June 26, 2013

Philippine meat processors seek help from government to be more competitive

Meat processors in the Philippines are urging the government's strong support for the industry to become more competitive this year.

Felix Tiukinhoy, Philippine Association of Meat Processors of the Philippines (Pampi) president, said that the Aquino administration were leaning toward the hog raisers and taking for granted the rest of the industries and sectors in the chain including the meat processors. The PAMPI president also said that while they are adopting global standards in meat processing, the government also has a critical role to help them. 

He cited the order tightening the accreditation guidelines of meat importers recently.

He said the Department of Agriculture should have also reached out to their sector.

Early this year, PAMPI sent a letter to Agriculture Secretary Proceso Alcala on what the group thought of the newly implemented Administrative Order No. 09-2013 that has set tighter guidelines on the accreditation of importers, where they also source raw materials from. This resulted on a shortage of meat and affecting production, he added.

 
Under the AO 09-2013, new importers cannot bring in meat products, including Indian buffalo meat, for a three-year period. It also raised the minimum paid-up capital for new importers to P5million and has already required an importer to provide the government with a list of their customers.

 
Tiukinhoy said that they already told Secretary Alcala that the National Meat Inspection Service (NMIS) began implementing the administrative order without even consulting PAMPI and other stakeholders. This resulted to local hog raisers having more control of the domestic market as well as affecting the market prices of meat.

 
Since its implementation, Tiukinhoy said some of their colleagues stop operations because they can no longer operate at a level where they can still achieve profits. If the accreditation process becomes more stringent, the PAMPI executive said the group will be forced to source locally and might increase prices just to achieve balance in our revenues and profits.

Tiukinhoy, who is also the president and chief executive officer of Virginia Foods, Inc., a Cebu-based meat processor, said that for businessmen like him, raising the prices is the last option because it affects their market shares and may in the longterm affect their competitiveness.

Raising prices or sacrificing quality is just two of the immediate options that a businessman can think of to remain competitive and according to Tiukinhoy, the local processors don't want to resort to these options because the consumers are very discriminating and will really notice any changes in the product quality or prices and would then switch brands.

Based on combined figures from all the 35 meat processors in the country, the Philippines consumes an average of PHP200 billion (US$4.59 billion) processed meat a year, of which about 80 % to 90 % are supplied by the 35 meat processors.