Historically, Vietnam's strong appetite for pork has been mostly satisfied through domestic production. This has changed significantly due to the country's struggles with African swine fever, which was first confirmed in Vietnam in February 2019.
By mid-2019, ASF had spread to all 63 provinces and by the end of that year losses totaled nearly 6 million head — or about 22% of Vietnam's total swine herd. In 2018, prior to confirmation of ASF, Vietnam's pork production reached 2.81 million metric tons. USDA estimates Vietnam's 2020 production to be 2.38 million mt and projects another decline next year — to 2.25 million mt.
In 2020, ASF cases in Vietnam have subsided for significant periods of time, but animal health officials and the swine industry continue to battle occasional outbreaks. Vietnam's hog prices have remained high, suggesting continued pork shortages. August prices for live hogs in southern Vietnam averaged $1.67 per pound, up 140% from last year. Meanwhile, pork imports have increased dramatically, climbing by an estimated 58% year-over-year to more than 95,000 mt.
Despite interruptions in production that impacted second quarter exports, the U.S. industry definitely capitalized on Vietnam's increased need for imported pork. January-to-June exports of U.S. pork and pork variety meat totaled 8,232 mt, up 148% from a year ago, while value climbed 164% to just under $18 million. This included an even stronger increase in pork muscle cuts, which were up 237% from a year ago to 6,246 mt, valued at $15 million (up 186%).
In addition to the size of Vietnam's import surge, also notable is the degree to which its slate of pork suppliers has diversified. While the European Union is still Vietnam's largest supplier in 2020, EU exports actually declined 2% in the first half, to about 41,000 mt. Conversely, Russia's exports to Vietnam more than tripled from a year ago, increasing 205% to nearly 22,000 mt. Vietnam is now Russia's second largest export destination, trailing only Hong Kong, with Vietnam accounting for 27% of Russia's total export volume. As of late-August, 16 Russian pork establishments were approved for export to Vietnam, with five added within the month. Canada's first-half exports to Vietnam also increased sharply, from just 108 mt a year ago to more than 11,000 mt in 2020.
"Vietnam's emergence as a major pork destination highlights some important developments in global pork trade," explains U.S. Meat Export Federation Economist Erin Borror. "After closing several years ago to pork imports from the EU, U.S. and Canada, the Russian government made a concerted effort to bolster its domestic pork industry. But Russian producers and processors must export if they're going to be profitable, and Vietnam is proving to be a solid market for Russian pork."
Canada's rapidly growing business in Vietnam is due in part to tariff reductions achieved through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Vietnam's most-favored-nation tariff rate for frozen pork muscle cuts is 15%, but Canadian pork pays just 9.3%. The MFN rate for pork variety meat is 8%, but Canada pays just 4%.
A free trade agreement between Vietnam and the European Union entered into force Aug. 1, extending similar tariff relief to EU pork. Under this agreement, EU muscle cuts pay 13.1% and variety meats 7.2%, with these rates falling to zero over eight years. Fortunately for U.S. pork, Vietnam also recently implemented a temporary reduction in its MFN rate for muscle cuts — from 15% to 10% — through the end of 2020.
The lower MFN rate took effect July 10, and July exports did not disappoint. According to just-released USDA data, U.S. pork muscle cut shipments to Vietnam reached a new monthly record of 2,443 mt, valued at $5.3 million. Pork/pork variety meat exports were the largest in more than 10 years at 2,923 mt, valued at $6.3 million.
"Vietnam is a very price-sensitive market, so the MFN rate reduction helps U.S. pork's competitive position for the time being," Borror says. "But if this lower rate isn't extended in 2021, we will face a growing tariff gap compared to Canadian and European pork."
In this promising but highly competitive market, it is important to highlight the versatility and value of U.S. pork for chefs and other foodservice professionals in Vietnam. USMEF recently teamed with the Saigon Professional Chef Guild to organize a U.S. pork cooking competition in Ho Chi Minh City. A video of the competition can be viewed by clicking here.
Funded by the Indiana Soybean Alliance and the National Pork Board, the competition was limited to 30 participants due to COVID-19 restrictions, but USMEF expanded the audience by livestreaming the event on Facebook. Rules required each dish to utilize a different cut of U.S. pork, with options being spareribs, cheek, loin and riblet.
"It was a great opportunity for Vietnamese chefs to showcase their culinary talents in creating innovative and delicious dishes using U.S. pork cuts, especially cuts that are relatively new to the market," says Sabrina Yin, USMEF director in Southeast Asia. "USMEF collected recipes from the 10 chefs in the final round of the competition and plans to include them in a U.S. pork recipe book."
Vietnam's retail and meat processing sectors also hold strong growth potential for U.S. pork. Convenience is an increasingly important factor for Vietnamese consumers when making retail food purchases, and the U.S. industry is well-positioned to address this need by supplying finished processed products as well as raw materials. For example, sausage-making is expanding rapidly in Vietnam, from about 10 processors five years ago to more than 50 today. Takeout and delivery services are also on the rise, especially during the COVID-19 pandemic.