Oversupply and high costs squeeze Vietnam’s poultry producers

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Expanding production capacity alone is no longer enough to secure an advantage in Vietnam’s poultry sector. Oversupply, falling prices, and persistently high input costs are forcing producers to rethink their strategies. Improving efficiency, strengthening value-chain integration, and developing higher value-added products have become urgent priorities.

Oversupply, high costs pressure the market

The Vietnamese poultry market experienced sharp fluctuations in the first eight months of 2026. Supply grew rapidly, but consumer demand recovered slowly, while production costs continued to rise.

Dr Nguyen Thanh Son, Chairman of the Vietnam Poultry Association, explained that oversupply and price declines stemmed from flock expansion, weak purchasing power, high input costs, and competition from imports.

Since late 2025, foreign-invested enterprises, large livestock groups, and feed manufacturers have expanded flock sizes and production capacity. Supply has outpaced demand, pushing down prices for broilers, colored-feather chickens, and eggs.

At one point, the price of white-feather broilers fell to USD 0.85–0.92/kg, colored-feather chickens to USD 1.73–1.85/kg, and eggs to USD 0.046–0.050 each—below production costs.

Prices improved slightly in August and September, but margins remain thin. Broilers now trade at USD 1.23–1.38/kg, while colored-feather chickens fetch USD 1.92–2.12/kg.

Domestic demand recovery has also lagged. Institutional catering, schools, and industrial parks have not rebounded as expected, leaving a wide gap between farm-gate and retail prices.

Dr Son noted that this weak demand limits efforts to stimulate consumption and at the same time increases risks for poultry producers.

Feed costs remain the largest burden. Accounting for 65–70% of production costs, feed prices rose 10–15% this year due to logistics, exchange rates, and global grain trends.

Imports added further pressure. Between January and August, Vietnam imported 185,000–190,000 tons of chicken, with frozen products dominating industrial catering and fast-food chains. This has intensified competition for domestically produced poultry, particularly in the industrial broiler segment.

Stronger value-chain integration to reduce risk

These developments show that simply expanding flock size is no longer a reliable path to efficiency. When supply grows faster than demand, large‑scale production without secure outlets can quickly shift from an advantage to a serious risk. Stronger value-chain integration is increasingly seen as the way forward.

The Feed-Farm-Food model, covering feed, breeding stock and farms through to processing and distribution, is being increasingly adopted by large companies to gain greater control over costs, quality, and supply. Companies such as CP Vietnam, Japfa Comfeed, and De Heus have invested in relatively integrated production models.

Meanwhile, contract with guaranteed offtake and provision of chicks, feed, and veterinary support, is also becoming more common. These arrangements improve productivity, biosecurity, and product quality.

Traceability from farm to table is also easier to implement when different stages of the value chain are connected.

However, Dr Son said significant gaps remain in Vietnam’s poultry value chains. Few fully integrated systems cover the entire process nationwide, leaving many farmers dependent on traders.

Infrastructure is another constraint. Centralized slaughtering, cold storage, and logistics remain underdeveloped. Industrial slaughtering accounts for less than half of output, below the 2030 target of 50%. Limited storage and weak transport infrastructure make it harder to reach modern distribution channels and build large‑scale export markets.

Smaller farms face rising risks as foreign-invested enterprises expand capacity. Without stronger integration, independent and smaller producers remain vulnerable to market volatility.

From flock expansion to value creation

Recent market developments highlight the need for a shift in growth strategy. Efficiency, cost control, and product innovation are now critical.

Dr Son emphasized that over the next 5–10 years, Vietnam’s poultry sector must restructure growth toward deeper, more efficient development over the next decade, with stronger self-sufficiency in supply chains.

This will require improving efficiency through better genetics, precision nutrition, flock management, and disease control. At the same time, reducing intermediaries and expanding processed products will add value.

Rather than relying primarily on fresh meat, the industry needs to develop more high-value-added products that meet the needs of modern retail, foodservice, and export markets.

Developing disease-free zones that meet international standards is essential. This will allow Vietnamese poultry products access to high-value export markets with strict food safety and traceability requirements. Producers also need product strategies tailored to different market segments.

In the domestic market, strategies should leverage consumer preferences for colored-feather and indigenous chickens, while industrial broilers focus on processed products and exports.

Achieving these goals will require a stronger role from lead companies within the value chain. Businesses must invest not only in breeding and feed but also in slaughtering, processing, logistics, branding, and market development.

Farmers, meanwhile, will need to join cooperatives or enterprise-linked chains to access technical expertise, inputs, and more stable outlets. 

Ultimately, competitiveness will depend less on flock size and more on the sector’s ability to manage the entire value chain and respond to demand.

The key question is no longer how much can be produced, but what should be produced, at what cost, for whom, and with how much value.