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Publication
 
FEED Business Worldwide - May, 2012
 
Meat imports vs. feed grain imports: Philippine feed's paradoxical position 
 
by Gemma C. DELMO in Manila
 
 
With the Philippine livestock sector facing a withering onslaught of cheap pork and poultry imports, the country's feed mills have been equally hit by the depressed livestock production. Because of this predicament, the Philippine Association of Feed Millers Incorporated affirms that the industry is indeed facing some tough challenges. "The animal industry is not growing significantly; it's only growing in single digits. There seems to not much support as far as developing the backyard industry. It is the bulk of how commercial feed millers operate," tells PAFMI president Dr. Norman Ramos.
 
 
Against meat imports
 
Apart from the meat imports, Ramos also cited other reasons for the livestock sector's stagnating growth. "The reason for contraction in the backyard industry has been brought about by high feed because of raw material prices. Another is disease outbreaks in the past that has not been corrected as well as low selling prices for hog and chicken. The government's strict rules on having five or six animals for backyard farming and they prohibit that, that's another thing. On the aquatic side, you've seen the shrimp industry hasn't grown that much in recent years. There are stricter environmental rules as far as setting up finfish operations and of course there is, on an almost annual basis, fish kills that occur as the environment changes."
 
Despite all these other challenges, Ramos admits that meat imports are now their biggest headache and that feed mill suppliers such as corn farmers have also been affected.  "If the price of imported meat is lower than the local, it will be detrimental people will simply buy the frozen, boxed meat. I think what the government does not realize also is that if you curtail the ability to raise animals, the implication goes down the line. Feed milling industry is the biggest user of corn in the Philippines so if you essentially contract the feed milling industry, where would your corn go? What happens to the corn farmers?"
 
Although corn farmers and importers are protected through subsidies and trade policies, Ramos says not much is being done to stimulate domestic livestock production."There is no encouragement to fuel up people to raise animals and that's our main market," he said.
 
 
Administrative orders as meat import barriers
 
One of the most controversial issues that have been stirring the feed and livestock industry is the Administrative Order (AO) #22 . Implemented in December 2010, the mandate aims to raise the safety standards on imported meat and poultry by establishing cold chain systems to ensure the safety of meat until it reaches the consumers in groceries and in the public markets. But the policy exempts locally slaughtered meat from its strict requirements.
 
The United States and Canada - two of the country's major meat suppliers-- protested the issuance of AO #22, saying it "disproportionately" affects meat imports, as most of them are frozen. Local meat importers also supported the US and Canada's stand. They claim that AO #22 is discriminatory and that it violates the Codex Alimentarius regulations on frozen food regulations.
 
On the other hand, AO #22 was fully lauded by feed mills and their local hog and poultry raising customers, stating this is one effective way of protecting their industry from the deluge of meat imports.
 
But the pressure to the Philippine government by the North American countries to scrap AO 22 was already too much to handle and as such, the Department of Agriculture (DA) has amended the mandate, replacing with AO #6 and AO #5.
 
AO #6 covers the hygienic handling of chilled, frozen and thawed meat. Under this order, packaging, certification, transport and handling were given separate sections to allow for more detailed regulations for each component of the meat trade process.
 
Similarly, AO #5, imposes new requirements on the handling of freshly slaughtered meat, which is not usually frozen or chilled. The National Meat Inspection Service, which led the drafting of the replacement order, said the new mandate contained recommendations from US-based meat exporters.
 
NMIS executive director Jane Bacayo said the revised administrative orders included a provision that frozen meat sold in local markets should be kept at temperatures not higher than 5ºC (41ºF). Apart from setting the product temperature, the new AO provides that meat retailers will be allowed to place their products in coolers. Department of agriculture secretary Proceso Alcala says the new order is expected to be a "win-win solution" for everyone.
 
But PAFMI's Ramos sees the opposite. He believes that AO's #5 and #6 allow meat exporters to enter the Philippine market more freely. "It allows for more imports in summary, that's how I see it. I think it will be much difficult for the feed milling industry because it becomes less attractive. If there is a cheap meat alternative as a source of livelihood, raising animals becomes less attractive. I think we see a possible scenario, how many people will follow their parents' footsteps in raising hogs or chickens if they can work as call centre agents where they can have higher salary? I think [that AOs #5  and #6] are detrimental."
 
 
In favour of feed wheat imports
 
But when it comes to the question of imports, feed mills themselves occupy a middle ground: While they are opposed to meat imports, they sometimes rely on imported corn or especially feed wheat for their own milling requirements.
 
Hence, corn farmers are often in odds with feed mills whenever the latter resorts to importation.  In December 2011, PAFMI has requested the DA to import 100,000 tonnes of corn in anticipation of a possible shortage in the first four months of 2012. The DA has rejected their request, much to the delight of corn farmers, upon seeing that inventories are enough to meet their requirements.
 
 
The above are excerpts, full versions are only available in FEED Business Worldwide. For subscriptions enquiries, e-mail membership@efeedlink.com
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