Drucker 1 Identification and quantification of subsidies relevant to ...

Drucker 1 

Identification and quantification of subsidies relevant to the production of local and 

imported pig breeds in Vietnam 

Pre-press version of paper accepted on 8 March 2006 for publication in 

Tropical Animal Health and Production 

Adam G. Drucker 12 , Emeline Bergeron 3 , Ute Lemke 4 , Le Thi Thuy 5 , and Anne Valle 

Zárate 4 

1 

International Livestock Research Institute (ILRI), PO Box 5689, Addis Ababa, Ethiopia. 

2 School for Environmental Research, Charles Darwin University, Darwin NT 0909, Australia 

Corresponding author: adam.drucker@cdu.edu.au 

3 

Netherlands Development Organisation SNV, 105-112 D1 Van Phuc Compound, 298 Kim Ma, Hanoi,, 

Vietnam 

4 University of Hohenheim, Institute of Animal Production in the Tropics and Subtropics, Department of 

Animal Breeding and Husbandry in the Tropics and Subtropics, Garbenstr. 17, 70599 Stuttgart, Germany 

5 National Institute of Animal Husbandry, Chem, Tu Liem, Hanoi, Vietnam 

Key words: Pig production, indigenous and exotic breeds, subsidies, Vietnam


List of Acronyms 

AnGR: 

CIRAD : 

DARD: 

EAST : 

FAO: 

GRET : 

LW: 

MARD : 

MC : 

NAEC: 

NIAH: 

OECD: 

SNV: 

UNDP : 

VBARD: 

VND : 

VNLC: 

VSF : 

animal genetic resources 

Centre de Coopération Internationale en Recherche Agronomique pour le 

Développement 

Department for Agriculture and Rural Development 

Eau Agriculture Santé en Milieu Tropical 

UN Food and Agricultural Organisation 

Groupe de Recherche et d'echanges technologiques 

Large White 

Vietnamese Ministry for Agricultural and Rural Development 

Mong Cai 

National Agriculture Extension Center 

National Institute of Animal Husbandry 

Organisation for Economic Cooperation and Development 

Netherlands Development Organisation 

United Nations Development Programme 

Vietnamese Bank for Agriculture and Rural Development 

Vietnamese Dong 

Vietnamese National Livestock Corporation 

Veterinaries Sans Frontières


1. Abstract 

Livestock diversity contributes in many ways to human survival and wellbeing, while its 

loss reduces options for attaining sustainable agriculture and universal food security. The 

current rapid rate of loss of this diversity is the result of a number of underlying factors. 

While, in some cases changes in production systems and consumer preferences reflect the 

natural evolution of developing economies and markets, in other cases, production 

systems, breed choice and consumer preferences have been distorted by local, national 

and international policy. 

In the context of a widespread threat to local pig breeds in Vietnam, this paper identifies 

and quantifies the level of agricultural subsidies that are currently contributing to this 

process of breed substitution. Producer subsidies, which tend to improve the 

competitiveness of imported breeds and their crosses over local breeds are shown to be 

considerable and mitigating measures are now urgently needed to avoid an irreversible 

loss of livestock diversity. 

2. Introduction 

Seventy percent of the world’s rural poor depend on livestock as a component of their 

livelihoods (LID, 1999). Livestock provide not only direct outputs (e.g. meat, milk, eggs) 

but also have other significant socio-economic and cultural roles. Livestock diversity is 

important as animals of different characteristics and hence outputs suit differing local 

community agroecological conditions and needs. Despite this, worldwide 32% are at risk


of becoming extinct and the rate of extinction continues to accelerate (FAO, 2000). 70% 

of remaining breeds are in developing countries where the risk of loss is highest (Rege 

and Gibson, 2003). 

The Vietnamese pig production sector provides the basis for this case study. Out of 15 

local breeds, 13 are at some degree of risk of extinction (Vietnamese Country Report, 

2003). Neo-classical economics suggests that such losses can be simply manifestations of 

changing returns to different types of breed production and socially optimal outcomes 

associated with higher levels of welfare. However, this view fails to account not only for 

a range of non-market values but also for agricultural/livestock subsidies, which may be a 

driver in this process. In turn, the existence of such externalities and market distortions 

calls into question the social optimality of irreversible breed loss. 

This paper identifies the main types of subsidy to the Vietnamese pig production sector 

and quantifies them in the context of their differentiated impacts on different pig breeds, 

as a first step towards assessing the need for reform. 

Although it is not possible to disentangle the precise impact that such subsidies have had 

on local breed population numbers from that caused by other economic developments, 

this study shows that the subsidies are substantial (19-70% of gross margin) and therefore 

likely to be a significant driver in the process of breed substitution and extinction. 

The paper concludes that in the face of initiatives that may substantially increase such 

subsidies even further, mitigating measures to avoid irreversible biodiversity loss need to 

be undertaken. This includes direct support for national conservation programmes (in situ 

and ex situ) and existing local breed farmers. Such measures may be relatively low cost


and the benefits of avoiding irreversible biodiversity loss are likely to outweigh these 

costs. 

The remainder of the paper develops as follows: Section 3 provides the conceptual 

background to the current status of livestock diversity, the economic framework within 

which this loss takes place, the importance of subsidies within this context and the means 

by which their actual impact can be determined. Section 4 describes the case study area, 

while section 5 presents the survey methodology and data collected, leading to an 

identification of the main subsidy types and their respective levels. Sections 6 and 7 

discuss the implications of the results, as well as identifying future research needs. 

3. Conceptual Background 

3.1 Status of AnGR 

Domestic animals supply some 30% of total human requirements for food and agriculture 

(FAO, 1999) and some 70% of the world’s rural poor depend on livestock as a component 

of their livelihoods (LID, 1999). Animals of different characteristics and hence outputs 

suit differing local community needs. Livestock diversity thus contributes in many ways to 

human survival and well-being, not only in terms of their output functions but also through 

other significant socio-economic and socio-cultural roles. These include savings, 

insurance, cyclical buffering, accumulation and diversification, as well as various sociocultural 

roles related to status and the obligations of their owners (Anderson, 2003). 

Despite the importance of this diversity, an estimated 16% of uniquely adapted breeds 

bred over thousands of years of domestication in a wide range of environments have been


lost over the last century (Hall and Ruane, 1993). A further 32% are at risk of becoming 

extinct i and the rate of extinction continues to accelerate (FAO, 2000). Although much 

less talked about, genetic erosion in farm AnGR is much more serious than in crops 

because the gene pool is much smaller (6,000 – 7,000 breeds of some 40 species) and 

only very few wild relatives remain. Furthermore, of the livestock breeds existing today, 

70% are in developing countries where the risk of loss is highest (Rege and Gibson, 

2003). 

Pig breeds in Vietnam are a typical example. The country’s State of the World AnGR 

report (Vietnamese Country Report, 2003) notes that there are approximately 25 pig 

breeds in Vietnam of which 15 are local and 10 imported. Of the local breeds, 3 are 

technically extinct, 4 are reported as critically endangered, 2 endangered, 4 vulnerable, 

and only 1 not at risk ii . 10 of these can now be found within an ex-situ and/or in-situ 

conservation programme. 

Factors that threaten local AnGR, in general, and local Vietnamese pigs, in particular, 

include: crossbreeding with and/or replacement by imported breeds in programmes 

designed to improve animal productivity; neglect arising from shifts in social settings, 

production systems and/or market demand of certain animal products; and urbanisation 

and its impact on traditional animal agriculture iii (Rege and Gibson, 2003).


