Surging input costs eat into agriculture firms’ profits

Hoang Anh Gia Lai Agrico posted a loss of nearly VND560 billion ($23.93 million) in the last quarter as fertilizer costs rose by 150% and packaging by 50%.

Road transport expenses rose by nearly 50% year-on-year, while sea transport costs tripled, it said.

Other agriculture firms also posted a dampening earnings picture.

The agriculture unit of Hoa Phat Group saw profit plunging 96% year-on-year to over VND13 billion.

Dabaco Vietnam, a major pig breeding company in the northern region, posted a profit of VND14 billion in the last quarter, down 93% year-on-year.

BAF Vietnam which operates in the same business saw profit sinking by two-thirds to VND40 billion.

Vissan posted a 22% profit decline to VND30 billion.

Vinamilk, Vietnam’s biggest dairy company, saw profit dropping 27% to VND2.1 trillion.

Insiders say animal feed costs, which account for up to 70% of expenses, are rising.

The cost of producing pork has risen by nearly 13% since the beginning of the year to VND62,000 per kilogram, said Nguyen Tri Cong, chairman of Dong Nai Husbandry Association.

But the price pressure is set to be reduced for the rest of the year.

SSI Securities Research forecasts that prices of corn, wheat and soybeans will fall by 7%, 30% and 8% respectively in the remaining months, which will likely lower animal feed costs.