Against a backdrop of steady increases in human population, domestic market liberalization, global openness, and urbanization, the demand for livestock food products has soared in the developing world. This demand-led growth for animal derived food has been accompanied by
the proliferation of large-scale, often vertically integrated livestock production units in or around urban centres. These operations are frequently owned and run by agribusinesses and have become increasingly important for the supply of livestock products both locally and globally.Livestock development has been identified as an effective agricultural diversification strategy for Viet Nam (IFPRI 2001). However, in a scenario of increasing globalization, the livestock sector is faced with both opportunities and threats that could have implications for rural poverty reduction.
In Viet Nam, there is a growing trend toward the development of large commercial livestock
production systems for pigs intended for the export market (Tung et al., 2005). This is supported by policies that provide investment incentives, as well as importation of breeding animals and veterinary inputs largely by state-owned enterprises. On the other hand, a large proportion of livestock production in Viet Nam still comes from smallholder production systems that generally have limited access to input supplies and services (ibid). Thus, there is a potentially critical inconsistency of current policies with the ultimate objective of reducing poverty.Appropriate institutional arrangements that assist in keeping smallholders in the game, at least in the near future, will be of utmost importance if the twin goals of poverty reduction and equitable distribution of the gains of economic growth are to be achieved in Viet Nam. This will require empirical investigation of the impacts of institutional innovations such as contract farming to inform policymaking and development planning.
