Rising pork imports affecting profits of local meat processors

CEBU, Philippines - Unless the Philippines decides to help the local hog industry in supplying processors with their needed requirements that consumers can afford, the country is seen to continue to import pork products.

A study conducted by the University of Asia & the Pacific (UA&P) showed that while the government allows pork importation to plug domestic shortages especially during times of calamities and disease incidences, imported pork products however, are reportedly sold in the wet markets.

Imported pork is supposed to be supplied only to meat processors. However, it is being reportedly sold in the wet markets. Moreover, hog raisers assert that the huge amount of imports of pork offal, including fats and skin, has created more competition.

Pork offal, made from pork innards, which has little value in the exporting countries, is sold at very low prices. Imported pork skin, for instance, is much cheaper at about P50 per kilogram, compared to locally-produced pork cuts priced at around P160 to P180 per kilogram.

Local hog farmers have asked the Department of Agriculture (DA) to review the current five percent tariff on pork offal imports. This is being studied by DA for possible recommendation to increase the duty.

However, for meat processors, the increase in the pork offal import duty would put them and the local consumers at a disadvantage.

The entry of offals enables consumers to purchase pork products at cheaper prices.

Low income households consume processed pork offal—lips, cheek, liver, skin and head—as substitute for fresh pork and chicken.

UA&P Food and Agri-business Monitor release showed that Filipino consumers use offal-pork liver, cheeks, and ears—in sisig, a popular Filipino dish. Skewered grilled ears and skin are also a popular street food.

Meat processors on the other hand, use pork skin and fat for processed meat products. Increasing offal tariff will result to increasing prices of raw material and thereby, higher price for processed meat products.

According to the UA&P monitor, meat processors clamor for the continued importation of offals since the local hog producers have not developed a market for offals.

The practice here, is to sell whole hogs and therefore, local producers cannot compete with those selling by-products such as offals. Looking at price competitiveness however, Philippine pork is competitive with imports.

            For pork bellies, which are sourced mainly from the US and price amounted to US$2.80/kg. This includes freight and insurance of US$$0.20/kg. At an exchange rate of P43.10 for example, to a dollar, the landed import price in Manila port would be about P121.52/kg. Adding cost of handing, traders’ margin and tariffs resulted to a derived wholesale price of about P188.30/kg.

On the average local pork bellies are priced lower at P169./kg, which is price competitive with pork bellies from the US.

The country’s supply of pig fat is also localized, mainly sold in the wet market. Pig fat and other offals are severely shortof the requirements of the meat processing industry for hotdog and sausage production. The comparative low domestic price may have been due to small and dispersed volumes.