FEED Business Worldwide - October / November, 2011
 
Philippine swine recovers strongly on back of import protection
 
by Gemma C. DELMO in Manila
 
 
After enduring several years of low profits pockmarked by hog disease outbreaks, Philippine pork is enjoying a banner year. Prices are up, imports are down by a third and feed corn inputs are plentiful.
 
Indeed, while there is considerable domestic and foreign opposition to stemming last year's flood of cheap imports, the Philippine hog industry seems be on the road to recovery. Figures from the Bureau of Agricultural Statistics show that swine production on the first six months of 2011 continued to grow and posted another 1.04% output increment on-year.
 
While hardly stellar, that is a vast improvement over the USDA-estimated 0.3% total increase posted over the previous three years. Furthermore, should imports be kept out of the market long enough for sow numbers to recover, a much more impressive production gain could be seen in the next year or two.
BAS says this was due to continued increases in the number of fatteners and numbers of hogs slaughtered in Central Luzon, Central Visayas, Northern Mindanao and Davao Region. Moroever,with demand growing strongly and a large portion of pork imports now effectively blocked from the Philippine market, pork prices have soared to record levels this year.
 
Even Edwin Chen, president of the Pork Producers of the Philippines, is optimistic of the sector's good finish this year. "We were off to a good start and I guess we'll have a good run this year," he says. One reason to be jovial this is this year's record corn harvest, which is up 37% over 2010's harvest and totals 3.3 million tonnes.
 
Accoriding to Chen, the bountiful feed corn this implies means that, "At least our production cost will be lower so we will be able to assure consumers of stable supply at the end of the year." Chen also tells that diseases, which usually abound during the rainy season, have also been controlled, thanks to proper vaccination and adequate medication. 
 
The imminent construction of a triple-A slaughterhouse also gives hopes to Chen and the rest of the industry of better chances to compete in the world market. Last year, cheaper imports, particularly offals, had dominated the domestic trade. Chen believes that a world-class slaughterhouse will help convince meat processors to stop importing pork and their years-long rift with pork producers.
 
"This has long been our request to the Department of Agriculture and we were hoping that it [the triple A slaughterhouse] will be built during President (Benigno) Aquino's term. Fortunately, we heard that the facility is included in next year's budget. This will help us improve our production and provide the requirements needed by the meat importers."
 
Although this high-quality abattoir is only seen as a short-term solution, Chen believes it could bide them time over long enough to urge producers to modernize their facilities. This would in turn give local pork producers a fighting chance in AFTA's now-liberalized trade environment.
 
"The pork offals are only wastes from other countries and we serve as a dumping ground. We can't afford to stay this way forever, so we're hoping that the situation will be changed once we have the facility."
The slaughterhouse is likewise aimed to suppress the age-old problem of smuggling--where trade felons include illicit items - usually hidden inside the bulk containers of pork imports. Such non-offal imports, though illegal, do much to undercut local farmers and cause considerable losses.
 
 
AO # 22 creates internal & external opposition
 
In response to complaints by both pork and poultry producers about the deluge of legal and illegal imports, the Philippine Department of Agriculture issued Administrative Order (AO) 22 on December 23, 2010. AO 22 imposes technical requirements on retail sales of frozen meat which would seriously affect imports of meat.
 
This regulation also imposes new regulations on imported meat's packaging, labelling, inspection, traceability and cold chain requirements. Under AO 22, vendors and retailers can only sell imported if they have own freezers and the facilities specified by department of agriculture regulations. AO 22 does not apply to unrefrigerated pork or to pork sold through restaurants.
 
Vendors, particularly smaller ones that cannot afford advanced refrigeration facilities, vigorously opposed AO 22, saying it was bad for business. Retailers in Cebu for instance, have filed a petition for the suspension of this ordinance, as it imposed charges for every kilogram of imported frozen meat that enters the city.
 
The petitioners also said the DA order singled out frozen meat while there were no rules for domestically produced fresh meat, which they claim is more susceptible to bacteria. They also complained that by pushing through AO 22 in just 15 days and without consulting them first, they were not given neither prior notice nor an opportunity to acquire the physical and administrative required to comply with this order.
 
Another lament by the Cebuano pork vendors is inspection delays by government agencies, particularly by the National Meat Inspection Service. Meat sellers who usually purchase between 5:00am to 6:00am must now wait until noon or later for NMIS agents to certify each box, making the meat "stale."
 
Vendors also object that the law is being enforced by local provincial and municipal officials, rather than qualified agriculture department or meat inspection personnel. The former are notoriously stricter and more inconsistent in enforcing guidelines than the latter, creating a further barrier to the entry of imported pork.
 
These new regulations have also caught the attention of Uncle Sam, as America is the largest exporter of pork offals to the Philippines. Its 2010 pork exports to the Philippines had jumped by 40% over 2009 levels. According to a USDA GAIN report, the 15 days between AO 22's publication and implementation was inadequate, since it takes an average of 25 days for a ship to travel from the US West Coast to Manila.
 
The USDA's GAIN report also notes that freezers are almost non-existent in outdoor "wet markets and are beyond the means of small vendors." The report estimates that with 20% of all imported pork offal and variety meats being sold in undercapitalised wet markets, AO 22 is having a strong, chilling effect. It goes on to aver that many of the meat stalls do not even have access to electricity, as even established importers and distributors do not have newly required temperature-controlled thawing rooms and refrigerated trucks.
 
The USDA also alleges AO 22's unfairly targeting imports since it applies only to frozen meat and meat products, and not to fresh "warm" meat. While nearly all imported meat is frozen, the vast majority of locally produced meat is never chilled at all between slaughter and market.
 
 
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