THE Philippine Association of Meat Processors Inc. (Pampi) said some of its member-companies have filed a price increase petition with the Department of Trade and Industry (DTI) due to rising raw material prices caused by tight supply worsened by shipping delays.
Pampi Vice President Jerome D. Ong told the BusinessMirror their buying price for mechanically deboned meat (MDM) of chicken has more than doubled to $1.5 per kilogram CIF (cost, insurance and freight) due to a series of bans on major import sources by the government.
Ong said the price of MDM only ranged from $0.5 to $0.6 CIF from last year to $1.2 to $1.5 CIF today.
“We are deeply concerned with the shortage of MDM because of the series of bans. The highly pathogenic avian influenza (HPAI) outbreaks has resulted in country-wide bans across European countries, which are our major source of MDM,” he said.
“As expected, since we can only access 40 percent of our supply, everybody is trying to buy from the remaining sources, thus, increasing MDM prices to rise to more than 150 percent from pre-ban levels,” he added.
The increase in prices of raw materials, Ong said, could lead to a price hike of as much as 25 percent—an inopportune time when the industry’s stockpile is dwindling as well.
He disclosed that the industry’s processed goods inventory is ranging from 21 to 30 days while its raw material inventory is at about the same level. This means that after 1 and a half months to two months, local meat processors would be utilizing higher-priced chicken MDM, thus, forcing them to increase their prices.
“That’s the problem. We are trying our best to provide safe, affordable, and nutritious meat products, especially for the masses, but very soon we won’t be able to do that because our inventories have either run out or are running low on stocks,” said Ong, president of CDO Foodsphere Inc.
“There’s no way we can maintain our prices of meat loafs, hotdogs, siomai and others. And all of which have become the center of the plate given that prices of pork chicken and other fresh meat have become out of reach to most consumers,” Ong added.
Ong hopes the price increase petition of some of their member companies would be approved by May 1 at the latest.
Bans on Europe sources
Since last year, the Department of Agriculture (DA) has suspended the importation of poultry products from European areas, which eventually expanded to country-wide bans, that have confirmed outbreaks of bird flu.
To date, the European countries that are banned from exporting poultry products to the Philippines are Denmark, France, Sweden, United Kingdom, Russia, Czech Republic, the Netherlands, Poland and Germany. Likewise two areas in two European countries are also banned: Menen municipality in Belgium and Kerekegyháza town in Hungary.
Bureau of Animal Industry (BAI) data showed that Europe accounts for 60 percent of the country’s chicken MDM supply. With the suspensions in place, the country has lost half of its supply base, leaving Belgium as the lone European country where processors can source their chicken MDM.
Belgium accounts for about 12 percent of the country’s annual chicken MDM supply.
Ong said they have been appealing to DA to shift the country-wide bans to regionalized ones, as what it did in 2017. The sector has held several dialogues with DA officials to discuss concerns on tightness of supply.
“They are deeply concerned about the situation and they would like to strike a balance between ensuring food safety and security,” he said.
Ong’s group is also proposing that DA allow even just the Pampi member-companies to import chicken MDM from banned Europe countries, subject to the stringent science-based guidelines and science just like four years ago.
In 2017, the DA allowed Pampi members to import chicken MDM from the Netherlands on the grounds that it will go straight to their facilities and the raw materials would undergo the required heating requirement to inactivate any virus.
Royal Cargo Inc. COO Jet B. Ambalada, who is also a Pampi director, said the situation of the meat processing industry is a “perfect storm,” having lost the majority of its supply while businesses face delays in shipment arrival while global shipping and logistics problems fester.
Ambalada told the BusinessMirror that arrival of shipments is delayed by two weeks to one month these days.
“[Meat processors] are only able to supply 80 percent of [their] demand contracts. We have a problem on availability of supply plus we are facing shipping and logistics problems,” he said.
“This is really a perfect storm. If this won’t be eased or resolved, then we’re up for a looming major food shortage. What will be our alternative protein source if we lose processed meat products or they hike their prices amid rising pork and chicken retail prices?” he added.
The BusinessMirror broke the story last week that global supply chain problems, such as rising shipping costs and lack of vessels, are greatly affecting importers and exporters. (Related story: https://businessmirror.com.ph/2021/03/26/food-shortage-seen-on-global-supply-woes/ and https://businessmirror.com.ph/2021/03/26phl-exporters-chafe-as-pandemic-delays-product-shipments/)