"A lot of producers have reduced production on top of their culling done after the Christmas holidays because there was simply no demand. We expected the supply to be tight after that and improve farmgate prices, but because consumers are not buying the way they used to, there is still a huge inventory," said Gregorio San Diego, president of the United Broilers Association of the Philippines (UBRA).
San Diego noted that consumers are scrimping on their food budgets because wage workers are feeling the pinch of expanded value added tax.
As a result of poor demand, farmgate prices have not risen enough to give growers ample room to make a profit. Current prices range from P56 to P59 per kilo, higher than the P48 per kilo recorded in November-December last year, but not enough to cover the cost of production which has gone up from last year’s P56 per kilo to P60 per kilo starting in January.
San Diego said production inputs rose last January, especially corn feed. Supply of the commodity was tight due to the torrential rains in November and December that destroyed a wide area of cornfields in key areas in Luzon such as Cagayan Valley and Isabela.
Along with this, the steady rise in fuel costs also increased their electricity costs.
San Diego said local producers are also feeling the pinch of chicken imports which continue to flood the markets at prices lower than domestic prices.
He said chicken imports from the US are coming in at a landed price of just P32.88 per kilo compared to local farmgate prices ranging P56 - P59 per kilo.
Another unsettling factor for the local poultry industry is the continued threat of the highly pathogenic avian influenza or H5NI strain that is relentlessly spreading across the globe.
"We are bird flu free alright, but there is no telling when an outbreak will hit us. As a result, a lot of producers continue to be cautious and are more conservative in their approach when it comes to production. For one, the government is not even talking about possible indemnity for those raisers that will be affected," noted San Diego.
The Philippines is only one of few remaining countries in the Asian region that has managed to keep out the bird flu virus that killed more than 60 people in the region. The virus has since then spread to various parts of the globe, heightening fears of a global pandemic.
The Philippines is vulnerable this time of year because from October to March, migratory birds that cruise along the East Asia-Australia flyway are most visible in the country’s 20 identified hotspots for migratory birds.
Poultry, especially ducks are highly susceptible to an infection coming from migratory birds since ducks prefer marshy areas. Chicken farms, on the other hand, are usually situated in dryland areas but still not absolutely protected from infection.