The year that was in business…

I musty apologize to our dear readers for rudely interrupting this short series on our Business Yearender which I started on the first week of January.  I expected to be back in town in time to churn out this second part but my flight schedule got mired somewhere – it’s a very long story, but try as hard as I could, I couldn’t get a flight back in time. So sorry.

For the first part of this short series, we had assessments from the top leaders of PhilExport (Mr. Sergio Ortiz-Luis, president), the Philippine Chamber of Handicrafts Industry of PCHI (Mr. Dennis Orlina, honorary president and Mrs. Mila Lacson, current president) and Philippine Plastics Industry Association (Mr. Peter Quintana, president).

We go now to the meat industry. Business & Leisure (B&L) talked to Mr. Jesus Cham, director of the Meat Importers & Traders Association (MITA) whose tales of woe have not stopped since 2012. And 2013 has been another tough year for all of the country’s meat importers, he said, and because of the government’s tough new regulations on accreditation, about one-third of the importers have dropped out of the scene. He went further to say that government has apparently bowed down to pressure from local producers to collect more customs duties from the importers, so apart from a big number from their ranks bowing out, many of them have been slowing down.  This development has resulted in price increases for imported meat products, and Mr. Cham decries the government’s protectionist scheme favoring the local meat producers “to keep out the imported competition,” according to the MITA executive.

Actually, B&L has been covering this issue from over a year ago, and in the spirit of fairness, we also aired the side of the local pork producers and gave them equal space. The issue of hygiene of imported meat was also raised, which saw the National Meat Inspection Service imposing new schemes for imported meat (frozen or chilled) being sold in the wet markets. The vendor has to provide a freezer or chiller to be allowed to sell his frozen meat products in the open market, while fresh meat is allowed to be sold openly on the tables. The importers have also decried the double standard.

On the other hand, the pork producers have accused the importers of flooding the market with smuggled or undervalued meat, thus affecting their price schemes. MITA of course denies this flatly and barbs have been traded between camps, but the government has not come up with a fair solution.  Both are key industries which the government must protect at all costs.

2013 is another dismal year for the meat importers, but they do not see a bright spot in 2014, according to MITA. “The challenge is for the importer to look for new products acceptable to the local consumers. Kanya-kanyang galing na lang,” said Mr. Cham.       

With tougher accreditation standards imposed by the Department of Agriculture, the toughest of the lot have chosen to stay and slug it out, which means that they have successfully weeded out the fly-by-nights and only the legitimate meat importers have stayed. On the issue of smuggling, only an iron fist can successfully stamp out meat smuggling for good. This has been brazenly going on for decades at the Bureau of Customs, and it still continues to be a major problem. This, of course, gives unfair competition to our local pork producers, an industry that is continuously struggling to keep farmgate prices at bay but is saddled by too many unscrupulous middle men all throughout the long road from farm to market.

The wood industry is next on our short list. From Mr. Jun Keh, executive vice president of the Philippine Wood Producers Association (PWPA), “This year definitely we’re still continuing to suffer…we might be worse off. We’ve done what we can, but… with EO 23, the ban is still on (resulting in a) shut down of plantation developers, the concession holders unable to move. No revenues, we cannot guard the forests, (we’re just) unable to guard the forests.” This sums up the wood producers’ assessment of 2013.

It has been a while since Executive Order No. 23 has been promulgated, and the wood producers are still reeling from its effects. Right now, the industry players are surviving on plantation logs, but their lament is that they cannot produce quality wood products from these. The plywood makers are severely hit, but what compounds the problem is the proliferation of smuggled plywood, mainly from China though there are some from Thailand and Indonesia as well. The PWPA says that, from their reckoning, some 1,000 containers are smuggled every month into the country. In fact, imports are already more than half of the entire local market for plywood. And if that isn’t bad enough, Mr. Keh reports that as a consequence of this tilt in the supply, plantation logs are cut down very young, processed into lumber, then exported to China. “We feel pressure on the cost side of the supply and also in the market because our prices are cut by imports,” added Mr. Keh. “We’re being phased out.”

Don’t get him wrong. The PWPA, in fact, advocates legal imports.  That’s competition, he says, but rampant and brazen smuggling is not fair competition, and this he says, they seem powerless to stop.

2013, like the previous year, has been a most challenging one for this industry because of EO 23 and all its implications for the wood producers. Yolanda, for all the havoc and devastation that it has wrought on some cities and towns in the south, may bring about some business for them, but where do they get the wood? Most of the wood requirements will have to be imported from our neighbors. By 2016, there will be a tremendous shortage of lumber needed for shelter, because like it or not, wood will always be a major part of construction.

For 2014, they will continue to advocate for the Forest Stewardship Council, hoping the certification system (where wood is certified as coming from a legal source) will set the legitimate wood producers apart from the importers. They will continue to develop markets for whatever is available to them like plantation logs, certify legal timber, advocate sustainable harvesting and lobby for a lifting of the total ban with this as its fall back. 2014 doesn’t look any brighter for them, even with the prospects of the rehabilitation of Leyte, Samar and Cebu because of supply limitations.

Climate change is a big reality, but we also hope that we can offer other alternatives in preserving our forests and the responsible harvesting of our wood.

Next week, the concluding part of this short series.

Mabuhay!!! Be proud to be a Filipino.

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