FEED Business Worldwide - June 2012

 

 

by Gemma C. DELMO in Manila

 

 

Fed up with a five year onslaught of imports, some of which are allegedly illegal, Philippine pork and poultry producers are launching a succession of spontaneous, "meat holidays,” whereby livestock farmers will stop production and suspend releases to market for several days. Although they have launched a 2-day holiday and its soft impact has already been felt by vendors and consumers in Metro Manila, industry players say that it is designed to 'send a message' to the government's alleged inaction against smuggling, which masks as importation.

 

 

 

Greg San Diego of the United Broiler Raisers Association boldly states that the smugglers' seemingly more audacious strategy is due to next year's midterm elections, which require huge money to finance electoral campaign. "Remember that smuggling entails a lot of money and imports are coming from many venues already like Subic, Clark and the PEZA zones (Philippine Economic Zone Authority) all over the country. Our market is so open that would you believe that we imported 7 million kilos of poultry products coming from China despite the ban because of bird flu? We're even importing eggs from other bird flu countries such as India, Indonesia, Thailand and even non-exporting countries such as Hong Kong. That goes to show that smuggling is really rampant and the government seems helpless about it,” he laments. San Diego added that poultry raisers suffered a PHP10 billion (US$230 million) loss last year due to rampant importation and smuggling of chicken. Poultry imports totalled reached 127.22 million kilos in 2011 compared to only 45.77 million kilos in 2008, a 180% increase over just four years.

 

Similarly, hog producers claim that they are suffering PHP38.4 billion (US$900 million) in annualised losses from unfair competition from imported and smuggled pork. According to Rosendo So, Abono party list representative and spokesperson of National Federation of Hog Farmers Incorporated, the sector has already lost PHP12.8 billion (US$300 million) in foregone revenues from January to April of this year due to misdeclaration of imports where contraband choice pork cuts are often declared as offals.

 

Higher feed costs also added burden to the problem coincident with transport expenses and power rates continuing to go up. San Diego emphasizes that they are not against importation but overdoing it will certainly kill their business. Besides, he said the government is also on the losing end, as they are unable to collect the proper taxes from the legal importation.

 

According to San Diego, "The government is supposed to collect 40% from the minimum access volume (MAV) for imports but with smuggling, they are only able to collect 5% of the tax since some unscrupulous traders are misdeclaring their shipments as offals. The government only earns PHP9.11/kg in taxes on imported chicken but that amount should be way higher since price of US chicken is US$123/tonne.”

 

He also stated that consumers are not benefiting from the cheaper chicken, since he suspects that these imports are being mixed into processed meats. "Just like the mechanically deboned chicken or MDM, recently [in Q1 2012] 20 million kg entered the country, in 2010, MDM totalled 60 million kg and last year, it was 90 million kg. Do we really have that big a market for MDM? Do the consumers directly buy that much MDM? Do we really need that kind of huge volume? That is preposterous, if you ask me,” he bluntly tells.

   

His allegations of fraud are echoed by pork producers, who imply that either pork's price is being misdeclared or it is being dumped into the Philippines below the cost of production. Edwin Chen of the Pork Producers Federation of the Philippines said hog farmers could not compete with smuggled pork that comes in at a landed price of US$0.80/kg. The landed price, he said, is way below the reference price of US$2.90/kg in other countries. Industry data showed that pork imports have been rising steadily from 109.36 million kg in 2009 to 116.21 million kg last year.

 

 

 

When the two-day meat holiday was implemented in late April, So claimed that Manila was the hardest hit, as 75% of the meat supply did not arrive. 65% of the markets in other major cities like Cebu and Davao were affected with delivery disruption.

 

To avert a bigger supply interruption, the government allegedly fired two officials who have been the centre of complaints by livestock raisers: Attorney Jane Bacayo, director of the National Meat Inspection Service and Efren Nuestro, director of the Bureau of Animal Industry.