Remittances, poll spending push food sales

CEBU, Philippines - As food exporters continue to brace themselves from the various challenges thrown at them by the international markets, the recent election spending and OFW remittances on the other hand, have kept the food businesses within the country afloat.

Felix Tiukinhoy Jr., president of Virginia Foods Inc. (VFI), said the coming in of remittances from overseas Filipino workers in time for the school enrollment, aside from the election expenditures that pumped up the local economy, has also helped cushion the effects of the international crisis to the local market.

He said VFI fared better in terms of sales performance in the first quarter of this year compared to the same period last year.

“There was so much money that circulated this year due to the election and the OFW remittances are also coming in for the school enrollment. These have kept the local economy alive,” Tiukinhoy told The Freeman in an interview.

He said VFI continues to expand its manufacturing plant by buying new equipment.

According to the Family Income and Expenditure Survey of the National Statistics Office, food accounts for 59.1percent of total expenditures in the Filipino household in 2006. Personal consumption expenditure on food and beverages in the first quarter of 2009 reached about P601.2 million from P520 million in the same period in 2008.

Meanwhile, Like VFI, the sales performance of another food manufacturing company, Central Seafoods Inc., has improved in the first quarter of the year compared to the same period last year, said company president Nelson Bascones.

His food exporting subsidiary, however, did not fare well in the same period with sales declining by 20-percent. The biggest problem, Bascones said, is the supply chain of raw materials and the steady rising of the cost of raw materials.

“Our production cost and the freight cost are too much compared to Indonesia, Vietnam and China. We can not compete with their prices,” Bascones said.

Aside from the softening of the international market, exporters have been bombarded by many other challenges such as the weakening of the value of the dollar and health and safety requirements,

Bascones earlier said most countries such as those in the European Union require food exporting company to have an EU-accreditation for health and safety.

Former AFME president Nancy Tan said countries in EU and the United States are requiring food exporting company to be Hazard Analysis and Critical Control Points (HACCP)-certified.

HACCP is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product.

Aside from the cost to be incurred from hiring a certification body to audit a company’s HACCP-compliance, other investments include technologies and machines to comply with HACCP programs.

This is why food manufacturers and exporters are asking the new administration under newly-elected President Benigno “Noynoy” Aquino III to assist the industry through training that would align food companies on food safety management system and build their capability for competitiveness, Bascones said.