THE Philippines is projected to suffer a glut in chicken meat this year as total supply is projected to reach at least 1.424 million metric tons, a figure that is 136,000 metric tons over the 1.288 MMT estimated total demand.
Citing government data presented by the Department of Agriculture (DA) Agribusiness and Marketing Assistance Service (Amas), United Broiler Raisers Association (Ubra) President Elias Jose Inciong said the total supply volume already includes imported stocks.
In the first quarter alone, the country would have a poultry supply surplus of 16,657 MT while there’s a projected glut of 59,281 MT in the second quarter.
The country would have 16,974 MT excess supply in the third quarter and by fourth quarter, when demand is usually high due to Christmas, a glut of 42,939 MT is forecast.
Inciong attributed the increase in supply primarily to the aggressive expansion of local production driven by anticipated hike in demand for broiler due to higher purchasing power by Filipinos.
However, this aggressive expansion by existing and new small and medium-size broiler players seems to be a “blinded” investment as industry stakeholders do not have a clear picture of the sector’s market situation in the absence of a proper data system, Inciong pointed out.
“People are making investment decisions based on wrong data. They still think there’s space or opportunity in this sector—and this is true not only [with] producers but even for importers,” he told the BusinessMirror. “The number of meat traders has increased from 80 traders to over 300 traders today.”
The lack of a sound data system, which Inciong has been pointing out for years, have encouraged new players to invest in the poultry sector due to enticing retail prices in the market, he added. The higher output could also be attributed to the better performance of breeders which started in the second half of 2018, Inciong added.
The glut in broiler supply, which started as early as August last year, has pulled down farm-gate prices below profitable levels, with some small players losing money and reducing production volume.
As of April 22, the average farm-gate price of regular-sized broiler is around P60.33 per kilogram, almost P15 lower than the lower-end of the P75 to P85 break-even level. The average farm-gate price of regular-sized boiler ending April 12 was pegged at P71 per kilogram.
Agriculture Secretary Emmanuel F. Piñol recently issued Administrative Circular 03 which set the suggested retail price of broiler at P128 per kilogram to match the average farm-gate price of P78 per kilogram recorded in April 5 to April 12.
Inciong pointed out that the 1.424 MMT total supply could be an “understated” volume as estimates of the DA-AMAS were quite conservative.
“That’s why I am really worried about looking forward unless, of course, there’s a slowdown with the heat taking its toll,” he said. “Those who do not have the capital might [resort] to stopping back production.”
Inciong explained that it is surprising that the higher temperature this year, brought about by the weak El Niño, has not slowed down broiler output. Historically, he added, broiler output is lower when the flock’s appetite declines due to heat.
Asked what is the industry’s plan moving forward, Inciong said they are studying options to address the concerns at hand, particularly the disconnect between the farm-gate price and the retail prices of broiler.
“What I am seeing now is that there are players who maybe—the best way to put it—will start to reduce their exposure to that value chain that ends up in the wet market as farm-gate prices are very volatile,” he added.
Image credits: Nonoy Lacza