HOTDOGS are having an identity crisis. It’s all because of a three-word phrase: “Born-and-bred.”
No, it’s not the title track in John Mayer’s fifth studio album. But it is something that Philippine state officials and industry players have not come to terms with. Yet.
It started in 2020 when the government slapped a series of temporary import bans on countries that had confirmed avian influenza (AI) outbreaks. It was a precaution that the Philippines took to protect its animal and human health.
However, the numerous measures that government issued to temporarily ban imports resulted in a technical shutdown of the entirety of European meat products to the Philippines. That has left some industries like meat processors scrambling for imported raw materials.
Like in previous years that saw European countries out of the Philippine market, meat processors had to carve their way to ensure continuous production of goods while keeping prices stable.
Chicken MDM
IN April, the Department of Agriculture (DA) allowed domestic meat processors to import mechanically deboned meat (MDM) of chicken from the Netherlands amid an existing import ban on the European country due to ongoing bird flu outbreaks.
However, what the meat processing industry thought would be “good news” turned out to be an arduous challenge.
By around that time, the Philippines had lost about 60 percent of its chicken MDM supply, a vital raw material used by meat processors to make products like hot dogs and meat loaf, due to existing import bans on European countries.
The partial lifting of the import ban on the Netherlands came as a sort of “relief” as the opening of the Dutch market would mean access to about 35 percent of the country’s annual chicken MDM supply.
However, this was not 2017; it was 2020 and lockdown measures were being imposed in almost every market.
Little did the industry know that the partial lifting of the import ban carried a stringent import condition that Dutch poultry exporters are unable to fully comply with: born-and-bred.
The import condition meant that poultry products to be exported to the Philippines—in this case Dutch—must come from birds or poultry that were born-and-bred in the Netherlands.
Raw material
IN a meeting of the Philippine Association of Meat Processors Inc. (Pampi) in the latter part of April, discussions regarding the latest problem to hit the industry began.
During that April 28 meeting, it was revealed that most of the poultry meat, including MDM, suppliers in the Netherlands cannot comply with the born-and-bred condition since the European country sources its raw materials (birds) from other European countries like Poland.
Given the import condition, Dutch poultry exporters can only supply the Philippines with “very, very few” containers per week, according to the discussions at the meeting.
It was also disclosed at that meeting that it is not only the Netherlands that would have difficulties complying with the “born-and-bred” condition but other European countries as well like Germany and the United Kingdom.
It was clear to meat processors that the born-and-bred import condition has become one big roadblock: the industry will not be able to get enough raw material supply from Europe.
Individual accreditation
THE Bureau of Animal Industry (BAI), the mandated agency to oversee importation of meat products, stressed that countries sourcing raw materials or products from other countries to be exported to the Philippines as their own “defies” the purpose of the government’s accreditation system.
“If the animals or animal products did not come from them, then what’s the point of their animal health programs? Worse, what if the exporting country’s sources of raw materials or products have problems or are not accredited [by the Philippines]?” BAI Director Reildrin G. Morales told the BusinessMirror.
The Philippine government provides two types of accreditation to interested meat exporters to the country: a system accreditation and an individual accreditation.
A system accreditation means that the Philippines recognizes the exporting country’s food safety system as at par with its very own domestic system.
Under such accreditation, any exporter or foreign meat establishment (FME) recognized and accredited by the exporting country could export meat products to the Philippines.
An individual accreditation or a FME-based accreditation allows only specific companies to export meat products to the Philippines.
Territorial divisions
MORALES explained that the partial lifting of the import ban on the Netherlands, which has an existing system accreditation, was based on the current disease situation in the country, particularly its current bird flu outbreaks.
What everyone must understand about the Netherlands’ bird flu situation—and the Europe in general—is that the outbreaks are “progressive,” with cases being confirmed one after another, Morales pointed out.
Due to this, the goal of the born-and-raised import condition for the Dutch poultry MDM is to ensure that the raw materials come from disease-free regions as the government can easily trace their origins, Morales said.