3.2 The economics of biodiversity loss 

Neo-classical economic approaches view such changes as enhancing society’s welfare as 

individuals make rational decisions regarding breed substitution based on values that 

reflect the economic scarcity of the resources used. Viewing AnGR loss in these terms 

leads Mendelsohn (2003) to argue that, given that the market will preserve valuable 

livestock breeds, the primary challenge facing the conservation of AnGR is to identify 

sound reasons why society should preserve animals that farmers are in the process of 

abandoning. In this paradigm, conservationists first must make a case for why society 

should be willing to pay to protect apparently "unprofitable" AnGR resources and then 

must design conservation programmes that will effectively protect what society treasures. 

However, Pearce and Moran (1994) note that the activity of biodiversity conservation 

tends to generate economic values (use and non-use) which are not captured in the market 

place. The result of this "failure" is a distortion where the incentives are against genetic 

resources conservation and in favour of the economic activities that destroy such 

resources. Furthermore, existing subsidies can inhibit the adoption of resourceconserving 

practices by artificially making them less profitable to farmers, while 

subverting farmers’ expression of their own priorities (Pretty, 1995; Chambers et al., 

1989). 

Economic theory suggests that decisions such as the replacement of a local breed of 

livestock with an imported breed will be determined by the relative rates of return of the two 

options. However, the relevant rates of return are those that accrue to the farmer rather than


to society or the world as a whole. To the livestock keeper the loss of the local breed may 

appear to be economically rational if returns are higher than that from activities compatible 

with genetic resources conservation. This is because the latter may consist of non-market 

benefits that accrue to people other than the farmer, as well as the fact that subsidised inputs 

and services (e.g. artificial insemination, veterinary treatment, etc.) may be available for the 

imported breed, particularly where such breeds are being actively promoted by externally 

biased agents of change (e.g. national extension workers, foreign donors). 

3.3 Role and potential impact of agricultural subsidies on livestock diversity 

conservation and sustainable use 

The OECD (2002) defines a “subsidy” (also frequently referred to as transfers, payments, 

support, assistance and aid) as a benefit provided to individuals or businesses as a result 

of government policy that raises their revenues or reduces their costs and thus affects 

production, consumption, trade, income, and/or the environment. The benefit generated 

by this policy may take different direct and indirect forms such as an increase in outputprice, 

a reduction in input-price, a tax rebate, an interest rate concession, or a direct 

budgetary transfer. Direct subsidies are visible on the expenditure side of the 

government’s budget, while indirect subsidies tend not to be recognised as subsidies at all 

(van Beers et al., 2002). 

Subsidies are essentially transfers to a particular group, based on certain characteristics or 

actions. Unless bestowed in an unconditional lump-sum form, subsidies change the 

effective cost of a good. Although certain groups benefit from subsidies (the incidence of


a subsidy depends on the relative elasticities of supply and demand), society as a whole 

loses from those policies, unless they serve to correct a pre-existing market failure. 

Efficient resource allocation requires prices to equal marginal costs, and minimum 

average costs in the long run. Subsidies distort relative prices and shift the allocation of 

resources away from more productive sectors in the economy. Subsidies can also 

exacerbate pre-existing efficiency losses (Fischer and Toman, 2000). 

de Moor (1997) argues that subsidy policies are often, albeit unintentionally, a major 

causes of environmental degradation and unsustainable practices. They distort efficient 

price and incentive structures and lead to unsustainable production and consumption 

patterns. Subsidies may provide perverse incentives and adversely affect both the 

economy and the environment, while primarily benefiting the rich. 

OECD countries spend US$235 billion a year supporting local food production, with, in 

2002, approximately three quarters of this spent by the European Union (US$100.6 

billion), Japan (US$43.9 billion) and the United States ($39.6 billion). These subsidies 

provide a notable portion of farm receipts – 31% for the OECD on average, but up to 

60% in some cases. Most of the money goes to the largest, and usually richest, farms, 

while small and poor farmers (who are the most likely to be maintaining local crop 

varieties and livestock breeds) are often bypassed (Reuters, 2003). iv 

The FAO (undated) notes that such explicit and implicit subsidies to livestock production 

increase the advantages of imported breeds which require more external inputs (e.g. 

veterinary services, artificial insemination v , concentrate feed, etc); while Karugia et al.


(2001) argue that the net benefits of crossbreeding programmes have often been 

overestimated as a result, leading to the promotion of imported livestock breeds at the 

expense of local livestock breeds. Additional costs are also ignored, as the mandatory 

changes in production systems necessary for increased productivity are often associated 

with higher levels of risk, while replacement of local breeds has socio-economic and 

environmental implications due to the loss of the (usually non-market) values of the local 

genotypes. 

In such cases, society needs to view the loss of local livestock breeds with much more 

concern than that suggested by neoclassical economics (which because of its assumptions 

about the reversibility of supply and demand changes is in any case ill-suited to the 

analysis of irreversible changes). Economic analysis should instead be used to assist in 

understanding the financial incentives that livestock keepers face in making the choice 

between raising local and/or imported breeds, including the identification and 

quantification of the non-market benefits of particular breeds. It can also be used to 

design the interventions necessary in order to ensure that the on-going agricultural 

development process will be compatible with the conservation and sustainable use of 

local livestock breed diversity. 

While the non-market valuation of AnGR has been the topic of a number of other papers 

(e.g. Tano et al., 2003; Scarpa et al., 2003a, b; Cicia et al., 2003), this particular paper 

will focus on the identification and quantification of government subsidies which support


imported pig breed production, in order to assess whether they play any significant role in 

increasing the risk status of local pig breeds. 

The impact of subsidies can be understood within the context of a conceptual framework 

that permits an analysis of the chain of effects that starts with a subsidy and ends with an 

environmental impact. The environmental impact of the subsidy is determined by the 

level of the subsidy, the reaction to the subsidy in terms of producer and/or consumer 

behaviour, and the degree of environmental damage caused by the sector concerned (van 

Beers et al., 2002). vi 

4 Description of Case Study Area 

According to the Vietnamese Country Report (2003) which forms part of the State of the 

World’s AnGR reporting process, Vietnamese agriculture generated 23.6% of GNP in 

2001, employing 65% of the national labour force. Twenty two percent of agricultural 

GNP comes from livestock production; and the livestock sector is growing at 6.9% p.a.. 

Total livestock production in 2002/2003 was 2.3m tonnes. Within the livestock sector, 

pigs are the most important species, with 21.8 million head producing 1.5 million tonnes 

of pork in 2001 (76.7% of total meat production and per capita consumption of 29.1 

kg/year). Almost all is consumed domestically, with only 2.6% being exported, mainly to 

Russia, Hong Kong, Malaysia and China. 

Animal production systems in Vietnam can broadly be classified as:


• “intensive” large-scale market-oriented production, relying on commercial highprotein-energy 

concentrate feed. These include beside Vietnamese state farms and 

foreign enterprises (e.g. from Taiwan and Thailand) private large-scale farms that 

dominate in South Vietnam but increasingly also develop in the North of the country. 

• “extensive” small household resource-driven production, where maintenance of a 

diversity of farm animal species is an important livelihood strategy. However, overall 

animal numbers are limited. Smallholder pig herds typically include 1-2 sows and 

roughly ten fatteners, relying mainly on locally available feeds. 

