With Vietnam steadily becoming a world leader in aquaculture and the leading Asian importer of soybean meal, the South Dakota Soybean Research & Promotion Council thought a visit there would be a natural fit.
“It’s fish, fish, fish everywhere,” said Jeremy Freking, executive director of the council, who made the trip with South Dakota Agriculture Secretary Walt Bones, six of the council’s seven board member-farmers, South Dakota Soybean Association board president Chris Fischbach and communications director Sarah Even.
The delegation, which Freking describes as not only ambassadors but salesmen, spent six days in China and the final six days in southern Vietnam last month. The mission was to tour Vietnam facilities and open lines of communication to tell the ag officials and people there that U.S. soybeans are a high quality product and that South Dakota producers would like to be able to export more as the nation’s demand increases.
China is the leader in the aquaculture industry, but because of so many water pollution issues, Freking said there is becoming more and more of a shift to Vietnam.
Freking said even though the country is the leading Asian importer of soybean meal, the United States only exports $100 million worth of the product to the country, well behind U.S. exports to No. 1 Canada, No. 1 overseas importer the Philippines and Mexico. Vietnam is still in the top 10 on the export list, however.
One of the stops was encouraging as the Vinh Hoan Co., a fully integrated fish company and one of the top processors and exporters in the country, buys 60 percent of its soybean meal from the United States.
“It was neat to see that the company prefers U.S. soybeans,” Even said.
The delegation visited Vinh Hoan facilities, which includes not only several inland 1-acre ponds with up to 700,000 fish in them, but also nearby fish farms and cages on the Mekong Delta rivers.
The Vietnamese feed the fish with pellets from 110-pound bags – similar to big dog-food bags – made of combinations of fish meal, soybean meal and high protein soybean concentrate with hulls taken out for less fiber and more protein.
Vinh Hoan, for example, feeds its fish 25 percent to 35 percent soybean meal.
Not only is fish meal high in demand and low in supply, but has a cost of $1,200 per ton, Freking said. Soy protein concentrate is about $1,000 a ton, with soybean meal with a protein level of 47 percent to 48 percent at $480 per ton.
“That’s a reason we can be a huge player in the soybean meal market,” Freking said.
On top of that, a crushing plant is being built in Vung Tau along the Mekong Delta and along the South China Sea to open up a market there for just the soybeans, too.
Fish raised on the farms included catfish, which they call pangasius, tilapia and sea bass, with much of it sold to the United States and the United Kingdom.
The pangasius is emerging as an important substitute for wild white fish and is sold to more than 60 countries.
Vinh Hoan, which not only raises the fish but has a feed mill, processing plant and distribution network, also is developing an extensive tracking system where they can keep tabs on the fish from the beginning – tracking the fingerlings and then all the way to when the filets go to the supermarket, Even said.
Some consumers demand such attention to detail and also before the fish is sold in the United States it must be certified.
Is there a future for aquaculture in the Upper Midwest?
“There could be,” Bones said. “Will there be a 2-acre to 3-acre pond with an aerator in the middle of the winter? That’s not going to happen.”
However, Bones said that ethanol plants, with a stream of warm water from production year-round, could utilize that water through an aquaculture project.
“It might have some possibilities,” Bones said.
Marc Reiner, a board member from Tripp, S.D., who also went on the overseas journey, pointed to the research being done at South Dakota State University looking at different types of fish that are suitable to growing in the Upper Midwest.
While he also noted that outdoor ponds are restrictive because of weather, Reiner sees some potential with recirculating indoor ponds. Trials, funded by the soybean council, are in the works at SDSU with larger indoor ponds planned but construction hasn’t started because of school funding problems.
The trip to Vietnam also took the delegation to a hog farm and a layer operation, about a three-hour bus trip from Ho Chi Minh City (formerly Saigon.)
Reiner was surprised by the swine operation, not only for its cleanliness, biosecurity, low odor and high-caliber stock, but by the environmentally friendliness of the privately-owned breeding operation.
Not only was the family at the Kim Long swine farm planning to reduce its finishing operation to keep the odor down for neighbors, but also had a giant tarp covering a lagoon to capture methane gas to produce electricity.
The system “is used to run two generators that supplies a good amount of power for their facilities,” Reiner said. “I really didn’t expect to see it in Vietnam, so it was pretty cool.”
Reiner said the family told him they did the project on their own, without any government assistance. In fact, the communist government is not involved in hog production in the country at all, which is perhaps part of the reason Vietnamese farmers aren’t making much of a profit on their feeding operations as compared to China where the government is heavily involved and offers subsidies to keep hog farmers on the land and boost its production in a country where the population grows about the size of South Dakota every month, said Bones.
The Vietnamese hog breeders also told Bones that they are facing stiff competition from huge conglomerates that are moving into the country and finishing off the pigs, thus the family was focusing on the breeding.
The stock at the farm was very impressive, said Bones.
“It was like walking into a sow farm around here,” he said. “There were some outstanding looking hogs as far as performance and conformation. They were averaging 22 to 23 pigs per sow per year.”
The diet was heavy on soybean meal, which made the South Dakota delegation happy.
Because of Vietnam’s population and smaller land mass, they were told that the Vietnamese were thinking of starting operations in Canada which is offering assistance programs. Reiner also said there is a potential for more pork exports to the country in the next few years.
Bones was also surprised to see that it was private entrepreneurs that were raising the hogs, fish and running the layer operation in Vietnam.
“I guess I was surprised by the capitalist system operating so well in a communist country,” he said.
Freking said a woman was CEO of the Ba Huan Layer Farm and told the delegation it was a good time to invest.
The egg industry market is not saturated like other countries, and the company had been profitable until the bird flu affected their operation in 2003. It is rebounding, collecting 1 million eggs a day and selling at 1,100 retail locations with a 50 percent market share in Ho Chi Minh City. However, the Vietnamese egg consumption is only about 50 eggs per person per year, compared to 380 eggs per person per year in the United States.
The layer operation was another example of how the country is using soybean meal.
Bones was encouraged by the development of relationships in the country, once an enemy of the United States.
“We let them know we had a good crop coming and can offer them a quality product,” he said. “We wanted to reinforce that their market is important to us and thank them for using our product.”
He also wanted the people in Vietnam to know that a new port coming on line in Washington state will allow freight time to be cut in half, by about 20 days, for shiploads of soybeans or soybean meal that will be another advantage to South Dakota producers who ship most of their grain to the northwestern United States.
Freking said the trip can be compared to a person being raised in New York City and never visiting a pig farm.
“That’s what it was like for us visiting the aquaculture farms,” he said. “We got to see firsthand the new livestock species where the commodities we raise in South Dakota are going to be fed.”
On top of all of that, the people were “very friendly,” he said. “In their language, a hello and thank you can go along way.”
Also on the trip were board chairman Dave Iverson of Astoria, S.D., and board members Monica McCrainie of Claremont, S.D., Matt Bainbridge of Ethan, S.D., Stan Hanson of Garretson, S.D. and Bob Metz of West Browns Valley, S.D.