the Department of Agriculture allowed the private sector to import about seven

million kilograms of pork.

While the industry remains optimistic on local supply, the DA noted the continuing
decline in the number of backyard farmers over the past few years, which has resulted
in the significantly higher suggested retail price of the commodity in the local market.

At the current farm gate price, pork's retail price should only be P195 per kilo, but it
goes up to as much as P210 per kilo when supply is tight.

According to a report from the United States Department of Agriculture (USDA),

Philippine pork production this year could reach 1.635 million metric tons (MMT),
3.15 percent higher than the projected output of 1.585 MMT last year.

In its report titled “Livestock and Poultry: World Markets and Trade,” the USDA
Foreign Agricultural Service (FAS) attributed the increase in output to the
improvement in the purchasing power of Filipinos.

“Robust consumer demand for pork will also boost output in Russia, the Philippines
and Mexico,” the USDA-FAS said in its report published recently.

Local pork demand this year is forecasted to grow by 4.63 percent to 1.919 MMT,
from the estimated 1.834 MMT this year, according to the USDA.

The USDA-FAS said imports would fill the gap in local pork supply this year. In 2018
pork imports may expand by 14 percent to 285,000 metric tons (MT), from the
projected 250,000 MT last year, according to USDA data.

SUBSTITUTE

Rising population of vegan consumers and increasing awareness about health

benefits obtained from meat substitutes have prompted the growth of the product
in the global market. Rising campaigns on animal welfare have influenced the
positive sale of meat alternatives among the vegan consumers. Health benefits
gained out of meat substitute's consumption are the main
drivers to the development of this segment. Growth of the functional foods
manufactured out of plant-based products has also provided an impetus for the
increased demand of this sector.

Boost in fitness and wellness sector has enhanced the market growth trajectory of
the sector to an elevated level. Shift in food consumption trend and rising veganism
among consumers have led to consumers demanding meat substitutes to balance
their nutritional requirements. However, food adulteration is one of the major
reasons confining the growth of meat substitutes market.

Financial data

The local meat-processing industry will continue to post double-digit growth as the hike
in the income of Filipinos will allow them to buy more food items, according to the
Philippine Association of Meat Processors Inc. (Pampi).

Pampi Vice President Jerome D. Ong said the industry is growing steadily by at least 10
percent and may even expand by more than 12 percent as the Philippines’s per-capita
GDP nears the $3,500 mark.

“Right now the meat industry is growing by 10 percent to 11 percent already. You see
that growth rate being sustained or may even exceed 12 percent because Philippine per-
capita GDP is now at $3,100 in real terms,” Ong told reporters in an interview on the
sidelines of Pampi’s 28th anniversary celebration held recently in Pasay City.

“There is this so-called inflection point, or tipping point, recognized by most global
economies. The figure is $3,500 per-capita GDP. At that point, many countries started to
grow even more rapidly,” he added.

Based on initial estimates, Ong said sales of the local meat-processing industry have
already reached P300 billion.
“There is a need to validate this figure because P300 billion in sales will mean that the
daily consumption of processed meat by Filipinos amounts to only P8.20 per day, an
unbelievably low amount,” he added.

Ong noted that despite the growth in the country’s per-capita GDP, the Filipinos’ per-
capita meat consumption remains relatively low compared to its Southeast Asian
neighbors.

“I think per-capita consumption in the Philippines is around 30 kilograms, while that of

our Asean neighbors are at 50 kg to 60 kg. Per-capita consumption in the West is around
90 kg to 110 kg,” he said.

“So that is an upside. The increase in the country’s population and the growing income
of Filipinos will translate to higher demand for protein,” Ong added.

The Pampi official said the industry must be given access to sources of good-quality meat
so companies can maintain the affordability of processed-meat products.

“Our prices for the past five to eight years have remained quite flat and it is because of
favorable exchange rate and availability of raw materials. So, I think, we are doing a
decent job [in making our products affordable],” said Ong, who is also president of CDO
Foodsphere Inc.

This, despite the fact that the spread of avian influenza (AI) outbreaks in European
countries has affected their operations in recent months, according to Ong. Meat
processors source most of their raw materials, such as mechanically deboned meat
(MDM), from Europe.

“[MDM] concerns continue to prevail, and further aggravated by AI outbreaks in areas

where we source our MDM,” he said.

Industry players said the price of MDM doubled to as much as $800 per metric ton (MT)
in the first quarter. This is due to the closure of Philippine borders to poultry products
from most European countries where there are AI outbreaks.
While the Philippines has reopened its market to MDM from the Netherlands, Ong said
the price of MDM has not gone down significantly. “The price of MDM is still high. It
has gone back to around $650 per MT.”

“Hopefully, by early next year, it goes down some more but we do not see it going back
to old level [of $400],” Ong added.

Philippine meat consumption this year could reach 29.641 kg per capita, higher than the
29.181 kg per capita recorded last year, data from the Organisation for Economic Co-
operation and Development showed.