There are approximately 3.5 million imported, 12 million local x imported crossbreds and 

6 million local breed pigs. 56% of imported breeds are found on intensive farms, while 

smallholders only have 9% of imported breeds. Local and local crossbreeds are found 

mainly in smallholder farms (58% compared to 28% on intensive farms). 

There are approximately 25 breeds of pig in Vietnam of which 15 are local and 10 

imported. The former include I, Mong Cai, Meo/Ban, Tay Nguyen Soc, Muong Khuong, 

Quang Tri Mini, Son Vi, Lang Hong, Co, and H’mong, as well as the composite breeds 

of Phu Khanh, Ba Xuyen and Thuoc Nhieu. Within the extensive smallholder systems in 

which these breeds are mainly kept, the Mong Cai breed can mainly be found in the 

Northern Mountains and Midlands, the Red River delta and the Northern central coast. 

The Meo/Ban, Tay Nguyen Soc, Muong Khuong and Co breeds are only found in some 

limited areas of the Northern and Central upland regions. The Thuoc Nhieu, Phu Khanh 

and Ba Xuyen are found mainly in the South of the country. The I pig is mainly found in


the Red River delta. Of the 14 (sic) local pig breeds, 4 are reported as critically 

endangered, 2 endangered, 4 vulnerable, 3 technically extinct and 1 not at risk. 10 of 

these can now be found within some kind of conservation programme. However, the 

long-term sustainability of those programmes is questionable, as they are based on very 

small animal numbers and depend heavily on government subsidies (Lemke et al., 2000). 

This current degree of local breed extinction risk is a direct result of programmes, 

initiated in the 1950s but with increasingly large modern-day impact, to import highyielding 

lean-meat breeds (imported breeds currently found in Vietnam include: Large 

White, Duroc, Landrace, Yorkshire, Hampshire, Berkshire, Pietran, DE, Cornwall and 

Meishan) in an effort to “improve” the performance of local breeds by crossbreeding 

(NIAH, 1997). High performing Vietnamese breeds, especially the Mong Cai, were also 

supported by the government. Whereas in 1994, 72% of the sow-population of North 

Vietnam consisted of local breeds (Thien et al., 1996), by 1997 this had decreased to 45% 

percent. An increasing number of crossbred fatteners can also be observed (NIAH, 1997). 

While government policy recognizes the importance of local breeds and calls for them to 

be maintained in order to conserve genetic diversity, provide genetic material for 

crossbreeding activities and ensure the continued existence of breeds appropriate for 

smallholder production systems (ASPS, 2002), subsidies largely benefiting imported 

breeds are undermining the potential to achieve this goal in situ through sustainable use. 

Instead, as subsidies contribute to the process of breed substitution, the majority of local 

breeds must now be found in conservation programmes.


The costs associated with this loss of local livestock diversity involve the loss of direct 

use, indirect use and non-use values. As local breeds are well adapted to extensive 

production systems, they represent an important livestock genetic resource for the 

resource-poor farmers of Vietnam’s remoter areas. Their distinct genetic make-up means 

that they may also have useful traits (and hence option values) for future breeding 

programmes and production system evolution (e.g. in the face of land degradation, 

climate change and new disease challenges). The loss of this resource reduces 

opportunities for poverty alleviation and improved food security. 

5 Methodology and Data 

5.1 Survey approach 

This work was carried out within the framework of the sub-project “Efficiency of 

smallholder animal husbandry depending on intensity of management and genetic 

potential of livestock in mountainous regions of Northern Vietnam”, and specifically 

covers Son La Province. The sub-project is carried out within the framework of a Thai- 

Vietnamese-German collaborative project, the Special Research Program SFB 564 “The 

Uplands Program/Research for sustainable land use and rural development in 

mountainous regions of South East Asia”, financed by the German Research Council 

DFG. The sub-project aims to develop livestock breeding programmes for resource-poor 

smallholder systems, using local livestock genotypes with high "productive adaptability" 

(i.e. high performance under harsh production conditions). From the general research 

objective, the need for the identification and assessment of the relative importance of the


principal policy and market factors determining trends in the utilisation of indigenous 

breeds, including agricultural subsidy policies, was identified. 

Semi-structured interviews with key informants were carried out during April 2004 and 

additional information was acquired in May/June 2005. Interviews were carried out 

during face-to-face meetings and telephone conversations. Additional information was 

obtained through email correspondence with a number of informants. A list of key 

informants is presented in Annex I. 

Secondary data was also consulted, although this was extremely limited. Almost no 

bibliographic references containing information relevant to pig subsidies could be found 

in VSF, GRET, CIRAD, FAO, UNDP nor MARD vii libraries (the latter is mainly in 

Vietnamese). The most important source of this type of information are existing 

“Uplands Programme” reports/publications (e.g. Lemke et al., forthcoming; Lemke et al., 

2005; Lemke et al., 2004, Valle Zárate et al., 2003). 

5.2 Identification and quantification of subsidies 

The interviews revealed 15 different types of potential subsidies to the pig sector (see 

Section 6 for a summarised list of the subsidies). These are all direct producer subsidies 

and include the following: viii


5.2.1 Direct subsidies for the rearing of breeding stock 

Subsidy description 1: In Vietnam, the Ministry for Agricultural and Rural 

Development (MARD) elaborates and issues decrees regarding agricultural production 

(including pig production). Two state-run pig-breeding farms are subsidized to produce 

exotic breeds (and their crosses) of high quality for sale to commercial pig production 

projects. One of these, the Thuy Phuong Pig Research Center/NIAH carries out breeding 

based on Landrace, Duroc, Meishan, Pietrain and Yorkshire breeds. The parent stock are 

sold to farms which usually have 200-300 sows for 16,000 VND/kg live weight, while 

the fatteners are sold to farmers with 20-30 fatteners for approximately 12,000 VND/kg 

fattener. The comparative price of a Mong Cai (MC) ix cross is about 10-11,000 VND/kg. 

Subsidy level A: The station receives 1.3 million VND/sow/year as a government 

subsidy. 

Subsidy level calculation A: The 1.3 million VND/sow/year subsidy supports imported 

breeds and their crosses. These are grandparent stock expected to produce 10 weaned 

piglets per litter and 1.7 litters per year, of which 50% will be females. As only females 

are sold as parent stock sows then the subsidy is 1.3 m VND/10 x 1.7/2 = approximately 

153,000 VND per parent stock sow produced. 

Subsidy Level B: An alternative way to calculate the breeding stock subsidy is to note 

that, according to NAEC, the animals are sold at 16,000 VND/kg instead of 20,000 

VND/kg in order to keep them affordable to farmers. The high unsubsidised price is


attributed to the high costs (e.g. through the use of imported breeds, artificial 

insemination and vaccines) of producing high quality animals. 

Subsidy level calculation B: Assuming that sows are sold at 50-100kg liveweight by the 

provincial breeding farm, a subsidy of 200-400,000 VND/sow can be identified, 

depending on the province. 

Given the range identified of 153,000 – 400,000 VND/sow/year, for the purposes of the 

analysis presented below we use an average value of 250,000 VND/sow/year. 

