Farm Gate Prices

PARTY-LIST GROUPS, HOG INDUSTRY LEADERS BACK D.A. PROPOSALS TO SUSTAIN GROWTH

Over 30 hog industry leaders have backed a proposal by the Department of Agriculture for the creation of the first-ever Livestock and Poultry Board to oversee them along with interrelated groups such as corn growers and feed millers, as the linchpin of short – and long – term DA measures to address the perennial supply and pricing concerns of these farm-based subsectors.

These key stakeholders led by party-list Representatives Nicanor Briones (Agricultural Sector Alliance of the Philippines or AGAP) and Robert Raymond Estrella (ABONO) also voiced their full support for six more proposals that they have worked out with Agriculture Secretary Arthur Yap to stabilize pork prices at the farm gate level and sustain the growth of the livestock subsector, which posted a dramatic turn around during the year’s first quarter despite the reemergence in 2008 of the Ebola reston virus (ERV).

Among these proposals are (1) the upgrade to “AAA” status of slaughter houses in strategic areas nationwide by equipping them with cold storage plants and cutting floors; (2) continued suspension of imports from Alberta in Canada, where one swine farm had been infected with the Influenza A (H1N1) virus; (3) adoption of more stringent inspection of imports, to prevent the entry of disease-infected pork products; (4) close coordination between DA-Bureau of Animal Industry (BAI) and National Meat Inspection Service (NMIS) and Bureau of Customs to curb the smuggling of meat products; (5) and work out a credit facility with the Land Bank of the Philippines for the swine raisers’ acquisition of refrigerated trucks.

Reiterating proposals reached during the first meeting with hog industry leaders last May 20, 2009 DA Assistant Secretary Salvador Salacup said during a Monday afternoon’s dialogue that agriculture officials will (1) strengthen market linkages between meat importers and hog growers, so processors could first try sourcing their pork requirements locally before engaging imports; and (2) meet with traders and viajeros with an eye on persuading them to adopt a floor price of P90 a kilo at the farm gate level.

Aside from Briones and Estrella, some 30 other industry leaders were present during the meeting, including Francisco Buencamino, executive director of the Philippines Association of Meat Processors Inc. (PAMPI); Jesus Cham, president of the Meat Importers and Traders Association (MITA); Marilou Uy of the Pampanga Association of Meat Processors Inc. (PAMPRO); Fortunato Venegas, president of Northern Mindanao Hog Raisers Association Inc. (NORMIN HOG); ABONO chairman Rosendo So;

Emilio Escobillo Jr., of South Cotabato Swine Producers Association (SOCOSPA); Joselito Liugpo of Lipa Multi-Purpose Cooperative Marketing Association (LIMCOMA); Ruben Coliyat of Soro-soro Ibaba Development Cooperative (SIDC); Romy Co, of Tarlac Association of Swine-Poultry Raisers Inc. (TATSPRI); Freddie Dy, of United Agri-Producers Group Inc. (UAPGI) and Alan Chan, of Gold Farm Livestock Inc. (GFLI).

The DA officials who were also present during the meeting were NMIS Executive Director Jane Bacayo, Executive Director Carlos Mendoza of the Livestock Development Council (LDC); BAI Assistant Director Victor Atienza; former National Food Authority Administrator Gregorio Tan, a member of the Secretary’s Technical Advisory Group; and Francisco Ramos III, director of the DA’s Agribusiness and Marketing Assistance Services (AMAS).

Yap said during the three-hour meeting that all livestock stakeholders should work together in sustaining the growth of this subsector, which expanded 2.37% during the January-March period after contracting 4.19% last year despite the ERV issue. International health authorities led by the World Health Organization (WHO), World Organization for Animal Health or Office International des Epizooties (OIE) and the United Nations’ Food and Agriculture Organization cited the DA and Department of Health last year for their “appropriate action” in dealing with the ERV problem last December.

