Summer of discontent for meat lovers

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Despite an “all-time high” of pork inventory, the price of meat in the retail level continued to spike, leaving government officials and industry players perplexed.

On April 17 Agriculture Secretary Emmanuel F. Piñol called a meeting with hog industry stakeholders and players to discuss the reported increase in the retail prices of pork in the market.

Edwin G. Chen, president of Pork Producers Federation of the Philippines Inc. (ProPork) and one of those who attended the gathering, said Piñol decided to call for the “urgent” meeting with industry stakeholders following President Duterte’s order.

“When they were in Talavera, Nueva Ecija, Piñol said somebody reported to the President that the price of pork is increasing. So, the President ordered Secretary Piñol to look into the matter on why the price is increasing,” Chen told the BusinessMirror.

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‘Hot’ weather

Speaking for ProPork, Chen explained that during this period of the year, the price of pork seasonally increases due to lower local supply, coupled with increased market demand.

“We said that the normal meat cycle during this time is that the growth rate of production declines due to climatic factors, while demand increases due to feasts being held left and right in the country,” Chen said.

According to Chen, hot weather conditions affect the conception and reproduction of sows, resulting in lower number of offspring by the time of September. Thus, the piglets that are born by the latter part of the year, which will be harvested by March, would be fewer than normal, Chen added.

Piglet killer

However, on top of the natural business cycle, Bureau of Animal Industry (BAI) Assistant Director Dr. Simeon S. Amurao Jr. said the local hog industry was allegedly hit by porcine epidemic diarrhea (PED) late last year, leading to the deaths of some piglets, which should have been harvested this quarter.

“During the latter part of last year, there were reports that the industry was hit by porcine epidemic diarrhea. So there were piglets that were supposed to be harvested this year that died,” Amurao told the BusinessMirror.

“So, that really affected the market with the decrease in supply,” Amurao said.

Chen also said the increased volume of imported frozen pork in the country’s inventory also affected the meat’s retail price.

“We told the secretary that the peso was weaker against the dollar, while the volume of pork imported by traders increased, reaching all-time high,” Chen said, citing data from the National Meat Inspection Service.

“This is considering that last year was an election year, and usually during election period, importation increases,” Chen added.

Inventory

NMIS data showed that the country’s frozen-pork inventory as of March 27 increased 33.07 percent to 15,367.19 metric tons (MT), from 11,548.18 MT recorded volume a year ago. The bulk, or nearly 91 percent, of the inventory, meanwhile, was comprised of pork purchased abroad.

Imported pork in inventory reached 13,961.58 MT, 43.81 percent higher than the 9,708.16 MT volume in same time period last year, according to NMIS data.

Meanwhile, locally produced pork in the country’s inventory declined by 23.61 percent to 1,405.61 MT, from 1,840.02 MT a year ago.

“In spite of the increased in inventory, the price of pork was still increasing. Because the importers resorted to buy locally produced pork, and when that happens—when a certain commodity is bought by many—naturally the price will really increase,” Chen said.

Citing data from the BAI, Amurao said the volume of imported pork in the January-to-March 2017 period declined by 7 million kilograms year-on-year.

Amurao added the increasing price of pork in Europe due to stiff competition resulted in higher landed cost of the commodity in the country.

“That’s why not a lot of consumers are not buying imported pork because it’s expensive,” Amurao said.

The higher price of imported pork prompted traders and importers to buy from the local sector, thus, pushing also the value of locally produced meat, Amurao said.

Pork hoard

“So, it’s possible that despite the decline in imports, there is a big inventory of imported pork. Because, I think, the importers are not releasing their volume in cold storage due to discrepancy in price of local and imported meat,” Amurao said.

Meat Importers and Traders Association President Jesus Cham said price of pork in Europe increased due to higher demand from China.

“EU pork price did start going up in the fourth quarter of 2016, but by products it’s not as much. China bought heavily and seems that the EU killed too much [hogs] to take advantage of higher demand and price,” Cham said in an e-mail.

“Now, EU pork [supply] is short. On the other hand, USA pork production seems to be increasing,” Cham added.

Based on the monitoring of the DA, the prevailing retail price of pork liempo in Metro Manila as of April 20 was at P220 per kilogram, higher than the usual P180/kg pricing. Meanwhile, average retrail price of pork ham in the same period was pegged at P200/kg. Chen said there were reports that the price of imported pork in the retail market hit as much as P250/kg.

However, with the increase in retail price comes a bigger profit margin for local producers as farm-gate prices increase, as well, Chen said. He added the farm-gate price of pork in Luzon has reached P130 per kilogram liveweight, higher than the usual P90-to-P100/kg range.

“But as a support for the government, I have announced to my members that they must maintain their present farm-gate prices,” he said. “This is the first time that the government cares for the hog industry, because the previous administration does not care what happens to the industry, what’s important to them was that the price of pork was cheap,” he added.

 

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