5.2.2 Direct subsidies for the purchase of breeding stock 

Subsidy description 2.1: In addition to the subsidies to the pig breeding farms, subsidies 

were also reported by Thuy Phuong Pig Research Center/NIAH as being available to the 

multipliers. Farmers can receive a subsidy of up to 300,000 VND/sow of exotic or 

crossbred genotype that they buy from the station, although this sum can be less, with the 

difference being applied to other required farm infrastructure. Additional subsidies may 

be provided by the provinces (see below) and farmers request such subsidies directly 

from the provincial extension department. 

Subsidy level: 300,000 VND/sow of imported genotype. Given that a sow’s useful 

reproductive life is five years, the effective subsidy is 60,000 VND/sow/year.


Subsidy description 2.2: MARD support to commercial farms can include: 

• support for GP stock is 1.3m VND for pigs, 900,000 VND for cattle and 50-70,000 

VND for chicken, all per head per year. 

• at the provincial level a further 1.8-2.5 mVND/head or up to 4 mVND can be 

obtained regardless of the pig breed. 

Subsidy level calculation: The 1.3 mVND/head/year for pigs mentioned by MARD is the 

same as that mentioned by Thuy Phuong Pig Research Center/NIAH and calculated in 

Subsidy 1 above. The additional maximum provincial level support of 4m VND is 

assumed to be mainly available to intensive farms with 200-300 sows and is therefore 

worth 16,000 VND/sow/year. 

5.2.3 Subsidised loans for the purchase of pigs and farm infrastructure 

Subsidy description 3.1 

As of April 2005, a new policy regarding loans to commercial farms has come into force 

under Decision N° 257. This policy concerns the establishment of modern farms using 

the latest technologies and covering more than 30 sows or 100 fatteners per year. 40-60% 

of the purchase price of the pigs are subsidized as well as concentrate feed, and 

insemination of sows and vaccines during the first year of the project. The Vietnamese 

government subsidises 100% of 12 months interests for the purchase of breeders, of 6 

months interests for the purchase of fatteners and of 24 months interests for the


infrastructure and equipment of the farms (VBARD and DARD) 50 % of any bank 

interest linked to the project will be also subsidized during the first three years of the 

project. The provincial extension department strongly encourages buying imported breeds 

but there is no restriction and national or local breeds could also be bought. Indeed, there 

is also a state farm with a selection program for the Vietnamese improved Mong Cai 

breed. These subsidised projects can be implemented by any individual or enterprise but 

will in practice mainly be of benefit to better-off farmers or external investors that can 

bring enough capital to build such modern farms. 

Subsidy level calculation: The Son La Extension Department (part of the provincial 

Department of Agriculture and Rural Development) reports that a nearby modern 

commercial farm using the Superlean commercial line involved a 1 billion VND 

investment for a farm size of approximately 120 sows. Assuming that all money was 

borrowed, animal purchase costs were 20% of the total (of which 50% is subsidised 

through a grant) and the normal interest rate is 1% p.m., then 100 mVND is given in the 

form of a grant, 100 mVND at a 1% p.m. discount and 800 mVND at a 0.5% discount. 

The subsidy level is therefore equivalent to 100 mVND + 100 mVND x 0.01 x 12 months 

+ 800 mVND x 0.005 x 12 months = 160 mVND in year 1 and 48 mVND in years 2 and 

3 (only 800 mVND x 0.005 x 12 months applies in years 2 and 3). The grand total of 256 

mVND over 3 years and divided by 120 sows is equivalent to approximately 710,000 

VND/sow/year. To date, no such loans have been made, as the associated law has only 

just come into effect. Effective subsidy rate used in this analysis is thus equal to zero but 

implications for the future are significant.


Subsidy description 3.2: In the case of loans, the application of MARD decrees is 

carried out through governmental institutions such as the Vietnamese Bank for 

Agriculture and Rural Development (VBARD) or the Vietnamese Bank for Social Policy 

(VBSP). According to the MARD’s policies, all types of farmer are eligible to borrow, 

with the poorest farmers eligible to borrow up to 10 million VND without collateral at a 

special interest rate of approximately 0.5% p.m.. For sums larger than 10 million, farmers 

are obliged to provide collateral and to prove project feasibility. These loans are made at 

the usual interest rate for farmers of approximately 1% p.m.. MARD also reports the 

existence of loans of up to 20 mVND at variable rates without providing collateral, while 

the Vietnamese National Livestock Corporation (VNLC) notes the existence of 

favourable interest rates for farm building construction for farms with at least 20 sows or 

100 fatteners. Farmers are able to borrow 7 mVND/sow at a 3-4% interest rate p.a. 

instead of paying 6% p.a.. A time limit for repaying this loan will be introduced shortly. 

In the North, farms taking advantage of this scheme typically have 50-70 sows while in 

the South they have more than 100. 

Subsidy level calculation: Assuming that farmers that borrow large sums of money are 

more likely to be investing in intensification, the availability of such loans can be 

considered as a subsidy for conventional, as opposed to traditional, farming systems. 

VNLC’s information suggests that subsidies could be worth up to 175,000 

VND/sow/year [7 mVND x 2.5% (= 6% - 3.5%)], while the values mentioned by MARD 

would translate into subsidies of approximately 300,000 VND/sow (10 mVND x 3%


p.a.). However,if we instead assume that farmers borrowing less than 10 million VND are 

more likely to continue keeping local breeds than those borrowing more than this, an 

0.5% (=1%-0.5%) subsidy in favour of local breeds could be identified. Furthermore, for 

sums over 10 million the loans appear to be at the local rate and hence there is no subsidy 

involved. Given this overall ambiguity, we assume that this type of subsidy is effectively 

zero. 

Subsidy description 3.3: According to the Son La Province Extension Department, loans 

are made available to poor farmers under the “Encourage Agriculture” programme. 

Farmers pay to receive a sow but get a loan that covers 60% of the pigs purchased and 

40% of the materials required relating to any improvement of infrastructure. According to 

the VBSP, those loans can be used for any breed of pigs. x 

However, the Son La 

Extension Department notes that the main breeds provided under the above programme 

are Large White (sows and boars) in richer areas, and Mong Cai (MC) sows and Large 

White (LW) boars in poorer areas. MC sows are valued for their high reproductive 

performance, varied feed requirements and robustness. MC x LW crossbreds are highly 

valued because the carcass has a higher percentage of lean meat and lower fat content, 

and because fatteners have considerable growth rates. MC x LW are also less demanding 

concerning the feeding intensity than pure exotic pigs (but more demanding than local 

breeds). MC x LW meat is valued by those consumers preferring lean meat (mostly found 

in urban areas while rural consumers show a higher preference for fat meat and lard 

required for cooking).


Such loans have been available since 1999. Loan amounts vary between 3-7 million 

VND, cost 0.3-0.5% p.m. in the poorest region and must be repaid within 6-12 months 

(depending on whether a fattener or sow is purchased). No information about the number 

of beneficiaries under this scheme or the rate of repayment was available . 

Subsidy level calculation: Assuming a loan of 5 million VND over a period of one year 

at an interest rate saving of 0.6% p.m. (1% - 0.4%) is used to purchase 5 sows and 

associated infrastructure materials, the effective subsidy level is equal to 72,000 

VND/sow/year. The subsidy supports mainly imported and Vietnamese improved breeds. 

Note that as the loan only covers 40-60% of total costs, this calculation assumes that the 

farmer is in fact purchasing approximately 8 sows in total. 