“That’s why we required that the source of the MDM must come from birds that were sourced in the disease-free region in the Netherlands,” he said.
“Now, if they will just source from other regions or other countries, then it defies [the] purpose of regionalization,” he added.
The Paris-based World Organisation for Animal Health (OIE) defines regionalization, which it also interchanges with zoning, as the mechanism of defining “a certain part of a country that contains an animal population or subpopulation with a specific animal health status with respect to an infection or infestation for the purposes of international trade or disease prevention or control.” Regions or zones are defined primarily on geographical basis using natural, artificial or legal boundaries.
For example, the Philippines is divided into three regions: Luzon, Visayas and Mindanao.
Influenza’s entry
MORALES stressed that the government is just protecting the country’s borders from the entry of the highly pathogenic avian influenza (HPAI) H5N8 strain, the current bird flu strain spreading in Europe, in light of certain bird flu strains being able to infect humans.
In February, Russia reported the first human cases of H5N8 infection. A month before that, China reported the first human case of the H10N3 bird flu.
“This is H5N8 and we have seen human cases. We are not just being cautious to protect our poultry population but even humans,” Morales said.
“And avian influenza in general mutates fast and that’s what we want to be cautious about. We already have H5N6 here and we do not want it to compounded by any means,” he added.
Furthermore, Morales explained that the Philippines is “entitled to its own policies” to ensure sufficient protection of its animal and human health, especially that it is a “smaller country” that is more vulnerable to economic shock in case of animal disease outbreaks.
“While there are standards or agreements, as a sovereign country we are entitled to our own policies that we think can protect our domestic industries. We should also appreciate that as one of the smaller countries with a growing economy, our system is more prone to shocks than bigger economies [in case of outbreaks,” he said.
“That dictum is acceptable even in the human health sector. It’s an agreed principle that smaller economies are gravely affected by animal disease outbreaks,” he added.
Compliance requirement
FOR Morales, the Netherlands’ case of not being able to comply with the born-and-bred import condition is “not an issue.”
“Technically, the Netherlands is banned due to bird flu and we are just accommodating the regionalization on the economic implication to the local meat processing industry. By all intents and purposes, the Netherlands is banned,” he said.
“And the Netherlands has no issue about it. The industry just informed us that the Netherlands cannot comply with the conditions. This is not an issue with the Netherlands—I would not call it an issue,” he added.
But for Pampi, the born-and-bred import condition is indeed an issue. In fact, the association told the BusinessMirror that it was “taken aback” with the imposition of the born-and-bred import condition, pointing out that such “was never a requirement.”
A breast, leg
IN Pampi’s opinion, the “logical application” of the import condition is for fresh poultry cuts like breasts and leg quarters — and not for products like MDM, especially if the countries concerned are under a unified custom and border rules like that of the European Union.
“For MDM, it becomes impractical because this raw material is taken from skeletal frames—mostly from the outer back which come in small volumes,” it said.
“Because of this, MDM producers in a country with a small poultry population such as the Netherlands will need to import these parts (i.e., outer backs, necks, etc.) from neighboring countries within the EU and UK to produce a substantial volume for export,” it added.
The Meat Importers and Traders Association (Mita) is in agreement with Pampi that the European Union must be exempted from the born-and-bred import condition since countries under the customs union have borderless trade.
“Born-and-bred import condition has nothing to do with food safety and animal health. It’s a non-tariff measure and a protectionist one,” Mita President Jesus C. Cham told the BusinessMirror.
Cham pointed out that discussions regarding born-and-bred import condition date back as far as 15 years ago and it is only this time that such rules have come into play, resulting in economic implications.
Loss of suppliers
IT’S a grave situation. That’s how Pampi describes the current situation of the industry when it comes to raw material supply. Well, Pampi was not remiss in warning the government of possible raw material shortage due to import bans abroad.
