THE country may experience a chicken shortage in the second quarter, which could result in higher retail prices, if the current glut and low farm-gate prices are not addressed immediately, according to the Department of Agriculture (DA).
“My worry is that if we do not address the problem [glut], some of the small players might go out of business due to low prices and, in a few months, we will have a shortage of chicken,” Agriculture Secretary Emmanuel F. Piñol told reporters in an interview on Tuesday.
“That is the effect of low prices. The farmers will pull out and when they do that, we would have a shortage, hence, chicken prices would increase,” Piñol added.
Piñol said the shortage may occur in the April-to-June period if the current supply situation does not improve.
The current supply glut has caused farm-gate prices to sink below breakeven levels, with some farmers selling live broilers at P38 per kilogram, according to Piñol. The cost of producing broilers ranges from P80 to P85 per kg.
The United Broiler Raisers Association (Ubra) had flagged the oversupply in end-December as local production continued to improve due to increasing demand for poultry.
Piñol told poultry stakeholders to agree on increasing their farm-gate price by at least P10 per kg every week until such time that they reach a breakeven level.
“You really have to bite the bullet and agree on the price among yourselves, whether or not there are buyers,” he said.
“The only competition would be imported chicken. If stakeholders would continue to compete [by lowering their prices], then they are killing themselves and the big integrators will have an advantage,” Piñol added.
He also said the DA will assess if the volume of imported poultry meat entering the country could be absorbed by the market. Piñol said the volume of imports might already be detrimental to the local poultry sector and may have caused the fall in farm-gate prices.
“Because the volume might be too much for the local market to absorb and could hurt the local industry,” Piñol said. “Under the agreement with our trade partners at the World Trade Organization, we can actually institute remedies to protect local industries from being injured from over-importation.
Citing government data, Piñol said cold storages can no longer accommodate more chicken. He said locally produced chicken in cold storages is estimated at 18 million kg while imported poultry meat is at 16 million kg.
Ubra President Elias Jose Inciong told the BusinessMirror in a recent interview that some of their members have already slashed their output or stopped producing altogether due to the current supply situation.
“This is bad. [The price] is lower than usual,” Inciong said. “It is usually low [after Christmas] but not this low,” Inciong said.
Poultry raisers will be forced to extend their loading cycle in order to cope with the falling prices, he said.
“For example, instead of loading 1 million heads in 60 days, it is spread out up to 90 days. That is a 33-percent reduction,” he said. “It depends on the financial resources of the raiser.”
Inciong warned that if demand does not improve in two weeks, the oversupply of chicken could persist beyond March and cause small poultry growers to lose a lot of money.
Image credits: Nonie Reyes