Subsidy description 3.4. Loans from the Vietnamese mass organisations, the Farmers’ 

Association or the Women’s Union, are provided in order to facilitate the ability of 

farmers from remote areas to borrow money, as they are far from a bank in the district or 

provincial towns. Funds can be borrowed directly from the Association/Union or 

borrowed by the latter from a bank. In the Farmers’ Association of Son La province, 

loans are made available at up to 2-3 million VND over 3 years at an interest rate of 0.5% 

(instead of the usual 1% interest rate p.m. as for normal credits). Available since 1999, 

these rotating fund loans are destined to the poorest farmers of the remote areas of the 

province and for the moment only three villages are eligible to receive them, due to the 

low total amount available to the fund. Since these loans became available, an average of


150 households have borrowed money, two-thirds of which have already repaid 1 and with 

a default rate of less than 10%. These loans can be used for any purpose related to animal 

husbandry but the Farmer’s Association gives advice on the way to use these loans for 

buying specific breeds and farmers are said to generally follow this advice. However, the 

implications for pig breeds are unclear as the main species of animal purchased in these 

locations to date have been ruminants. 

Subsidy level calculation: Assuming that the equivalent of 2-3 sows can be purchased 

for 2.5 mVND, the subsidy level is equal to 2.5 mVND x 0.5% p.m (1%-0.5% = 0.5%) x 

12 months divided by 2 or 3 sows = 50,000-75,000 VND/sow/year. However, as the type 

of breed usually purchased is unknown and the number of loans made under this scheme 

has been very small, the effective subsidy used in this analysis is zero. 

5.2.4 Artificial insemination (AI) 

In Son La province, there are three AI stations, including one in Son La town. The 

station, which is under the administration of the Extension Department, but privately 

managed, began to provide AI services in 1985. Although Mong Cai and Cornwall have 

been kept in the past, since 1996, only LW boars have been kept. These usually come 

from the Thuy Phuong Pig Research Center/NIAH. 

Replacement boars are about 3 month old, have a weight of about 40 kg and a price of 

38,000 VND/kg. Boar semen collection starts at about 10 months of age and is collected 

2.5 times/week during an average 5 - 6 years of service. 

1 No data available concerning pig producers only


Subsidy description 4: In 2001, the AI station was providing service to 15 villages 

around Son La. The price paid was 25,000 VND/pregnancy or 10,000 VND/dose for 

farmers from remoter villages who purchase semen directly from the station and carry out 

the insemination themselves. 

In contrast to this, the Netherlands Development Organisation (SNV) working with the 

Son La Extension Department states that in 2004 the Department was providing free AI 

and training (focussed towards intensive systems and production/utilisation of LW x MC 

genotypes). 

Son La Farmers’ Association notes that urban growth has reduced crop land and 

increased the demand for livestock production. Breed preferences have also changed 

significantly over the last 5 years. Farmers used to prefer local breeds (e.g. Ban/Meo), 

whereas now preference is for the latter (MC sows and LW x MC fatteners). 

Insemination is usually artificial by private suppliers. The cost is 25,000 VND with two 

free repeats. Usually the semen is from a LW. Natural mating by a LW is similar in price. 

Subsidy level calculation: Given that the market cost of AI and natural mating is in both 

cases 25,000 VND/pregnancy, the subsidy can be calculated to range from zero (where 

purchased privately) to 25,000 VND (where supplied for free). Assuming that 

insemination takes place 3.2 times per year in order to produce 1.6 litters per year 

(Lemke et al., forthcoming), the subsidy would be within the range of 0-80,000


VND/sow/year The use of semen of exotic boars clearly favours the reproduction of such 

breeds even when there is no direct subsidy. For the purpose of this analysis we assume a 

mid-range value of 40,000 VND/sow/year, although due to frequent reproductive 

problems the number of paid inseminations per pregnancy may be even greater than 3.2, 

resulting in an even higher effective subsidy. 

5.2.5 Water supply 

Commercial pig farms use large quantities of water for animal consumption, cleaning and 

cooling. Where the provision of clean water is provided free this can be considered as an 

environmental subsidy. Given that it is mainly intensive pig farms who will benefit from 

the provision of large quantities of clean water, this type of subsidy can be considered to 

increase the competitiveness of imported breeds and their crosses over local breeds raised 

in smallholder production systems. 

Subsidy description 5: In rural areas, the price of water depends on provincial water 

policy but is usually between 2,000 and 2,500 VND/m 3 for both industry and private 

users and is closely associated with the average cost of water treatment (EAST). It should 

be noted, however, that many industries do not pay for water use as they are able to 

extract water directly from wells and rivers. 

Although no actual measurement was observed to take place, Vietnamese estimates of 

water use (based on the assumption that water use is equivalent to 10% of the pig’s live


weight per day) from farms which produce 50-500 fatteners/year suggest that this is 

10l/day for a fattener, 12-17l/day for a lactating sow and 35-40l/day for a gestating sow. 

Subsidy level calculation: Assuming average water usage of 20l/sow/day, 7.28 m 3 

would be used per year, which charged at 22,500 VND/m 3 implies a cost subsidy of 

approximately 16,400 VND/sow p.a. to those who do not pay for pig production water 

usage. 

5.2.6 Water treatment 

Commercial pig farm waste management is well documented in the international 

literature (see for example, Taiganides, 1996; Drucker and Latacz-Lohman, 2003). The 

latter found that the total residual water (which includes feces and urine) varied between 

16-46l/fattener in commercial farms in Yucatan, Mexico. In The Netherlands, treatment 

costs have been shown to range from 4-19% of total production costs (Dietz and 

Hoogervorst, 1991; Berentsen and Giesen, 1994), with Mexican costs being at the lower 

end of this range (Drucker and Latacz-Lohmann, 2003). Non-enforcement of 

environmental legislation can be treated as a subsidy in so far as it places those that 

comply with the existing legislation at a competitive disadvantage to those that should be 

complying with the legislation but attain some cost saving by not doing so. 

The Thuy Phuong Pig Research Center/NIAH notes that in Vietnam, pig manure is 

generally used as a fertiliser for crops. On this government farm, solid wastes are sold to 

farmers for use in their rice paddies. There are no regulations limiting the quantity and


timing of applications of manure to land. By contrast, the liquid waste is used to produce 

biogas which is then used to heat water (for human on-station use) and also to incinerate 

dead pigs and placenta, both of which are recycled into feed. Waste water is subsequently 

allowed to flow into fish ponds (currently under construction). The cost of the biogas 

treatment system is 3-5 million VND (cost of the treatment vessel) and farmers who have 

more than 15-20 pigs are said to be obliged to use such systems, although this was not 

always observed to be the case in practice. VNLC noted that such a treatment vessel 

would have a 3-4m 3 capacity and be sufficient for a farm of 60 sows, although other 

sources suggested that capacity might have to be much greater. 

Subsidy description 6: In the case of Vietnam, 50-100% of treatment costs can be 

covered through a government grant. The most common type of treatment system 

observed was a biogas system with a life-cycle of 15 years and only minimal 

maintenance costs during this period. It is unknown at present whether more than one 

grant can be obtained (i.e. for periods beyond the life cycle of the initial treatment 

system). 

Subsidy level calculation 6.1: Assuming a 50% subsidy and costs of 3.5 mVND for 

waste treatment on a 60 sow pig farm for the type of capacity as described by VNLC, the 

subsidy is equivalent to 29,150 VND per sow over the treatment system life. Given that 

this is spread over the 15 year life-cycle to the treatment plant, this is equivalent to a(n 

undiscounted) subsidy of 1,950 VND per sow per year.


