Philippines output, import of pork, poultry may rise this year

MANILA, Philippines — The Philippines may increase its pork and poultry production and importation this year, driven by stable demand amid a growing economy as well as the extended lower tariffs for pork, according to the United States Department of Agriculture (USDA).

In a report, the USDA-Foreign Agricultural Service (FAS) said Philippine pork production may increase by eight percent to one million metric tons this year from 925,000 MT a year earlier.

While last year’s output was limited by a resurgence of African swine fever (ASF) cases in Luzon and Mindanao, producers are eyeing to produce bigger pigs this year.

The US agency also forecasts no vaccine for ASF will persist, but the industry “sees a glimmer of hope” after a special permit application for an ASF vaccine by a local company, in partnership with a Vietnamese firm, was lodged with the Food and Drug Administration.

For the poultry sector, chicken production is also projected to grow by five percent from 1.3 million MT to 1.36 million MT amid a growing economy.

Moreover, demand will increase for chicken as it is the next available less expensive protein source, with egg prices rising due to the Highly Pathogenic Avian Influenza (HPAI) or bird flu, coupled with high feed costs.

Egg prices rose sharply in the middle of last year, with a tray of 30 eggs already more expensive than a kilo of dressed chicken.

“With HPAI problems in layers resulting in decreased egg production, FAS Manila expects chicken meat to pick up the slack as an alternative less expensive protein,” the USDA said.

The USDA also projected pork imports to increase to 600 million MT this year from 575 million MT last year.

This year’s projection is higher than its previous forecast of 450 million MT.

The USDA said the higher forecast is due to the extension of lower pork tariffs until Dec. 31 this year.

Late last month, President Marcos signed Executive Order 10, extending the reduced tariff rates on swine meat, rice, corn and coal under EO 171 until end-2023.

In particular, importers will enjoy 15 percent in-quota and 25 percent out-quota tariff rates for pork throughout the year.

This means the country’s frozen pork inventory will further increase, bringing in cheaper imported pork.

Citing data from the Department of Agriculture-National Meat Inspection Service (DA-NMIS), the USDA said frozen pork inventory in accredited cold storage facilities breached 100,000 MT for the first time in history.

This was attributed to logistics problems because of previous COVID-19 restrictions and meat importers trying to beat the lower tariff rate expiration for imported pork under EO 171.

“These two factors resulted in unprecedented pork inventory levels in cold storage facilities,” the USDA said.

For poultry, the US agency increased its chicken imports forecast to 475 million MT from 450 million MT this year. The new projection is flat compared to last year, reflecting steady demand.

Moreover, meat processors are awaiting the government’s action on their proposal to retain the five percent tariff on mechanically deboned meat (MDM) of chicken and turkey until 2025.

The government has yet to issue its decision on the proposal, which means a reversion of MDM tariffs to 30 percent in-quota and 40 percent out-quota starting this year.

From January to October 2022, MDM accounted for 60 percent of total chicken imports, according to Bureau of Animal Industry data.

The USDA said the industry believes the lower tariffs would be extended given MDM’s prime importance to the meat processing industry.

MDM is a paste-like meat product produced by forcing under high pressure pureed or ground beef, pork, turkey or chicken through a sieve or similar device to separate the bone from the edible meat tissue.

It has been used since the late 1960s in certain meat and meat products, such as hotdogs, luncheon meats and sausages, and does not compete against table grade meat.

“Extending lower MDM tariffs is important for the way it helps the producers lower their cost of production, which is passed on to the consumers in the form of lower retail prices. Industry contacts said that there will be minimal effect on MDM imports regardless of whether the lower tariff rate is extended or not. A higher or lower cost MDM will just be passed on to the consumers,” the USDA said.