Report: PHL will continue to rely on milk imports

Despite the persistent logistics disruptions, the Philippines would continue to source nearly all of its dairy requirements from other countries, an international agency said.

The United States Department of Agriculture-Foreign Agricultural Service (USDA-FAS) in Manila said the Philippines remains a “competitive” market for imported dairy products since the country only produces 1 percent of its total requirement.

“The industry is affected by global shipping bottlenecks, the effects of Russia’s war on Ukraine, and rising prices,” the USDA-FAS Manila said in a Global Agricultural Information Network (Gain) report.

“There is no quick solution, but dairy importers will continue to ship imported dairy products despite all these challenges to address the country’s increasing demand.”

The USDA-FAS Manila noted that the Philippines’s dairy output this year would increase to 26,800 metric tons (MT) from last year’s 26,000 MT as it will be “boosted” by a bigger dairy herd and as a result of the government’s dairy development projects “geared towards increasing milk production.”

“Dairy consumption reached 3 million MT in 2021. Post sees these combined factors leading to greater dairy consumption,” the USDA-FAS Manila said.

“Rising consumption is also supported by infrastructure investments, particularly in cold chain facilities, supermarkets, and display areas.”

The USDA-FAS Manila report showed that the country’s dairy imports last year reached 3.035 million MT (MMT) while total consumption was estimated at 3.010 MMT.

“The limited local supply makes the Philippines a competitive market for dairy imports, with the United States and New Zealand having the largest shares,” it said.

“According to NDA data, overall imports grew by 3.4 percent in volume terms and 10.8 percent in value terms in 2021. FAS Manila sees overall dairy imports recovering in 2022 as the economy reopens, most of the population becomes vaccinated, and business operations expand,” it added.

The USDA-FAS Manila said the dairy importers in the Philippines were not spared from the global logistics and shipping woes, such as scarce vessel space, delays in arrivals and high freight rates.

It added that shipping delays now range from 30 days to as long as 120 days from the pre-pandemic travel time.

“Dairy importers complained of shipping delays, which hampered delivery of goods and added to logistics costs,” it said.

“Securing space on next sailing after getting a quote has a 50/50 chance at best, and bookings for container space could be pushed out three or four weeks.”

The USDA-FAS Manila noted that dairy imports will “continue to do advance orders and stock up inventory in anticipation of delays.”

“The global shipping bottlenecks will continue to affect the Philippines in terms of escalating freight rates, and the surge in freight rates shows no sign of losing steam this year,” it said.

“High freight rates, lack of vessel space, shipping delays due to port congestions, lack of equipment in transshipment ports, empty sailing, unpredictable arrival of vessels, and other current challenges will remain.”

Image credits: BusinessMirror file photo


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