Yap stressed during the meeting the urgency for the creation of a National Board to “integrate” the various livestock and poultry sub sectors and come up with a total approach to the supply and pricing concerns that have for long buffeted these industries, not only with regard to livestock and poultry production but also with related concerns such as their animal feed requirements.

He said the DA would recommend to President Arroyo the issuance of an Executive Order to create this new and integrated commodity board.

This would-be Board will decide on crucial matters, he said, like the actual import requirements of meat processors to ensure that shipments do not create supply “surges” that unduly depress farm gate prices, implementation of intervention programs in corn areas that supply the requirements of livestock and poultry farms, and the list of slaughterhouses that the DA will have to modernize so local growers can have better facilities to store and then market their pork products.

Hence, he said, the DA will give priority from hereon not to the construction of more slaughterhouses but on upgrading existing ones — which industry stakeholders themselves will have to identify — to meet the NMIS certified “AAA” rating by equipping them with cold storage plants, cutting floors and other post harvest facilities to sharpen the competitiveness of domestic growers.

As for the planned meeting with traders and viajeros. Salacup said Yap had directed Mendoza and Ramos to sit down with these entrepreneurs in the hope of coming up with the minimum per-kilo farm gate price of P90, in the same way that the DA successfully persuaded these groups in 2008 to adopt a “reference price” of P150 to P160 per kilo of choice pork cuts like pigue, liempo and kasim when prices rocketed to P180 to P190 ahead of the Christmas season.

With regard to the planned strengthening of market linkages between meat processors and domestic growers, Salacup said the DA wants to adopt and expand a similar arrangement between Nenita Quality Foods Corp. (NQFP) and PAMPRO in 1998 on the steady supply to Pampanga based processors of pork cuts from Mindanao.

Buencamino said during the meeting that to make this planned arrangement work local producers would have to devote a part of their operations to growing overweight or “processing-grade” hogs to the range of 100 to 130 kilos per animal so meat processors could have enough fat and other non-essential pork cuts that they need. Local producers normally sell their hogs when they reach the “prime” weight of 80 to 90 kilos each.

Hog growers expressed concern during the meeting over the steady rise in imports, but the meat processors and importers explained that their shipments only comprise a minimal part of domestic supply and that they had to do so because local producers could not provide them with enough fat, skin/rind, offal and other parts that they need to manufacture hotdogs, tocino, luncheon meat and other processed pork products.

During the May 20 meeting at the DA, agriculture officials and hog industry leaders have agreed to consider an array of initiatives to address the import concerns of certain swine raisers even as they reached consensus that any effort to unduly link pork consumption to the Influenza A (H1N1) virus would only pull down farm gate prices and further hurt this sub sector that is already reeling from weakening demand.

The industry leaders present during that May 20 meeting included Cham; Edwin Chen of the National Federation of Hog Farmers, Inc.; and Dr. Leo Obviar of the Philippine Swine Producer’s Association.

BAI Director Davinio Catbagan said during that meeting that pork imports entering the country cover only a minimal share of the country’s total supplu and do not compete with pork sold in retail markets as these are mostly deboned fats, offal, rind of skin and other pork cuts used by local meat processors.

He noted that pork imports, which accounted for only 6.86% of the total pork supply in the country in 2008, were necessary because domestic hog producers could not meet the ever-increasing demand of the local meat processing industry.

In fact, Catbagan, pointed out, there was an incremental increase in imports last year only because of the drop in domestic production and supply in the face of the ever-increasing demand by local meat processors, he said in noting that domestic production fell 1.6% in 2008 as against the yearly 3%-4% jump in the local industry’s demand for pork cuts for its meat processing requirements.

Total pork supply for 2008, Catbagan said, reached 1.59 billion kilos, while pork imports only amounted to 109.368 million kilos.

Of the total amount of pork imports for 2008, 72.558 million kilos were deboned pork, fats, offal, rind and skin used to make hotdogs and other processed meats.

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