THE recent opening of a large-scale, ultra-modern beef processing facility in Vietnam has raised speculation in Australia that the plant could be used to process Australian-bred cattle exported live to Vietnam, for re-export into to other parts of Asia.

A similar project was put forward more than 20 years ago in Indonesia, when a company called AustAsia proposed to use its modern US-licensed beef processing facility to slaughter Australian-bred cattle being lotfed in Indonesia, for re-export, under an ‘AustIndo’ style flag. The export part of that project never went ahead.

In December, Japanese investment giant Sojitz Corp commissioned its new beef processing facility in Vietnam’s Vinh Phuc Province, proclaiming it to be the nation’s largest beef processing plant.

Sojitz said the new business near Tam Dao (see picture above) would be the first in Vietnam to process chilled beef, and “all meat will be processed in a controlled, highly sanitised environment.”

The company said the new processing plant will be equipped to process about 30,000 cattle per year, with the aim of increasing production of beef products to 10,000 tons per year. Such a level of production would require 40,000 to 50,000 cattle annually.

Cattle integration

Next month, Sojitz plans to start operating a dairy-based cattle farm near the processing plant, which it described in a statement as “providing a stable supply of high-quality beef products through an integrated system for all processes from farming to processing and sales, which enriches the food culture in the country.”

The cattle farm adjacent to the processing plant will be capable of raising 10,000 head of cattle, and Sojitz said it aimed to provide a “stable supply of Vietnamese beef products through an integrated system that spans cattle farming to processing and sales.”

Sojitz is a Japanese investor with exposure to aerospace, automotive, renewable energy, mining, metals, chemicals and agriculture. In Australia, Sojitz is an investor in public infrastructure including roads, light rail and subway projects, the New Footscray Hospital and the Edenvale Solar Park on Queensland’s western Darling Downs. The company was the major investor in the Minerva coalmine in Central Queensland that closed in 2021.

In Vietnam’s current meat market, pork and chicken consumption is high, while annual beef consumption is only about 500,000 tonnes per year, Sojitz said during the beef plant’s December launch. By comparison, Japan’s annual consumption of beef totalled about one million tonnes.

“Most beef distributed in Vietnam is processed and shipped at room temperature (hot boned) before being sold at traditional (wet) markets,” a Sojitz statement said.

“Moving forward, Vietnam’s population growth (100 million people as of 2023) and rising income levels are anticipated to increase the domestic consumption of beef. Due to diversifying consumer behavior from this economic growth, demand is expected to grow for high-quality domestic beef processed in a sanitised refrigerated environment.”

Link with large dairy producer

In 2021, Sojitz and Vietnam Livestock Corp, a division of Vietnam’s largest dairy manufacturer Vietnam Dairy Products (Vinamilk), established JVL, a joint venture company for a beef/dairy livestock business.

Starting in 2022, JVL began test marketing of imported Japanese beef before starting sales of Vietnamese-produced beef products processed at partner plants through supermarkets and restaurants in 2023.

The beef products from the new processing facility would be distributed using Sojitz’s cold-chain logistics service in Vietnam with plans to conduct sales to mid to high-end hotels and restaurants in the customer network of DaiTan Viet Joint Stock Co, which is Sojitz Group’s largest commercial food wholesaler.

“Sojitz will continue to pursue growth markets as part of the Sojitz Growth Story under Medium-term Management Plan 2026,” the company’s recent statement said.

“Sojitz has a strong foothold in the Vietnamese market starting with the logistics business that includes manufacturing and retail, and the company plans to expand its retail businesses further. In the beef business, Sojitz will leverage its business foundations to distribute and sell products and promote inter-business collaboration and growth in order to strengthen the food value chain in Vietnam,” it said.

Talks with Australian live cattle exporters

Beef Central made some inquiries through contacts close to the Vietnamese protein market about the new Sojitz beef facility, and particularly whether re-export was a possibility. Here’s what we learned.

At the moment the facility is processing low numbers of dairy bulls each week for the Vietnamese restaurant trade.

The facility is said to be following a lot of Ausmeat quality assurance principles regarding meat quality inspection and grading, and have been advised under work contracts by Ausmeat inspectors who live in Vietnam.

While Beef Central’s contact said he did not believe the business was currently processing any Australian-bred cattle, the new joint venture had the intent to import Australian cattle into the feedlots and was in active conversations with Australian live cattle exporters.

“This is not the first attempt at higher-value processing in Vietnam,” our trade contact said.

“The market is large, but it is confusing, as the high value market (restaurants) take only certain cuts and the low volume of processing makes it difficult to compete with imported boxed beef products,” he said.

“It also makes balancing the carcase hard, has the secondary cuts are significantly more expensive than other products in the market, and again at significantly lower volumes.”

“Vinamilk (Sojitz’s Vietnamese partner in the cattle side of the business) has lots of money, and the use of dairy bulls from their own milk operations to produce meat makes sense,” he said.

One of the biggest hurdles for any export expansion was the lack of official access to any export destination, including China,” our Vietnamese meat trade source said.

“Despite promises for export to other Asian nations, there is no established health protocol, and so most of the trade deals are commercial arrangements with limited legal justification.”

In Beef Central’s opinion, that’s code for so-called illegal ‘grey trade’ across nearby international borders.

With no organised program for Foot & Mouth Disease eradication in Vietnam in place, it was unlikely that Vietnam would get any kind of zone free access to other Asian markets, our trade contact said.

“Processing the meat into other products (ie canned meat, where FMD risk is negated) is an option, but it would be difficult to see the financial justification for this compared to high value beef trade,” he said.

Vietnam took a record 119,634 head of Australian live cattle last calendar year, second in size only to Indonesia (537,000 head).

While boxed beef exports to Vietnam are somewhat indistinct (the country appears only under the ‘Other Asia’ category in DAFF export data), the number last year was somewhere less than 22,000t, mostly used in the hotel, restaurant and resort sector.