Foreign invested firms have been pouring money into and expanding animal feed production, according to the Vietnam Animal Feed Association.
The domestic animal feed market is expected to see demand of 18-20 million tonnes by 2015 and 25-26 million tonnes by 2020.
US-invested Cargill Vietnam in March added two factories to its nine existing feed production facilities, increasing total capacity to 1 million tonnes per year, accounting for 10 per cent of the local market.
"Recent investment in animal nutrition is a sign of our continued commitment to fostering the economic growth of Vietnam ," said Cargill CEO Greg Page.
Last year, CP, a Chinese animal feed producer operating in Vietnam , announced it would build six additional factories by 2014 while another Chinese firm, New Hope , confirmed it would construct six more.
The association said foreign investment increase in animal feed production was due to high domestic demand as well as advantages in capital and tax during the production process.
Meanwhile, local animal feed producers have faced many challenges, including high interest rates on loans and low competitiveness.
Association Chairman Le Ba Lich admitted supporting capital to poor local producers is yet to become reality.
Lich suggested the Government better regulate the animal feed market, encouraging foreign invested firms to produce mixed feed materials using advanced technology.
The state should offer investment incentives to local feed producers such as capital and warehouse facilities at ports, Lich added.
Vietnam currently has 59 foreign-invested firms and joint ventures which hold 70 per cent of the domestic market share while 180 local firms retain the remaining 30 per cent.
Local firms face the risk of losing their market share to foreign rivals due to increased foreign investment into the feed industry, Lich noted.