Poultry Products

The broiler-producing industry has been one of the most flourishing in the livestock and poultry sector for the past decades. It will continue to be the growth leader in the sector even in the world market.
 

Description

  • Mindanao has remained free from the Bird Flu virus, which has depleted poultry populations in other Asian countries.
  • It has also been declared Foot-and-Mouth Disease free by the OIE.
  • These factors have made broiler raising in the region a thriving and profitable enterprise.

Production

  • In 2004, Mindanao contributed 19% of the total chicken production in the country.
  • Broiler production in the region (MT, live weight) increased by an average of 7% annually from 156,767 MT in 1998 to 231,512 MT in 2004 (BAS).
  • The number of heads slaughtered in the region increased by 12% on the average from 26,316,587 in 1998 to 49,775,218 in 2004.
  • About 85% of the broiler population can be found in the regions of Northern Mindanao and Southern Mindanao where operations of poultry integrators are heavily concentrated.
  • The rest are divided among Central Mindanao (8%), Western Mindanao (4.75%), CARAGA Region (2%), and ARMM (0.2%).
  • Three big industry players predominate: San Miguel Purefoods, Inc., Swift Foods Inc., and Tyson/Bounty Agri Ventures, Inc.
  • These companies maintain their own contact breeders, contract growers, hatcheries, feedmills and dressing plants to support operation.

 

Cost and Return

  • It costs P51.45 to produce a kilo of live broiler chicken including the cost of stocks, building, land, labor and other farm inputs.
  • Live broiler is harvested and transported to the integrator’s dressing plant where P15.66 is spent to produce a kilo of dressed chicken.
  • These are then collected and distributed to the various wholesale outlets where another P3.12 per kilo is added as distribution cost.

 

Demand and Supply Projections

  • The Philippine broiler industry is projected to expand by nearly 4 percent this year, fueled mainly by the growing domestic and regional demand for domestic chicken meat.
  • The industry is forecast to produce over 680,000 MT of dressed chicken in 2005.
  • The future looks promising for the Southern Philippines Broiler Industry with the opening of the Asian export market.
  • It is envisioned that the country will not only be supplying Japan but other Asian countries in the next few years as well as the Middle Eastern market with the production of Halal chicken.
  • Preliminary talks have already been conducted towards this end with the holdings of the Halal Consultative Conference last March 17, 2005.

 

Local Market

  • Aside from supplying the local markets in Mindanao, Southern Philippines supplies the markets of Bacolod, Bohol, Cebu, Metro Manila, Bicol, Panay, Palawan.
  • In Region 10 alone, a total of 26,769.15 MT was shipped out to various Philippine islands in 2004.
  • Philippine poultry market is mainly composed of the food service and the household sector, each with distinct product preferences.
  • Fastfood chains – require volume delivery, mainly marinated parts and are very particular about product specifications, value quality and reliability.
  • Hotels, restaurants and other institutional buyers (HRI) – require whole chickens and have more variable pricing against the relatively stable prices of fastfood chains.
  • Wet markets – still provide the majority of the daily requirements of household purchases, offering both whole chicken and parts, although households are increasingly buying from supermarkets and hypermarkets.
  • Supermarkets and hypermarkets – it is estimated that only about 10 percent of fresh and frozen poultry are being sold at this level.

 

Foreign Market/Trade

  • The Philippine DA has been limiting poultry imports through the MAV scheme where only quota-holders are allowed to import frozen and chilled poultry meat into the country.
  • In 2004, the Philippines’ tariff-rate-quota (TRQ) for chilled and for frozen poultry meat (HTS 0207) is established as 22,968 MT. In 2005, the TRQ will drop to 10,374 MT as the Philippines’ WTO commitment is to implement the 2005 TRQ on only a half-year basis.
  • As of May 2005 a total of 519.7 MT has been exported by Swift Foods Inc. and San Miguel Purefoods, Inc. to Japan.
  • Poultry meat for the Japan market is especially prepared using “Teriyaki” cut with each piece skewered through a bamboo stick and shipped frozen in refrigerated container vans.

 

Marketing Practices

  • At present, five integrators are supplying 80% of the Philippine demand for poultry and poultry products: San Miguel Foods Inc., Swift Foods, Inc., Vitarich Corporation, Tyson Agro-Ventures and Universal Robina Corporation.
  • There are four major market segments being served by the integrators: 1) the live sales segment, comprised of the accredited viajeros (live birds salesmen) who haul the broilers from the company’s farms for delivery to their customers in the wet markets, either live or dressed 2) the supermarkets, 3) the wet markets and 4) HRI accounts
  • The small and medium-scale broiler producers sell directly to the live chicken traders or viajeros who buy the broiler from the farm and pass it on either live or dressed to retailers in the wet market, restaurants and carinderias.

 

Problems

  • The high cost of feed continues to be a limiting factor in the sector’s growth.
  • Posing a threat for the Broiler Industry is the possible entry of the Bird Flu virus into the country.
  • Competition for the local market via smuggled chicken

 

Price Trend

  • P95-115/kg of dressed chicken in June 2005.
  • P90-110/kg in June 2004
  • Generally lower from February to April at P70-100/kg in 2004 and P80-100/kg in 2005
  • Export dressed chicken to Japan was at $3.44/kg in 2004 up from only $2.60/kg in 2003

 

Credit Assistance

  • Land Bank of the Philippines
  • Quedancor

 

Investment Opportunities

  • Production of feed components (mainly corn and soybeans)
  • The Philippines remains one of the few countries in Asia that has not been affected by Avian Influenza (AI). Due to the AI-free status of the Philippines, many of the large food manufacturing companies are gearing up to export processed poultry products, particularly to Japan, Korea and the Middle East.

 

Institutional Support

  • The main regulatory agencies monitoring the safety aspects of imported animals, meat and meat products are the Bureau of Animal Industry (BAI) and the National Meat Inspection Commission (NMIC) under the Philippine Department of Agriculture
  • BAI has jurisdiction over the import of both live animals and meat, the NMIC plays a key role in the enforcement of the regulations over fresh, chilled and frozen meat and poultry imports into the Philippines.
  • Republic Act 9296 (R.A. 9296): On May 12, 2004, Republic Act 9296 entitled “An Act Strengthening the Meat Inspection System in the Country” was signed into law.

 


Souce: On the road to progress . . . Invest in Mindanao: Profiles of Priority Commodities. Publication from the Department of Agriculture.

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