Subsidy level calculation 6.2: An alternative way of estimating the subsidy is to 

consider the gross margin of a sow in smallholder production. According to Lapar et al. 

(2003), this is 656,500 p.a. for a Mong Cai sow, while Lemke et al. (2005) report 1.7 to 

3.7 mVND/household/year for smallholder households of varying production intensity, 

keeping 1 to 2 sows and the respective offspring. Assuming treatment costs are 5% of 

these values and spread over 15 years the subsidy is 2,188 – 8,222 VND per sow per 

year. 

For the purposes of this analysis we will use an intermediate value of 5,000 

VND/sow/year. 

5.2.7 Exports 

The Ministry of Agriculture and Rural Development (MARD) noted that pig production 

development is a high priority and this is reflected in Decision 166 which promotes the 

export of pork. The principal markets for exporters such as the Minh Hien farm and the 

Vietnam National Livestock Corporation (VNLC) are Russia, China and Hong Kong, 

with the latter seeking to overcome regulatory problems so as to enter markets in 

Singapore, Malaysia and Korea. 

According to Cuong, Hanoi Agricultural University, export difficulties are due to the low 

percentage of lean meat being produced (43-45% compared to the international 

“standard” of 54%). However, another problem is the veterinary sanitary status of 

Vietnamese livestock products that is unacceptable for most importers (Barwinek, 2002).


Demand for lean meat is also increasing in Vietnamese urban areas, where the price is 

now 1.5 times higher than for meat of high fat content. In rural areas, high fat content 

meat commands a price premium of 1.8 times the price of lean meat. 

Exports to Russia have declined to zero from 10,000 tonnes 5 years ago, as Vietnamese 

prices became higher (as a result of low productivity levels, feed price increases and 

quality constraints) than those of its chief international competitors (i.e. Brazil and 

China). Exports to Hong Kong have however grown over previous years, as the quality – 

higher fat content of imported F1s (LW x MC/Duroc x MC/Landrace x MC) and F2s 

(LW x (Large White x MC)) – is better than that of similar Chinese breeds. 

Subsidy description 7: Prior to 2003, there was support from the government for exports 

with cash paid to farmers to increase the production. This was worth 3% for every US$1 

that was exported and allowed VNLC to pay 13,000 VND/kg liveweight instead of the 

market price of 9-10,000 VND/kg. There was no Vietnamese government limit on the 

total amount that could be exported under this scheme. 

Subsidy level calculation: Although export subsidies supported the production of 

imported breeds and their crosses by 3% in the past, as of 2004 this has no longer been 

the case and the current export subsidy is equivalent to zero. 

5.2.8 Feed


Ingredients for commercial concentrate feed include grains, soybean cake (60-70%), fish 

and meat flour, minerals and amino acids. Small-scale farmers tend to mix commercial 

concentrate with maize and rice bran, while large-scale producers rather tend to feed 

rations consisting only of commercial feeds. The principal companies supplying 

concentrate feed in Vietnam are Charoen Pokphand CP, Cargill, Guyomarch VCN and 

Proconco. 

MARD reports that Vietnam produces 3.5-3.8 million tons of feed p.a., although demand 

is closer to 10 million tons p.a. 

Subsidy description 8: Over the previous 6 years, feed prices have been closely linked 

to the evolution of the price of soybean cake, which is currently 4,500-5,000 VND/kg, 

depending on its protein content. This is also the international market price as the 

Vietnamese tax on soybean cake was abolished in 2003 and there is no Vietnamese price 

control policy. 

Subsidy level calculation: National and international prices are similar, hence there are 

currently no direct subsidies for commercial concentrate feed products. 

5.2.9 Land 

Land in Vietnam is allocated by the government. According to national law, in general, 

the amount of land available for farmers with land use rights is up to 2 ha for annual 

crops (e.g. rice) or 10 ha for perennial crops and 5 ha for other farming activities, such as


livestock production. However, in each province, this law is applied according to land 

availability. In the Red River delta close to Hanoi, urban land use is expanding fast and 

encroaching on the agricultural land. The pressure on land is high and farmer rarely reach 

the maximum land use described above even in rural areas. An exception, according to 

CIRAD, is a 5 ha pig farm in Thai Binh province. 

In rural areas, there are 6 different levels of land tax. The highest tax concerning paddy 

fields is 20 kg of rice/sao/year (approximately 1.4 million VND/ha/year, as 1 sao 

corresponds to 360 m 2 and 1kg of rice sells for approximately 2,500 VND). 

In Son La Province, the majority of agricultural land is free of tax. Maximum land use is 

officially restricted to 1 ha/household for agricultural activities and 4 ha for the whole 

farm (including forest areas). Land distribution occurs every 5 years. Households only 

pay a land tax while using more than 2 ha but no data regarding the rate is available as 

this limit appears to be never reached (insert institutional reference for Lo Thi Thanh 

here). 

Subsidy description 9: According to provincial policy, land may be given free of tax to 

commercial pig farms during the first 5 years, after which farmers have to pay the land 

tax. This information is corroborated by VNLC but MARD states that such support to 

commercial farms lasts for only 3-5 years. Land use rights are allocated for periods of 30- 

50 years.


Subsidy level calculation: No data regarding actual land taxes could be obtained despite 

consulting a number of sources. While commercial farms may get preferential treatment 

during the first 3-5 years, the advantage that this provides such intensive farms over 

extensive ones is essentially zero as it appears that intensive farms are also paying zero 

land tax in practice. In this case, the commercial farm land tax after years 3-5 could even 

be considered as to favour extensive farms. However, based on the assumption that the 

land tax on a per sow basis is both appropriately discounted and small, we use a zero 

value for this subsidy level. 

5.2.10 Transport 

Subsidy description 10: Transport subsidies to/from mountainous areas exist. However, 

they appear to apply mainly for the transport of crop-related goods but not for livestock, 

according to the Service for Agriculture and Rural Development in Son La. However, 

livestock-related transport subsidies may apply within very specific state projects 

concerning a limited area for a limited time, according to GRET. 

Subsidy level calculation: We note, however, that transport subsidies are applied to 

seed, so that seed is sold at the same price anywhere in the province. Where such 

subsidies were to apply to feed products, a subsidy for intensive farm pig production 

(which tends to use imported breeds and their crosses) would be observable. However, 

given that feed prices seem to largely reflect international market prices (see above), we 

conclude that transport subsidies are currently zero with regard to pig production.


5.2.11 Extension, Training and Veterinary support 

The Son La Extension Department reports that it works with free range chickens, goats, 

and concerning pigs, with improved Vietnamese Mong Cai, exotic Large White, local 

Ban, and the commercial Super Lean Meat genetic line . Extension meetings/training 

activities can be individual or group-based. Officially, contact is determined by farmer 

needs and covers both rich and poor farmers. However, in practice, there may be a bias 

towards richer farmers and the degree to which Vietnamese extension services, created 

for lowland farmers in Vietnamese language, actually respond to the special needs of 

upland farmers who often speak no Vietnamese is open to question(Siem et al., 1997; 

Jamieson et al., 1998). 

Subsidy description 11: In so far as it can be assumed that the Son La Extension 

Department works equally with both intensive and extensive pig farmers, and does so 

without promoting imported breeds over local ones, there is no subsidy. In the more 

likely case where these assumptions do not actually hold, then a bias towards intensive 

farms and imported breeds would be expected and quantifying that bias would involve 

calculating a shadow price for “breed neutral” private extension services. 

