Poultry growers on Tuesday have expressed concern over the possibility that there will be an oversupply of chicken, which could lead to a steep decline in farm- gate prices.
United Broilers Raisers Association (Ubra) President Jose Elias Inciong told the BusinessMirror that growers are more apprehensive over the possibility of a supply glut than La Niña.
“The apprehension would be oversupply and collapse of farm- gate price because of the increase in [output],” Inciong said.
He said even importers have become “cautious” about deciding the volume of their shipments, lest there be an oversupply.
Citing the Philippine Statistics Authority (PSA), Inciong said projections have shown an increase in chicken output starting the third quarter of the year.
“Based on the data of the PSA, if I remember correctly, there will be growth in volume. The question would be the profitability. Most of the time when you have tremendous growth in volume, you have lower profit or losses,” he said.
Agriculture Undersecretary Jose C. Reaño earlier told the BusinessMirror the government is expecting a 6-percent growth in poultry output this year. He said this will be driven by more investments in the sector.
Inciong added that the “increasing segmentation” of the poultry subsector could also be boosting the subsector’s growth. “The market has become increasingly segmented. In the past, when you talk of chicken prices, you refer only to grocery and wet-market chicken,” he said.
Inciong noted that the increasing demand for chicken of the food-service segment has paved the way for the entry of some institutions into poultry production.
He cited, as an example, the recent agreement between Cargill Inc. and Jollibee Foods Corp. to build and operate a poultry processing plant in Batangas. Cooked-chicken segments are also increasingly expanding, according to Inciong.
“Go to Andok’s, for example, and aside from the usual lechon manok, they now also have cut-ups of fried chicken. These are new segments that are picking up,” he said.
Stable for now
AT the moment, the Ubra said prices of chicken remain stable, even after the slight decline in output in the first quarter of the year. Data from the PSA showed the poultry sector’s growth slowed down to 1.01 percent in the January to March 2016 period.
Duck, chicken egg and duck egg production all posted increases in output, while chicken production slightly decreased by 0.29 percent.
Reaño said the decline was due to the infestation of the Newcastle disease during the period.
“Most farms affected by the disease stopped producing but inventory is still high. It’s [also a] distribution problem,” he said.
Data from the National Meat Inspection Service (NMIS) showed dressed-chicken inventory in cold storages as of May 23 reached 18,678.52 metric tons (MT), 15.62 percent lower than last year’s stocks of 22,137.15 MT.
However, Inciong noted an “unusual” trend in the supply and price movement in the market in recent years. “Back in the days when frozen-chicken inventory reached 4 to 6 million kilos [equivalent to 4,000 to 6,000 MT], prices tend to drop. That is not the case now,” he said.
“One possible explanation is that a large volume has always existed, but it was not captured in previous data because of smuggling. Or maybe there’s just really an increase in demand,” he said.