Imports seriously hurt local food firms, says executive

MANILA, Philippines - The previous administration’s policy of heavily relying on imports to fill in demand has led to a serious fallout in local food manufacturing, a top executive of a leading food processor said.

Bernie Concepcion, president of Swift Foods Inc. (SFI), said the Arroyo government’s reliance on imports to meet any shortfall in demand has done heavy damage to local food firms. He said this is evidenced by the decision of no less than top conglomerate San Miguel Corp. (SMC) to sell off its food business.

“It’s no longer competitive, that’s why big businesses are getting out,” Concepcion noted.

Likewise, Concepcion said the reliance on imports, has resulted in the over-importation of rice, which has steered up a storm of controversy over the role of the National Food Authority.

Concepcion said Swift, itself, has been one of the victims of the past government’s policy of allowing poultry imports.

Thus, Concepcion said he is optimistic, the new Department of Agriculture Secretary, Proceso Alcala, appears to be more careful about imports.

Concepcion acknowledged that the local poultry business has grown into a “cut-throat” competition and gradually leaving the traditional live chicken and wet market retailing to small “opportunistic” poultry growers.

“The damage has been done,” he said.

The Concepcion family-owned SFI, Concepcion said, is expecting to finally break even this year following a successful move away from its money-losing traditional operations to more value-adding activities.

In a talk with reporters following SFI’s recent annual stockholders’ meeting at the RFM Corporate Center in Mandaluyong, Concepcion said that based on preliminary and unaudited figures for the first half of this year, the company is posting a much smaller loss of P100,000 in terms of earnings before interest, taxes, depreciation and amortization (EBITDA).

Last year, SFI posted an EBITDA loss of P98 million.

By next year, Concepcion said SFI is hoping to post a positive gross earnings even though bottom line profitability is still targeted by 2012.

Concepcion revealed that the company’s decision to move away from its traditional live chicken and wet market retailing towards more value-adding and customized processing has improved the company’s income.

In fact, with 30 percent of SFI’s operations now engaged in more value-adding and customized processing, this segment has contributed 12 percent to gross profit.

Over the next five years, Concepcion said SFI plans to shift more of its traditional operations to value-adding activities. As such, SFI would do less direct retailing and would instead focus on more value-added processing for institutional clients consisting of major fastfood chains.