Subsidy level calculation: In the face of limited information, subsidy is assumed to be 

zero, although this is likely to underestimate the true size of the subsidy. 

5.3 Limitations


The subsidy levels identified above can only be interpreted as “ballpark” estimates. Very 

little documented material relevant to this study is available and consequently primary 

sources needed to be relied upon to obtain much of the data required. However, even 

these primary sources do not have all the information necessary to enable us to carry out 

a comprehensive study. Furthermore, although in some cases different sources 

corroborate each other’s information, in other cases there are contradictions. As a result, a 

number of key assumptions (sometimes even heroic ones) had to be made. We have 

nevertheless endeavoured to make these assumptions as explicit as possible and to further 

consider their implications through a sensitivity analysis. Lower-bound values 

(particularly zero values) were used in a number of cases. 

Although it is clear that a much more in-depth study is needed before a definitive 

quantification of pig sector subsidies can be achieved, the “ballpark” figures are 

sufficient to suggest that subsidy levels are indeed significant and help to highlight areas 

that should be the priority focus of any further studies. 

6 Discussion 

Table I presents a summary of the above findings. 15 potential types of subsidy were 

identified. Of these, two provided direct support for the production and purchase of 

parent stock at the national level. An additional type of support was also provided at the 

provincial level. Four types of loan subsidy were identified, together with limited implicit 

subsidies for artificial insemination, water use and waste treatment. Other potential


subsidies (for export, feed, land tax and extension/veterinary services) were considered to 

be zero either because of their small size or lack of adequate information. 

INSERT TABLE I NEAR HERE 

As can be seen in Table I, and taking into account the limitations described in Section 

5.3, the total subsidy for imported breeds and their crosses is in the region of 460,000 

VND/sow/year (approximately US$31). 

Compared to a range of estimates regarding the profitability of pig rearing, this represents 

19-70% of the gross margin typically associated with sow production (see Table II). 

INSERT TABLE II NEAR HERE 

Such findings are compatible with the OECD findings mentioned previously (i.e. 

subsidies as a portion of farm receipts reaching 60% in some cases) and those of pig 

production in Mexico and Canada, which were approximately US$17/head (more when 

expressed on a per sow basis) [Drucker and Anderson, 2004; Escalente-Semerena, 1997]. 

Having identified the level of the subsidy, the actual environmental impact could now, as 

mentioned previously, be determined through an assessment of the reaction to the subsidy 

in terms of producer behaviour, and the degree of environmental damage caused by the 

sector concerned.


However, in the absence of information regarding the relative elasticities of supply and 

demand differentiated by breed (information which is not available), it is not possible to 

quantify the precise reaction of producers to these subsidies. Although it is clear in 

general terms that imported breeds and their crosses have increased relative to local 

breeds, leading to most of the latter becoming threatened with extinction (degree of 

environmental damage), the extent to which this has occurred independently of other 

factors (e.g. technological advances, general economic development, including improved 

market access, changes in consumer preferences towards lean meat production, etc.) 

cannot be determined. 

Nevertheless, given that the proportion of subsidy relative to gross margin is not 

inconsiderable, it seems reasonable to assume that the subsidy has indeed played some 

role in the decline of breed numbers. While it may be argued that their decline can be 

attributed to “rational” economic forces in the intensive sector (and which would have 

occurred even in the absence of subsidies), this is unlikely to be the case in the remotest 

extensive systems. Given that constraints in these production systems mean that even a 

large subsidy is insufficient to outweigh the advantages of the local breed (which is why 

most remaining local breeds are still found in these production systems), it is clear that it 

is the less isolated extensive systems in transition (i.e. in transition between demanddriven 

and resource-driven states that will be most susceptible to subsidy-induced breed 

substitution and loss.


In addition to identifying the production systems where high subsidies are likely to be 

influencing breed preferences and hence conservation potential, it is also worth assessing 

which subsidies are actually having a widespread effect. Approximately two-thirds 

(67.5%) of the total subsidy arises from two sources: direct subsidies to breeding farms ( 

250,000 VND) and subsidised prices for commercial farmer purchase of breeding stock 

from state-run breeding farms (60,000 VND). In assessing the importance of these, it is 

clear that further information regarding the number of sows purchased under these 

subsidised prices, together with the number of farms benefiting from such subsidies, is 

important and needs to be identified in future research. 

Other types of subsidy (e.g. export subsidies) that may have affected the market 

previously are now no longer relevant and can be ignored unless circumstances change. 

Implicit water use and treatment subsidies appear to play only a minor role (4.7%), as 

does artificial insemination (8.7%), although the latter may be having a high genetic 

impact even if this is not reflected in its price subsidy. 

By contrast, future subsidies might have a significant impact on breed substitution. The 

most important type of loan is that under Decision 257, which is potentially very large 

(and sensitive to assumptions regarding the size of the loan and the number of pigs within 

farms constructed using such loans). However, as the law has only recently entered into 

force, its effect has thus far been zero and for analytical purposes we ignored it. 

Nevertheless, it is potentially almost as large as all the currently existing subsidies. Its


actual size and the degree to which a large number of loans will be made under this 

decision will need to be carefully monitored. 

de Moor (1997) notes that in most cases reshaping subsidies yields economic, 

environmental and fiscal gains, and may create greater equity as well. Markets should be 

left to take care of allocating resources, while governments should instead focus on 

defining and enforcing conditions for a better functioning of markets and ensuring fair 

competition. Sound pricing of resources, goods and services, covering full costs of 

production and consumption, is a key element of good governance. Reforming subsidies 

in practice is however difficult, not least given the existence of vested interests. Creating 

more transparency is a key to subsidy reform; a practical way to create more 

transparency is to develop an informational framework on subsidy policies (to which the 

“ballpark” estimates in this paper contribute). 

Nevertheless, the current high subsidy levels, the prospects of further increases and the 

degree to which local breeds are already endangered suggest that mitigating measures for 

AnGR conservation urgently need to be implemented rather than or in addition to simply 

advocating the removal of distorting subsidies. The expenditures associated with the 

resulting conservation programmes should be treated as a direct cost of the current 

subsidy policy. 

Although there are currently 19 active AnGR conservation programmes (not all for pigs) 

underway in Vietnam (Vietnamese Country Report, 2003 ), the ones related to pigs will


need to be significantly enlarged if they are to succeed in conserving breeds that are 

increasingly without an in situ sustainable use conservation option. While in situ options 

have been shown to be relatively cheap to implement through community-based 

approaches (for example, see Pattison et al., 2002), ex situ options tend to be much more 

expensive. 

7. Conclusions 

Subsidies made available to pig producers form a significant proportion of the gross 

margin of imported breeds and their crosses. Ceteris paribus this improves their 

competitiveness vis-à-vis local breeds and can therefore be seen as a contributory factor 

in increasing the degree of threat faced by the latter. Although we were not able to 

quantify the precise impact of such subsidies, the “ballpark” estimates we have obtained 

are sufficient to suggest which current and future subsidy types merit further research. 

The planned increase in the already substantial subsidy level also suggests that mitigating 

measures are now urgently needed in order to avoid an irreversible loss of pig diversity. 

