MLBA6: December / January 2009


Tough times ahead for the Philippine broiler industry


By Gemma C. Delmo


The months of September to December usually promise a robust period for the Philip­pine broiler industry as the market anticipates the Christmas season. This time of the year however brought not the best mood as broiler production costs hover around PHP60 to PHP67 per kg while prices of dressed chicken plummet to PHP58 a kg from PHP66.


"The problem is that huge pro­duction has clashed with the meager demand," says Greg San Diego of the United Broiler Raisers Asso­ciation (UBRA). "Frozen chicken inventory in October has reached an all time high of 6.9 million kg, com­pared to 3.2 million kg last year. We do not know how to get rid of these inventories because despite low market prices, it's obvious that the Filipinos' purchasing power had re­ally weakened." As in the past when massive imports are done to prevent stock shortfalls for the holidays, this year, San Diego relates that the bulk of inventories are mostly local poultry, a sign that there is indeed an excessive domestic supply.


What worries raisers now is the projected production increase in the first quarter of 2009. Going to December, San Diego estimates the build-up rate of inventory at about one million per week, dishing out projections of a 30-percent increase in the output of grandparent and par­ent stocks in the first four months of next year. "We can't even consume the production that we have now and if there's no intervention, surely there'll be a supply glut which is very bad for the industry."


Disposing these inventories for exports to avoid supply excess might be a sound idea, but then again, the problem of high produc­tion cost lies therein. In a global competitiveness report furnished by local broiler integrators, the Philippines has the most expensive production cost against major pro­ducing countries such as Thailand and Brazil. Thailand's production expense is PHP40 per kg, Brazil PHP32 per kg as against Philippine output cost of PHP60 to PHP67 per kg.



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