As early as March, Pampi had disclosed that their raw material prices have doubled to $1.5 per kilogram due to loss of European suppliers. And an increase in raw material prices would only mean higher retail prices of processed meat products, such as the Filipinos’ beloved hot dogs.
And well, what was just a forewarning months ago has become a reality. Hot dog manufacturers hiked their prices in late May and early June. (Related story: https://businessmirror.com.ph/2021/05/31/meat-processors-set-list-price-hikes-hot-dogs-to-cost-more/)
“Suppliers from Brazil, US and Canada are trying to fill the void but at atrociously high prices which threaten the businesses of meat processors and food supply (and costs!) for our consumers,” Pampi said.
Morales recognizes the economic implications of the import bans imposed by the government on European countries, but pointed out that their primary concern is protecting the country’s borders.
“Everything else is secondary. Some people might say or insist on food security but we are really doing a balancing act—we need to protect our borders and work on our food security,” he said.
Talk, no action
THE Pampi said it has been in continuous dialogue with the DA ever since the problem with the born-and-bred import condition came up. The industry group sums up the dialogue in five words: all talk but no action.
“But there is growing frustration among our member-companies, many of them suspecting that DA is taking us for a ride,” the group said.
“[We] believe there is basis to think that way because in the many meetings we had with them over the past 6 months, they present nothing but stumbling blocks and practically no solution to our problems,” the group added.
“Over the same period of time, our MDM supply dwindled and prices have tripled, resulting to massive hemorrhage to our business,” it lamented.
Pampi noted that DA’s rationale behind the born-and-bred import condition has not been clear, but it pointed out that what is clear is that “a food crisis is on the horizon.”
Pampi added that they are “carefully” studying the impact of the born-and-bred import condition “to develop a long-term plan.”
“We continue to appeal to the DA to have ready solutions to these problems because they affect the consumers in a big way, and it contradicts the thrust of government in keeping food prices low and to curb inflation,” it said.
Health system
THIS is not the first time that the Philippines banned the Netherlands over bird flu outbreaks and eventually allowed meat processors to seek raw material supplies from the European country. This also happened in 2017: different year, same situation but different import conditions.
The striking difference, however, between 2017 and 2021 is that there was no born-and-bred import condition. The only condition for meat processors to import poultry MDM from the Netherlands is that they source the raw materials from bird flu-free zones in the country and use them in “cooked products.”
This, Pampi said, “has clear scientific basis and relies on the soundness of the exporting country’s animal health system, our country’s meat inspection & accreditation system, and the impartiality of the OIE.”
It added: “This time, they simply would not allow it, at a time when it is paramount to strike a balance between disease control and food security.”
Government and industry sources familiar with the matter agree that the 2017 import conditions set by the DA for meat processors to access Dutch poultry MDM sets precedence. However, sources noted that it seemed that the DA disregarded whatever rules were implemented in 2017 and went to craft a new set of rules based on the current situation.
“What would be logical for the DA is to implement the 2017 rules and see if they are still effective. If not, then that’s the time you tweak it accordingly,” one source said.
Pampi emphasized that the government’s importation rules, including the 2017 rules on Dutch poultry MDM, have been effective in preventing the entry of bird flu through legally imported products.
“To-date, there has not been any recorded incident of bird flu virus in the Philippines attributable to imports of poultry from anywhere,” it argued.
Into a corner
AS meat processors were pushed into a tight corner, they had nothing else to do but to find alternative solutions to boost their raw material supply: seek expansion of MDM sources outside the Netherlands.
Among the countries where the industry has been seeking expanded access through accreditation of more FMEs or regionalization of blanket import bans are United Kingdom, Poland and Hungary. (Related story: https://businessmirror.com.ph/2021/05/25/less-than-45-days-will-hotdogs-soon-be-hard-to-find)
European countries like Hungary and Poland have also written the DA to seek updates or urgent resolution of their requests for accreditation to export meat products to the Philippines.
