Something to look forward to

If everything goes as planned, then we will be able to experience a truly world-class international airport in the Philippines as early as 2022.

I am talking about the Bulacan airport project of the San Miguel Corp. group, one of the most anticipated infrastructure projects under the Duterte administration.

It seems that everything is a go as far as this project Is concerned, barring another issue which the Department of Finance might again raise to unduly delay this very important project. I hope not because people are beginning to suspect that the DOF guys are favoring other existing airports and are not thinking of the welfare of the people.

According to the transportation department, the new gateway which is seen as an alternative to the congested Ninoy Aquino International Airport (NAIA) in Manila, may be ready by 2022 should construction start this year.

Transportation Undersecretary Ruben Reinoso has said that NAIA, which cannot even fit in a second runway, has outlived its usefulness.

Reinoso said they have already addressed the concerns of the DOF which sought clarification on the phased implementation and material adverse government action (MAGA) clause of the project.

MAGA refers to any future government action that could impair the rights, make it difficult to comply, or reduce the benefits for a private sector proponent under a public-private partnership (PPP) contract.

While it generally refers to actions by the national government, DOF originally wanted to include local government actions, which San Miguel opposed.

As to the second concern of the DOF, Reinoso said the development of the Bulacan international airport would be undertaken in phases by SMC in line with the DOTr’s policy of projects having “partial operability.”

He said that SMC has committed to make the first phase of the project operational in three to four years, which will include two runways and a capacity of 35 million passengers. Phase two is another 40 million (capacity), but of course that will depend on the growth of traffic and demand, he said.

The DOF had earlier said that there was no such phased implementation when it was submitted to the NEDA, but DOTr insisted that the latter’s policy is partial operability.

Reinoso clarified that for the DOTr, as soon there is a terminal and a runway already, then you operations should start immediately.

Government is targeting to conduct the Swiss challenge for an unsolicited proposal within the first quarter. DOTr is already working on the terms of reference for the Swiss challenge and has already created a special bids and awards committee in the DOTr.

The P754 billion new international airport in Bulacan was granted approval by the NEDA in April last year, but had to be further evaluated due to issues raised by the DOF. In fact, just to speed up the process, San Miguel agreed to shoulder the costs for securing the necessary local government permits and right of way acquisitions, which are supposed to be shouldered by government.

The project involves the construction of a world-class, major international gateway with four to six parallel runways, modern terminals, a sea port, an industrial zone, and necessary infrastructure such as expressways.

According to SMC president Ramon Ang, the new airport could bring in 20 to 30 million foreign tourists a year.

Another bad year

The industry association of mainly small and medium-scale broiler producers insists that there is an oversupply of chicken meat in the country.

According to United Broiler Raisers Association (UBRA) president Elias Jose Inciong, the oversupply in chicken is not temporary because of current production intentions. And based on the loaded great-grandparent, grandparent and parent stock breeders, the oversupply may be structural for at least a year and half unless culling occurs because of heavy business losses. 

Inciong said that there are at least four major new entrants providing fierce competition in almost all the value chains for broilers.  These are CP of Thailand, Leung Hap of Malaysia, New Hope of China, and Cargill-Jollibee.  Competition has so far been brutal, he told this writer.

But the question remains: if there is an oversupply, then why are retail prices of chicken still high?

Inciong explained that while normally, retail prices should be an accurate measure of the actual demand and supply situation, unfortunately for both producers and consumers, there is a disconnect between farmgate prices and retail prices especially in the value chain that ends in the wet markets. 

He said that it took the organization a while to convince both the agriculture and trade departments of the reality that retail prices have a trajectory that is autonomous to the movement of farmgate prices.  

He explained that generally, the formula of farmgate price plus P50 per kilo will be fair to all the players in the value chain.  However, market control in the flow of the product from farm to market has undermined the normal workings of the law of supply and demand. It has frustrated the efforts of the government to enforce the Price Act through the suggested retail price (SRP) mechanism, he said.

Inciong said that last Feb. 22, the average farmgate price for prime size broilers was P68.76 per kilo liveweight, with Rizal province posting the highest price range of P70-73 per kilo liveweight.  Using P73 as basis, the SRP should only be P123 per kilo dressed at the retail level. In spite of this, a kilo of chicken now retails at P140-160 per kilo dressed.  At the height of the glut, retail prices in the supermarkets went down to as low as P90-99 per kilo dressed, he said.

UBRA emphasized that adding to the oversupply is the fact that, based on National Meat Inspection Service records, as of Feb. 11, there were 44.3 million kilos of frozen chicken meat in accredited cold storage facilities, 25. 4 million of which were imported. On Feb. 12, 2018, the total was only 18. 5 million kilos, of which 7.8 million is imported.  

Inciong stressed that while 2018 was a very difficult time for the industry especially for small and medium enterprises, with yellow corn and soyameal prices at five-year highs and breakeven at P75-P85 per kilo, 2019 is proving to be the same or far worse.

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