Stakeholders say poultry supply enough for holidays

Poultry industry stakeholders on Saturday said the supply of chicken in the market is sufficient despite increased demand due to the Christmas season but still see the need to extend the lower tariff rates on major agricultural commodities. 

In a statement, American Chamber of Commerce Agribusiness Committee chairman Christopher Ilagan said there remains adequate chicken in the market, with producers capable of meeting demand even amid the seasonal Christmas rush.

However, Ilagan said that prices across commodities remain elevated. 

The latest market monitoring from the Department of Agriculture showed that chicken is now priced at P200 per kilogram.

For his part, Bounty Agro Ventures Inc. (BAVI) president and general manager Ronald Mascariñas said the price of imported chicken has also gone up to record highs but is still lower than the local cost of production because other countries have access to reliable and reasonably priced inputs. 

Mascariñas said that there is pressure from producers to raise prices because of the record high cost of feed inputs. 

Global grain prices skyrocketed during the pandemic and worsened during the Ukraine-Russia conflict.

The two countries are the world’s biggest suppliers of feed wheat. 

There is also an estimated 21% increase in local yellow corn prices compared to the same period last year.

"Producers will go out of business if they cannot raise prices," Mascariñas said.

"But there is enough production. Frozen inventory is higher this year compared to the same period last year. Demand is down simply because prices of goods and services have significantly gone up and yet minimum wages [have] remained the same," he added.

For Vitarich Corp., one of the country's pioneers in poultry and feed manufacturing, rising chicken prices even as imports have increased is a reflection that sourcing more supply abroad does not reflect consumer prices. 

Vitarich legal counsel Karen Jimeno said the importation of chickens is simply not an effective solution for reducing chicken prices, which are actually mainly driven by the increased cost of inputs.

"The key to stabilizing prices is local self-sufficiency. The Philippines needs to secure its local food supply, encourage local producers to scale up, and lower prices of inputs like imported corn," Jimeno said. 

"At the recent PCAFI (Philippine Chamber of Agriculture and Food Inc.) meeting, it was mentioned that the most yellow corn produced historically is at six million metric tons based on the DA National Corn Program report. Local industries in the Philippines need around eight to 10 million metric tons of yellow corn, so there is clearly a shortage in local corn supply," she said.

"When we do not control the production and supply of chickens and other commodities, we are at the mercy of external forces and affected by variables we cannot control," she added. 

As a solution, Mascariñas, Ilagan, and Jimeno backed the move to extend Executive Order 171, which effectively reduces the tariff rate of commodities such as corn and will provide stability and reliability for inputs valuable to the local value chain. 

The measure is set to expire by the end of the year, and the economic team of the Marcos administration is pushing for its extension amid a high inflation rate.

The National Economic and Development Authority has forwarded to President Ferdinand Marcos Jr. a draft order extending EO 171 for the entirety of 2023.

Under EO 171, issued by then President Rodrigo Duterte in May, the tariff rate for both in-quota and out-quota pork shipments was kept at reduced rates of 15% (from 30%) and 25% (from 40%), respectively.

The EO also kept the lower tariff rates for rice at 35% for both in-quota and out-quota imports, as well as the reduced duty for corn shipments at 5% (from 35%) for in-quota and 15% (from 50%) for out-quota.

The order also temporarily removed the 7% tariff on coal imports.

"This is absolutely necessary to keep the cost of production down. Otherwise, a number of producers will go bankrupt with the worsening profit squeeze," Mascariñas said.

Mascariñas added that producers are currently unable to pass on to consumers the full cost of the increase in production.

"The push to reduce tariffs on production inputs like corn can help put a lid on costs associated with feeds and, in the short term, [support] dependent downstream industries like livestock and poultry," Ilagan said. 

Jimeno said that EO 171 promotes a stop gap measure for local producers to scale-up, manage costs, and be competitive.

She added that augmenting corn supply through EO 171 also buys time for local farmers to catch up to the corn demand.

“It is really important for our government to understand the components and supply chain of finished products like chicken when formulating policies,” Jimeno said.

Going forward, Ilagan said that there is a need to support the improved competitiveness of corn and downstream industries through the earmarking and efficient utilization of tariff revenues for the sectors that are directly competing with imports.

Ilagan also called for more investments in post-harvest facilities, the promotion of more consolidated farm operations and the adoption of production-enhancing technologies that could help the corn sector boost its output and efficiency over the longer term.

“Another idea that has cropped up lately is to identify and utilize the vast tracts of idle government lands which may be tapped to produce more crops that can boost local production of key staples, such as rice and corn,” Ilagan said.

“To boost more foreign investments in the sector, removal of investment restrictions in certain sectors can help support the improved competitiveness of our agriculture sector, bring in more foreign investments and generate jobs in these areas,” he said.  —VBL, GMA Integrated News