For example, Hungary emphasized that it remains keen on exporting more pork and poultry products to the Philippines as it is seeking the accreditation for several Hungarian companies. (Related story https://businessmirror.com.ph/2021/06/08/hungry-for-pork-chicken-try-us-hungary-tells-phl)
Cognizant of the Netherlands, situation, the Polish government has expressed an intention to have more of its meat plants accredited by the Philippines, as it argued that it can comply with the born-and-bred import condition.
In a letter to Dar, the Embassy of the Republic of Poland in Manila Chargé d’affaires ad interim Jarosław Szczepankiewicz explained that “rich European countries like the Netherlands do not raise chickens but rather import their supplies from lower-cost sources like Poland.”
“In fact, I believe that Poland is one of the very few, or even maybe the only country in Europe that can meet the criteria of born-and-bred,” Szczepankiewicz said in his letter dated June 8, a copy of which was obtained by the BusinessMirror. (Related story: https://businessmirror.com.ph/2021/06/16/poland-seeks-das-urgent-ok-to-export-poultry-to-phl)
Not mincing words
IN a statement sent to the BusinessMirror, the EU Delegation to the Philippines said European meat exports have been the subject of bilateral discussions with the DA “for some years now,” including “certain import restrictions imposed on member-states” due to animal disease outbreaks like African swine fever and bird flu.
The EU Delegation to the Philippines noted that international standards have been set by the OIE and by the Sanitary and Phytosanitary (SPS) agreement of the World Trade Organization “to allow safe trade to continue” from disease-free areas and “on which products can be safely continued to be traded whenever an outbreak occurs.”
The EU Delegation to the Philippines emphasized that the EU implements “stringent control measures in its affected areas and applies strict regionalization measures guaranteeing safe trade of animals and animal products.”
However, the EU Delegation to the Philippines did not mince words when it noted the seeming double standards that the Philippine government has been implementing between locally-produced meat and imported meat regarding regionalization.
“While DA has been implementing regionalization to also allow safe trade within the Philippines (as in the case of ASF for instance), regionalization has not been applied consistently in respect of certain EU meat exports—especially pork,” it said.
The EU Delegation to the Philippines also took a swipe at the born-and-bred import condition set by the DA on Dutch poultry MDM, pointing out that the “restrictive trade measures imposed on certain EU meat exports are not in line with WTO SPS Agreement and the OIE standards.”
“The EU Delegation is coordinating with concerned Member States including the Netherlands and will pursue the dialogue with the Department of Agriculture to address concerns in this regard,” it said.
Key relations
THE BusinessMirror attempted to get a comment from the Embassy of the Kingdom of the Netherlands in Manila but the diplomatic office responded that it cannot “respond favorably” to this paper’s interview request.
The BusinessMirror also sought to interview a representative from the Association of Dutch Poultry Processing Industries (Nepluvi) but the group has not responded as of press time.
Likewise, the Embassy of Spain in Manila informed this newspaper that it is “not available” at the moment for an interview, citing Covid-19-pandemic related problems. Industry sources told the BusinessMirror that Spain is also having some problems regarding the born-and-bred import condition.
Nonetheless, the Embassy of Spain sent a statement saying that it is “working closely with DA, exporters, importers and all stakeholders, to ensure a sufficient and safe flow of pork meat and meat products to the Philippines.”
“The Philippines is a top priority for Spain, and our good and long lasting bilateral relationships are allowing us to be at this moment the largest supplier of pork. We look forward to continue working closely with the Philippines in this and many other areas related to agriculture and food,” its statement read.
The Embassy of Spain noted that it has an “extraordinary” relationship with the DA.
Integrated farming
EUROPEAN countries are not the only ones affected by the born-and-bred import condition. The United States is is in fact one of the countries that immediately raised issues regarding the “new” import condition.
Upon the issuance of the renewal of the system accreditation of the US in January of 2020, Washington immediately raised concerns about the new import requirement. The US has an integrated farming for its livestock sector with neighboring countries like the Canada and Mexico.
