(Repeats earlier story for wider readership with no change to text)
BINH PHUOC, Vietnam/BEIJING, Oct 29 (Reuters) - In a cluster of blue and white buildings nestled deep inside one of southern Vietnam’s rubber plantations, China’s New Hope Liuhe is busy stocking its first overseas pig farm with young sows.
New Hope’s efforts in Vietnam illustrate a significant acceleration in its global expansion to increase its overseas revenue to 30% of its total in a few years, said Bai Xubo, securities representative with the company.
The new push includes expanding the company’s core feed mill business internationally along with setting up overseas poultry farms, according to Bai.
Adding pig farms in Vietnam could be risky amid an outbreak of the deadly African swine fever that has killed about a fifth of the country’s swine herd. But the investment could be well-timed to capitalize on small hog farmers quitting the business because of the disease.
China, the world’s biggest pork consumer, is also grappling with an African swine fever outbreak that has reduced 41% of the country’s herd.
“Any country hit by African swine fever, be it Vietnam or China, is a blue ocean market for pig farming,” said Lei Yi, a Shenzhen-based analyst with China Merchants Securities.
New Hope’s farm in Binh Phuoc province will have 13,500 sows on site by the first quarter next year, producing 300,000 hogs a year by 2021, according to Zhang Xiangjun, general manager of the farm.
After completing another two farms planned in Vietnam, it could produce more than 700,000 hogs annually, catapulting it into the ranks of the country’s top producers, though behind market leader C.P. Pokphand Co. Vietnam had about 27 million hogs in 2018.
New Hope’s overseas business, including eight feed mills in Vietnam and others in Egypt and South Africa, accounted for almost 10% of its 69 billion yuan ($9.77 billion) in 2018 revenues.
Since 2016, New Hope has shifted from its animal feed producing business into pig farming and food processing, building dozens of industrial farms each year and investing in catering kitchens.
It sold 2.55 million hogs in China in 2018, up 49% from 2017, and is aiming for 10 times that number by 2022.
New Hope already has a permit to produce food from its first Vietnamese pig farm and is doing market research ahead of a possible food processing company in the country, said Zhang, the farm manager.
The firm also wants to build pig farms in the Philippines, and expand its poultry operations in Indonesia, according to Liu Zhong, general manager of New Hope Liuhe’s overseas pig business.
Despite a 16% fall in Vietnamese pork consumption this year because of falling supplies and rising prices, appetite for the meat is likely to rebound in 2021, according to Rabobank.
African swine fever kills almost all pigs it infects and there is no vaccine. The disease has not spared modern, industrial farms with higher hygiene standards.
On the farm in Binh Phuoc, north of Ho Chi Minh City, New Hope has installed two layers of air filters around each pig barn to stave off airborne viruses while multiple phases of sterilization in and out of the farm should help keep swine fever at bay, the company said.
Expanding in Vietnam may prove difficult for New Hope because of the country’s population density.
“In Vietnam, the supply of land is not plentiful. Also, because the government is mindful of the environmental impact of these (pig farming) projects, it is also quite slow to give the license to application,” said Ben Santoso, an analyst with Rabobank. ($1 = 7.0615 Chinese yuan renminbi) (Reporting by Hallie Gu and Dominique Patton; additional reporting by Khanh Vu in HANOI; Editing by Christian Schmollinger)
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