August 17, 2007

 

Philippine feed prices to stay high on strong corn prices

 

 

Philippine feed prices are likely to remain at elevated levels this year amid slow demand from poultry raisers due to strengthening prices of corn -- a main feedmeal component-- in the local and global markets, an industry official said Thursday (August 16).

 

Prices of corn-based feeds have jumped by 10 percent since the onset of 2007 amid a drop in demand from poultry raisers, who have started using cheaper substitute feeds such as cassava and rice bran, according to United Broilers Association of the Philippines President Gregorio San Diego.

 

According to San Diego, the hike in feed prices is likely to continue, tracking a steady rise in local corn prices. Corn accounts for about 60 percent of total feed cost.

 

Domestic corn prices are at all-time high of PHP14/kilogramme or US$0.30 (kg), up from PHP12/kg (US$0.25) a few months earlier and almost double levels two years earlier.

 

Apart form high prices, San Diego also laments of the poor quality of corn.

 

Corn prices in the Philippines were projected to fall because local farmers are harvesting a major crop, San Diego said, but prices have instead risen to record highs because of insufficient domestic supply and high prices in the global market.

 

On the other hand, domestic broiler production growth is taking a slower route due to higher production costs, San Diego said.

 

If poultry producers heed a recent government request to step up production, broiler output this year could increase by around 2 percent from last year's actual output of 456 million heads, San Diego said, adding that growers "would be lucky to produce as much as we did last year".

 

In recent months, the government and poultry raisers have encouraged feedmeal producers to raise output, but "we will produce according to demand," San Diego said.

 

Tight supply have elevated local poultry prices as most producers cut back on projected output due to the high cost of production and poor consumer demand.

 

The average price of chicken has risen as high as PHP120 a kilogramme from around PHP90/kg a few months earlier.

 

However, many feedmeal producers have slowed production in recent months due to the high cost of raw materials, such as corn.

 

Meanwhile, demand for chicken has been mostly lacklustre in the first half of the year, due to poor consumer spending, San Diego said. He said producers are expected to profit in the fourth quarter due to Christmas and New Year activities but losses will still be prominent for the rest of the year.

 

However, a decline in imports due to high global poultry prices has offered some respite for domestic poultry producers, San Diego said.

 

In June, imported poultry leg quarters totalled only 290,000 kilograms, down sharply from 2.1 million kilograms in May, he said.

 

The United States and Canada are the main sources of the Philippines' imported chicken products.

 

Chicken part imports have been increasing steadily in recent years. In 2006, imports rose to 32.6 million kilograms from 23.3 million kilograms in 2005.

 

However, generally lower chicken arrivals have also led to tightness in domestic supply, thus the higher prices of chickens in the local market. San Diego is calling the government to regulate the entry of imported chicken regardless of world market price. 

 

The domestic poultry industry accounts for around 13 percent of the Philippines' total farm output, which in turn contributes to a fifth of the country's gross domestic product.

 

US$1 = PHP46.43 (as of August 17, 2007)