion, is the latest to enter the market.
The company is preparing to begin the intake of 3000 head of cattle this August, with capacity to grow to 50,000 head annually.
Hoa Phat Group has entered the market aggressively this year, spending millions of dollars on infrastructure which will meet the animal welfare standards enforced under Australia’s Exporter Supply Chain Assurance Scheme (ESCAS).
Hoa Phat Group’s subsidiary Hoa Phat Livestock Development JSC has six feedlots under construction, with two, near Hanoi in the country’s north and Ho Chi Minh City in the south, expected to import Australian cattle within six weeks.
North Australian Cattle Company manager Patrick Underwood said Elders had worked closely with the company in developing designs for the feedlots estimated to be more than US$8 million.
An Elders farm tour of Vietnam recently visited the construction site of the southern feedlot – which has the capacity to hold 10,000 head of cattle – prior to its first ESCAS audit.
“It is a long and rigorous checklist to ensure that any new player is ready, willing and able to import Australian cattle – and they’ll be no different,” Mr Underwood said.
“They have an aim to be the number one feedlotters in Vietnam and because of the work they’re doing prior to shipment and the quality of their facilities, I feel very strongly they will be.”
Hoa Phat Group is not the only company investing significantly in the infrastructure to importer cattle, according to Mr Underwood who said there were many others upgrading and building new facilities in the past three years to handle Australian livestock.
Vietnam has a population of 94 million people and a national herd size of about five million head.
Vietnamese love of beef has resulted in the average consumption doubling to 5-6 kilograms of beef a year in the past decade.
“There is an increase of second tier importers and new players coming in that understand the significant investment required to build high quality feedlots,” he said.
“The big commodities over there are palm oil and rubber, but they understand the demand for protein.”
In the last two years, Vietnamese powerhouses including Hoang Anh Gia Lai JSC and Red Star Company have made significant investments in upgrading and building feedlots.