Due to trade agreements and lack of supply, the US sources live animals such as pigs or cattle born or born-and-bred from either Canada or Mexico, which obviously could violate the Philippines’s born-and-bred import condition.
Sources familiar with the matter told the BusinessMirror that the born-and-bred import condition was not a requirement for US meat products prior to the renewal of its system accreditation.
“The source of meat for export shall be from animals born-and-bred in United States of America,” Section 3.4.2 of Agriculture Department Order (DO) 02 of 2020 read.
The US has held a series of dialogues on the matter until the DA decided to postpone the publication of the said DO, which meant a status quo on the previous import rules on US meat imports, sources familiar with the matter said.
No problem
PEOPLE familiar with the matter told the BusinessMirror that Agriculture Secretary William D. Dar wrote concerned US officials that the DA “considers the concern” they raised regarding the born-and-bred import condition.
Dar added that they remain open for “technical discussion” with the relevant competent authority of the US to resolve the latter’s concern.
Sought for comment, Morales said the US is allowed to source animals or pigs from countries that are granted with system accreditation by the Philippines, which, in this case, is Canada.
“If US sources from Canada there is no problem about it but if it comes from Mexico then we have an issue,” he said, pointing out that Mexico does not have a system accreditation to export meat products to the Philippines.
Morales said they told US officials in Manila that the born-and-bred import condition stands as part of measures protecting domestic animal health.
Guaranteed not
US Meat Exporters Federation (USMEF) Senior Vice President for Asia-Pacific Joel Haggard pointed out that having a born-and-bred import requirement does not guarantee a product is intrinsically safer than others.
Haggard explained that products born in one country and harvested in another are not any safer than if they were born and harvested in just one country.
“The way we see it…the born-and-bred requirement doesn’t make the products any more safer intrinsically,” Haggard said in interview.
“It doesn’t guarantee the safety of that product anymore than having it just harvested in the US or born in one of the other neighboring countries,” Haggard added.
What is important, Haggard said, is that the country exporting to its trade partners observes necessary protocols to ensure the safety of products.
“We have trade agreements with health protocols for importing livestock from neighboring countries, which are being taken seriously. These are only made after necessary risk assessments,” he said.
The US imports live hogs and feeder cattle from its neighboring countries like Canada and Mexico since it employs integrated farming in certain sectors of its livestock industry.
Born-and-bred
HOWEVER, Haggard said the number of hogs and cattle imported from Canada and Mexico that are exported as pork and beef only accounts for a small percentage of the United States’ total meat exports.
“I think the ideal situation would be to entrust the safety of those products going to US born in US or somewhere else look at safety aspect good record with that conducting risk assessment.”
Furthermore, Haggard noted that the USDA food safety export library shows a status quo of export requirements to the Philippines.
Haggard added that health certificates issued accompanying their exports do not disclose whether the meat products derived from livestock that were born or raised in Canada and Mexico and imported to the US for slaughter.
“Anything that is harvested in the US becomes a product of the US,” he said.
Based on publicly available information, the Philippines is not alone in implementing a born-and-bred import condition. China also requires the same condition but has explicit rules stating that it allows the entry of US meat products even if they were born or raised in Canada or Mexico as long as they were slaughtered on US soil.
Moving forward
THE BusinessMirror learned that government agriculture and Pampi officials met in the last week of June to thresh out issues hounding the industry, including the born-and-bred import condition. During the meeting, the industry group expressed “disappointment” over the turtle-paced progress of the issues they have repeatedly raised before the department.
During the meeting, DA executives told Pampi officials that it “cannot waive” the born-and-bred import condition but disclosed that they are in close coordination with Dutch veterinary authorities regarding the matter. The DA added that a technical working group is currently assessing the situation and the department would provide the industry group with its findings sometime this month.
The Pampi also reiterated its appeal for “urgent action” for the accreditation of additional MDM plants in Poland, Hungary and Turkey with the DA promising to send an inspection mission to Hungary and Poland once its team is fully vaccinated.