Pork supply tightens amid price freeze scare

Metro Manila (CNN Philippines, February 8) - President Rodrigo Duterte’s executive order mandating a price ceiling on pork and chicken could expose consumers to more headaches ahead: a pork supply crunch.

That’s what both local retailers and meat importers flagged as, over the weekend, public wet markets brace for raids amid a government crackdown targeting profiteers.

For the past five years, Jemer Yarza has been hauling live pigs in a truck from Batangas pig farms to Manila’s public markets. His daily drives end today (Monday) as the price freeze takes effect.

“Yung mga susuplayan namin sa palengke eh baka hindi magtinda gawa ng baka makumpiska lang kung may magtanong o magsurvey sabihin overpriced sila,” the middleman said on Sunday.

[Translation: Our client retailers at public markets might not sell pork at all for fear of confiscation or apprehension if accused of overpricing.]

Pork price has soared because too many people in the supply chain want a cut. The middleman gets pork straight from the pig farm at ₱230 per kilo. He seeks a ₱40-cut so he delivers to public markets at a wholesale price of ₱270 to ₱280. Retailers pencil in a profit margin of at least ₱50, bumping up the price to ₱330 a kilo and exceeding Duterte’s price cap of ₱270 to ₱300 per kilo.

Yarza said the finger of blame must not point squarely at middlemen like him.

“Let’s say 1,000 yung baboy nila, then tinamaan yung 500 ng ASF, siyempre ipapashoulder nila yung mga natalo nila sa mga hauler,” the middleman said. “Mataas kasi yung mortality rate ng baboy ngayon.”

[Translation: Let’s say a hog raiser has 1,000 pigs, then 500 die of the ASF disease. Of course, the losses will have to be passed on to haulers. Hog mortality rate now is high.]

The Meat Importers and Traders Association, which groups the country’s largest pork sellers, said the government must instead take aim at containing the African swine fever.

Because hog raisers hedge against possible losses as the disease destroys farms, prices inevitably will be higher.

“They are working in a very hostile and risky environment. So the hog producers have said in order to stay viable, they have to add a risk premium of 30 to 40 percent,” Jess Cham, president of Meat Importers and Traders Association, told CNN Philippines.

The debate versus price control gains momentum.

The root of the problem is tight supply as the African swine flu decimates herd, and price ceilings will not solve that, meat importers and economists said.

They asked the Agriculture department to intervene by raising the volume of pork imports from the current 54,000 metric tons per year.

Cham’s group pegs the meat supply deficit at six million metric tons.

Aside from raising import quotas, or in their parlance -- minimum access volume – government must also bring down tariffs on imported meat.

“This is long overdue. They should have liberalized a long, long time ago… Our consumer should have benefited,” Cham said, referring to major global reforms in agricultural trade rules dating back to the Uruguay Round that came into effect in 1995.

As middlemen for local pork stay on the sidelines given a government crackdown, and as meat importers said the first batch of orders for the year will not come until April, expect fewer source of protein from today till March.