The FAO (undated) specifically recommends that where endangered breeds cannot be 

conserved as parts of economically viable farming systems, as the best solution to AnGR 

conservation, direct subsidies per breeding animal or per offspring registered may be 

useful in the medium-term to support the individual efforts of breeders. Indirect subsidy 

through support to the functioning of breed societies, including record-keeping, 

dissemination of information and storage of semen may also be appropriate.


The National Programme on Conservation of Vietnamese Animal Genetic Resources, 

established in 1990, is currently following a combination of these strategies. The 

programme explicitly favours on-farm conservation of local breeds (Lemke et al., 2000), 

with economic incentives (financial and technical) provided to participating farmers. 

Such initiatives will have to be considerably expanded for pigs and increasingly work in 

remote areas where on-farm conservation of local pig breeds will still be of interest to 

farmers. 

Finally, in addition to assessing the impact of the new loans under Decision 257, a more 

comprehensive field study needs to be conducted among the relevant actors, with the 

particular goal of assessing the number of grants, loans and other types of support that are 

actually made in practice and that currently directly affect Vietnamese local breeds.


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Potential Subsidy Type 

Table I: Vietnam Pig Sector Subsidy Types and Levels 

Potential Subsidy Level 

(VND/sow/year) 

Subsidy Level 

used in Analysis 


Ratio of 

subsidy 

level to 

total 

subsidy 

(%) 

1. Direct subsidies for the rearing of 153,000-400,000 250,000 54.4 

breeding stock 

2. Direct subsidies for the purchase 

of breeding stock 

2.1 Farmer purchase price 60,000 60,000 13.1 

2.2 Provincial level grant 1,800,000 – 2,500,000 16,000 3.5 

3. Subsidised loans for the purchase of 

pigs and farm infrastructure 

3.1 Loans under Decision 257 Variable but estimated at 

710,000 

3.2 Other loans 175,000 –300,000 0 

3.3 Encourage Agriculture Variable but estimated at 72,000 15.7 

loans 

72,000 

3.4 Farmers’ 

Association/Women’s 

Union loans 

50,000 – 75,000 0 

4. Artificial Insemination 0 – 80,000 40,000 8.7 

5. Water Use 16,400 3.6 

6. Treatment 5,000 1.1 

7. Export 0 

8. Feed 0 

9. Land 0 

10. Transport 0 

11. Extension, Training and 

Veterinary support 

0 

>0 0 

Total (Vietnamese Dong) 459,400 100 

Total (US$) 30.63 

US$1 = approx Vietnamese Dong (VND) 15,000 in 2004. Source: Author’s survey.


Table II: Estimates of Intensive Farm Gross Margin per Sow 

Gross Margin/Sow/Year 


Source 

Ratio of Subsidy Level 

(459,400 VND/sow/year) to 

Gross Margin 

656,000 Lapar et al., 2003 0.70 

712,500 GRET 0.64 

1,825,000 MARD 0.25 

1,133,000 Lemke et al., forthcoming# 0.41 

2,467,000 Lemke et al., forthcoming# 0.19 

# Based on an estimate of 1.5 sows per household


Annex I: Key Informants Consulted 

• Dr. Nguyen Van Dong, Thuy Phuong Pig Research Center/National Institute of 

Animal Husbandry (NIAH) 

• Mr. Vu Thu Oanh and Mr. Tang Van Long, Vietnam National Livestock 

Corporation (VNLC) 

• Prof. Dr. Hoang Kim Giao, Department of Agriculture - Ministry of Agriculture 

and Rural Development (MARD) 

• Mr. Vincent Porphyre, MARD- Centre de coopération internationale en 

recherche agronomique pour le développement (CIRAD) 

• Minh Hien export and pig farm (Export Agricultural Products and Foodstuff) 

• Mrs. Chau, Son La Veterinary Sub-Department 

• Mr. Cuong, Son La Extension Department. 

• Mr. Duong, Head of Boar & AI Station, Son La Extension Dept. 

• Mrs. Lo Thi Thanh 

• Farmers at Hoai Duc village, Cat Quey Commune (Ha Tay province) 

• Mr. Nico Janssen, SNV, Son La Extension Development Project 

• Dr. Patrice Gautier, Vétérinaires Sans Frontières (VSF) 

• Mr. Miguel Pedrono, Centre de coopération internationale en recherche 

agronomique pour le développement (CIRAD) 

• Mr. Patrice Lamballe, Groupe de Recherche et d’Échanges Technologiques 

GRET 

• Mr. Tuan, Head of the Livestock Dept., Service for Agricultural and Rural 

Development, Son La. 

• Mr. Doan, Son La Farmers’ Association 

• Dr. Tran Huu Cuong, Lecturer, Economics Dept., Hanoi Agricultural University 

No. 1 

• TRAN Kim Anh, NAEC 

• M. Ho Hoe, Vietnamese Bank for Agriculture and Rural Development 

(VBARD) 

• M. Xuan, Department for Agriculture and Rural Development (DARD), Son La. 

• M. Tuan, Department for Agriculture and Rural Development (DARD), Son La. 

• Mr. Jerome Dumanois, Eau Agriculture Santé en Milieu Tropical (EAST).


i Breeds at risk are defined by the FAO (1999, p.43) as “any breed that may become extinct if the factors 

causing its decline in numbers are not eliminated or mitigated.....Risk of extinction may result from, inter 

alia, low population size; direct and indirect impacts of policy at the farm, country or international levels; 

lack of proper breed organisation; or lack of adaptation to market demands. Breeds are categorised as to 

their risk status on the basis of, inter alia, the actual numbers of male and/or female breeding individuals 

and the percentage of pure-bred females. FAO has established categories of risk status: critical, endangered, 

critical-maintained, endangered-maintained, and not at risk.” 

ii Note that this totals 14 and not 15, but is as reported. 

iii Drought, civil strife/conflicts and famines are also mentioned by Rege and Gibson (2003) as causes of 

AnGR diversity loss but they are not relevant to the particular case of Vietnam. 

iv For example, two-thirds of U.S. crop supports go to 10 percent of cotton, grain and oilseed growers. 

Furthermore, the current system of agricultural support is highly inefficient. Price supports account for twothirds 

of farm subsidy spending in OECD nations yet only 25 percent of government spending on marketprice 

supports registered as a net income gain to farmers (Reuters, 2003). 

v Subsidies on AI frequently favour imported breeds as that is usually the only type of semen made 

available through this technology. The FAO recommends that the potential advantages of easily available 

AI need to be carefully evaluated against biodiversity objectives, as well as general market principles 

(FAO, undated). 

vi However, there are all kinds of factors that make the basic model more complex, such as autonomous or 

externally induced changes in use of the means of production, technology, and autonomous economic 

changes (shifts in demand). However, these are beyond the scope of this study. 

vii Veterinaries Sans Frontières (VSF), Groupe de Recherche et d'echanges technologiques (GRET), Centre 

de coopération internationale en recherche agronomique pour le développement (CIRAD), UN Food and 

Agriculture Organisation (FAO), United Nations Development Programme (UNDP), and the Vietnamese 

Ministry for Agricultural and Rural Development (MARD), respectively. 

viii 

All references are personal communications with the associated person interviewed at the institution 

mentioned in italics and noted in Annex I.


ix In the subsequent analysis, Mong Cai is treated as a non-local or national breed, as it is a breed suitable 

for intensive production systems and hence popular and not at risk of extinction. 

x However, to date, this type of loan has mainly be used for cattle purchase.

Drucker 1 Identification and quantification of subsidies relevant to ...

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