Broiler raisers are now incurring losses and may continue to lose money until early 2019, as the glut in chicken supply has caused farm-gate prices to fall below break-even levels.
Local chicken supply continues to outpace demand for poultry despite the expected increase in demand during the fourth quarter, according to the United Broiler Raisers Association (Ubra).
“No [price] recovery yet. Apparently, supply is still outpacing demand,” Ubra President Elias Jose Inciong told the BusinessMirror.
“[Prices] are still below cost of production.”
The latest Ubra survey showed that the average farm-gate price of broiler as of November 16 settled at P74.50 per kilogram for regular-sized chicken. This is already below the production cost of P80 to P85 per kg.
Inciong earlier said the farm-gate price of broiler has declined by at least P15 per kilogram since September 28 due to the increase in production and higher poultry supply.
Despite losing money and the possibility that they will continue to incur losses until the first quarter of 2019, Inciong said local raisers are not immediately slashing output to arrest falling prices.
“We do not see a cut in output. It would seem that DOC [day-old chick] production has improved. The big players will take their time to even consider a cut in production,” he said. “This may persist until the first quarter.”
“We are hoping that there will be an improvement within the next two weeks, but after the holidays, there will be a further collapse [in prices],” he added.
Inciong earlier attributed the collapse in the farm-gate prices of broiler to the lifting of the special safeguard duty on chicken meat imports.
The country’s broiler output this year could expand by 5.4 percent to 970 million heads, from 920 million heads, on the back of higher demand, according to Ubra’s previous estimates.
The expected total broiler output this year translates to about 1.248 billion kg to 1.261 billion kg of meat at an average weight of 1.3 kg per broiler.
Inciong said the broiler farms’ expansion is due to optimism that demand would improve due to the increase in population and the improvement in the purchasing power of Filipinos.
SRP’s impact
Inciong also said the suggested retail price (SRP) scheme being implemented by the Department of Agriculture (DA) has “no clear impact” yet on prevailing market prices.
“Right now, the SRP has no clear impact yet. It would be helpful if the public can be informed of the places which are compliant with the SRP,” he said.
Agriculture Secretary Emmanuel F. Piñol issued last week Administrative Circular (AC) 9, which ordered the reduction of the SRP on chicken to P125 per kg, from P135 per kg set in October.
The DA set an SRP on chicken in early October to stabilize retail prices.
The DA, in consultation with Ubra, decided that the SRP for broiler chicken should be equivalent to the prevailing farm-gate price plus P50 per kg.
However, the DA’s price monitoring reports showed that the average retail price of broiler chicken in the market has remained above the SRP even after it was implemented last month.
Nonetheless, reductions have been noted since October 3 but prevailing market prices remain above the SRP.
As of November 9, the average retail price of whole chicken in wet markets was at P139.25 per kg, 6.15 percent lower than the P148.38 per kg average recorded on October 3, when the DA decided to set an SRP for poultry.
However, on a weekly basis, the latest average quotation of chicken was slightly higher than the P138.5 per kg recorded on November 7.