LOCAL meat processors have assured Filipino consumers that they have sufficient raw materials to produce two months’ worth of processed goods despite the closure of meat-packing plants in the United States.
However, local meat importers have incurred losses close to P1 billion since the imposition of enhanced community quarantine (ECQ) due to the closure of the food service industry and lack of cold storage space.
Philippine Association of Meat Processors Inc. (Pampi) Vice President Jerome D. Ong said the closure of US meat-packing plants will not have an immediate detrimental impact on the country’s raw material supply since there are more available import sources.
“We won’t really feel their loss but ultimately there would be an impact if the shutdown is prolonged as it may affect other markets and sources,” Ong told the BusinessMirror in an interview.
“In our recent board discussions, we feel that the plant closures will be temporary. It will be brief because they won’t allow themselves to be paralyzed for a long time,” Ong added.
Several US meat-packing plants, including those owned by big players Smithfield Foods, JBS and Tyson Fresh Foods, have been shut down after their employees tested positive for Covid-19.
The United States was the country’s top meat import source in 2019 with a total volume of 146,121.931 metric tons (MT), bulk of which are prime cuts which are not used by meat processors.
In terms of raw materials, such as mechanically deboned meat (MDM) of chicken which is used for various processed meat products, the Netherlands remains as the top supplier for the Philippines at over 87,500 MT.
The US, in comparison, only exported 16,070.161 MT of chicken MDM to the Philippines, ranking fifth among all import suppliers.
No price increase
Despite a possible tightening of global meat supply, particularly for raw materials used in processed meat products, Ong said they do not see any immediate price increase for their products.
Ong, who is also the president of CDO-Foodsphere Inc., said the industry has a consolidated raw material supply enough to last 45 days to 60 days of production, based on current demand and allocation for processed meat products.
Latest Bureau of Animal Industry data showed that total chicken MDM imports from January to March expanded by 40.4 percent to 84,852.008 MT from 60,436.856 MT,
Furthermore, Ong disclosed that local meat processing plants have remained free from Covid-19 as the industry players have observed stringent health measures since the imposition of ECQ.
Ong added that the industry’s capacity utilization rate has slowly returned to 80 percent to 85 percent from the previous 70 percent to 75 percent after the government allowed full manpower operation in certain businesses.
Importers endure losses
In a separate interview, Meat Importers and Traders Association (Mita) President Jesus C. Cham said many industry players are now facing a “cash crunch” after incurring huge losses since the start of the ECQ due to shutdown of clients and lack of cold-storage space to store their goods.
Meat importers are now losing about P4.785 million daily for imported frozen pork and dressed chicken stored in local cold storages which they cannot unload since clients like the hotels, restaurants and institutional (HRI) entities are paralyzed by ECQ, based on Mita estimates.
Furthermore, importers are incurring additional daily losses of about P107,000 for every container on shore for shipping charges, detention charges and plug-in costs, Cham said.
Cham said there are about “few hundreds” of containers at present that are on shore, bringing total daily losses to at least P10.7 million for 100 containers.
In total, meat importers and traders are incurring losses of about P15.485 million everyday. This is equivalent to cumulative losses of nearly P700 million to P929 million, based on the lockdown duration of 45 to 60 days.
“[These are already] sunk costs,” Cham said. “The situation is difficult to read. Our cold storages are bursting and there is now a queue to unload.”
Cold Chain Association of the Philippines President Anthony S. Dizon told the BusinessMirror that local cold storages are already 95 percent full, with meat products accounting for bulk of the content.
The country’s frozen pork inventory as of April 20 is estimated at a record 51,126.71 MT, 43,350.19 MT of which are imported, National Meat Inspection Service (NMIS) data showed.
NMIS data also showed that dressed chicken inventory reached an unprecedented 71,864.86 MT, about 36,422.13 MT of which are imported.
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