Swine industry to the slaughterhouse
The Philippine Star
08/29/2003

A possible new victim to globalization, if it does not quickly shape up, is the P80-billion local swine industry, currently comprising about 80 percent backyard raisers and 20 percent commercial farm growers.

In recent years, there has been a growing trend in the importation of live and carcass swine, as well as frozen cuts used mostly by meat processors. With the introduction of GATT and the WTO, importations were noted to have gone up by as much as 134 percent from 1995 to 2000.

No wonder that the industry – largely represented by the small hog raisers – time and again is raising loud squeals of protest. They are relatively silent these days only because pork prices are up. But expect the whining to resume the first instance that prices go downhill.

Local small farm hog growers quickly blame surging imports and rampant smuggling whenever pork prices plunge. Which is, by the way, the same song that poultry and vegetable growers sing nowadays whenever they too feel the price pinch.

Last year from June to December, for example, the local swine industry claimed that legitimate hog importations complemented by technical smuggling – amounting to an estimated P10.5 billion – resulted in pork prices dropping by P5 to P10 per kilo. The drop in market prices, whilst evidently welcomed by consumers, resulted to losses as claimed by many small hog raisers.

For an industry that employs about 500,000 people, the impact of mounting importation cannot be ignored. Already, the number of backyard farms has been decreasing.

Grunting At The Wrong Tree

Yet, if we probe deeper into the issue, importations and even smuggling are only manifestations of a more serious problem. Once again, we wake up and realize that some of our ASEAN neighbors are able to price very competitively their swine exports and are therefore capable of flooding our markets with lower priced produce.

The local swine industry responded with the usual knee-jerk reactions. Industry representatives are lobbying for drastic measures such as the recall and further tightening of all meat import permits and the imposition of the so-called trigger price and volume mechanisms to shield the industry from the onslaught of cheap pork imports.

The trigger price scheme will impose additional tariff on imports that come in at a price lower than the established trigger price, while the trigger volume format will control shipment volumes when levels are serious enough to dampen local prices.

The industry is also on the warpath with local meat processors for preferring to buy carabeef from India. They accuse processors of not just importing manufacturing grade meat but are also bringing in table grade meat that are finding its way into wet markets and supermarkets. And apparently, of good quality but at much lower prices compared to local produce.

Realities Of Globalization

By merely concentrating on pressuring government for more protection, the local swine industry seems unable to see the realities of trade globalization. Countries around us are boosting their swine export capability and competitiveness. For example Thailand, now with a fast-growing swine export industry, can sell frozen carcass and meat parts priced at about 40 percent cheaper than our home grown varieties.

Admittedly, local meat processors will want to have the flexibility to get their raw materials from the cheapest source. They after all also need to produce their products using the most cost-efficient measures.

And so with the housewives, who would like to stretch for as much as they can their food budget.

It seems that Philippine hog producers are hounded by higher production costs, from transport, handling, cold storage, shrinkage and trading. And these high costs are accentuated in the operations of small and backyard growers where there is more inefficiency compared to commercial farm raisers.

Cooperative Herding Of Swine Growers

The local hog industry should get its act together. Today’s reality is that small-sized farms will be hard put to achieve economies of scale to sustain profitable operations in view of the ongoing world trade liberalization.

A good model that shows bright possibilities is a group formed by hog and cattle raisers in Bukidnon that started to supply a portion of the meat processors‚ manufacturing grade requirements.

The market for this cooperative grouping of hog and cattle raisers in the area is expected to expand. A number of foreign companies are interested in investing in modern facilities at the Phividec Industrial Estate in Villanueva, Misamis Oriental. Already, a P400-million world-class integrated meat processing and cold storage facility by TLC Beatrice Foods Philippines Inc. is being constructed.

If this cooperative grouping catches on with other hog and cattle raisers in other parts of the country, they just might save their industry. This definitely is more productive than lobbying in Congress for more protection.

Protectionism Fuels Consumer Revolt

Clearly, the direction for local hog raisers is to upgrade facilities and invest in the latest production technology. Doing so would enable them to meet the requirements of local meat processors and the pork-hungry Filipinos at competitive prices. Export opportunities are also there to be exploited.

Pushing for protective policies and legislation that will cause prices to be artificially high and not competitive will just cause consumers to rebel. Higher priced local produce will make processed meat such as meat loaf, corned beef, hotdogs and sausages, unaffordable for Filipino consumers.

Can you imagine protesting housewives dragging the swine industry into the slaughterhouse?

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