MORE than a year after a bird-flu outbreak almost decimated poultry farms in Central Luzon and sent chicken prices tumbling down, raisers are once again facing a calamitous situation. What’s killing their business this time, however, is not entirely unavoidable like natural calamities such as strong typhoons. The culprit is the supply glut caused by a host of factors, including the bad timing of imports.
Agriculture Secretary Emmanuel F. Piñol said poultry raisers were forced to sell their live broilers below break-even levels following the free fall in prices. For example, production cost ranges from P80 to P85 per kilogram. But because of the supply glut, poultry growers are being forced to sell live broilers for as low as P38 per kg. (See, “DA: Low prices may cause chicken shortage,” in the BusinessMirror, January 9, 2019).
One of the prescriptions of the Department of Agriculture is for affected poultry raisers to increase their farm-gate price by at least P10 per kg every week until it reaches breakeven. On the part of the government, Piñol said the Food Terminal Inc. will negotiate with poultry raisers for the purchase of chicken at a level that is higher than the prevailing farm-gate prices. The government is also planning to tweak the schedule of arrivals of chicken imports under the minimum access volume of the World Trade Organization (WTO). (See, “Stop ‘nitpicking’ on broiler raisers, DA chief tells PCC,” in the BusinessMirror, January 17, 2019).
The timing of the arrival of chicken imports was a major factor behind the glut seen in recent weeks. Of the 18 million kilos of chicken in local cold storages, government data indicated that 16 million kilos were imported. It is possible that the shipments of imported chicken arrived in the Philippines in the middle of harvest. Thus, proper scheduling of the arrival of imports is a good idea to allow producers to plan accordingly.
The export market would have been a viable alternative for poultry raisers, but they remain unable to take full advantage of this. The cost of shipping to other countries may be onerous for small players, but the government can consider playing the role of consolidator to export chicken from small players in bulk. Currently, only the “big players” can tap the export market as they have the financial capacity to shoulder the shipping cost.
The inability of small players to tap the international market is lamentable considering the trade deals that Manila has forged with other governments in recent years. There are countries that are ready to buy Philippine chicken products, but small players must be given technical assistance so they can comply with the stringent requirements in these markets.
The government must also start encouraging value adding among small players. For the longest time, poultry raisers have been used to selling whole dressed chicken. As the domestic market is no longer exclusive to them given the commitment of the Philippines to the WTO, poultry raisers must be assisted in developing new chicken products aside from tocino. This can only be done if the government will throw its full support behind research and development (R&D) activities for the farm sector.
While it is preferable for the private sector to invest in R&D efforts for the poultry sector, investments are scarce because Philippine agriculture is simply unattractive to businessmen. This administration has acknowledged that agriculture would remain as one of the top concerns of the government. The next step should be to identify viable strategies that would help solve the ills plaguing the sector.