THE country’s pork deficit of about 400,000 metric tons (MT) and lower tariff rates will result in record shipments of pork from foreign meat suppliers to the Philippines this year.
The United States Meat Exporters Federation (USMEF) and Dutch Meat Industry Association (COV) told the BusinessMirror they expect record-high pork exports to the Philippines this year.
COV International Affairs Director Frans van Dongen told the BusinessMirror that the Philippines is one of their key markets in Asia. The Netherlands has seen a steady increase in pork exports to the Philippines in recent years.
Van Dongen noted that in contrast to the drop in total pork exports of the European Union to the Philippines last year, the pig meat shipments of the Netherlands rose to 27,000 MT from 24,000 MT, accounting for 20 percent of total EU volume.
“This year, we are further growing. We are already at the level for the first months of last year. This is a new record year for pig meat for the Netherlands,” Van Dongen said in a recent interview. “This year, [shipments] will rise above 30,000 metric tons.”
Van Dongen said the Philippines’s pork supply shortfall is driving the increase in Dutch pork exports.
He also said the decline in pork prices in China due to its high inventory level has tempered the Asian nation’s demand for Dutch pork. This encouraged Dutch exporters to look for alternative markets like the Philippines.
“China is really a big factor and it is one big and very important market for us. If a lot of exports go to China then less will go to the rest, if less goes to China then more will go to the rest,” he said.
Van Dongen also said the Netherlands’ share to the total EU pork exports to the Philippines will continue to expand this year as Germany is still not allowed to export pork to the Southeast Asian nation due to concerns over African swine fever (ASF).
Bureau of Animal Industry (BAI) data showed that the country’s total pork imports from the Netherlands in January to May more than tripled to 22,406.793 MT from last year’s 7,211.166 MT. Pork imports from the Netherlands reached 25,008.175 MT in 2020.
US pork exports
The USMEF noted that US pork exports to the Philippines, excluding variety meats such as offal, surged by over 640 percent year-on-year to nearly 30,800 MT as of June 10.
Latest US weekly export data also showed that US pork exports, excluding variety meat, has reached 31,225 MT as of June 17, 611 percent higher than the 4,389 MT recorded a year ago.
US Department of Agriculture (USDA) data showed that the latest US pork exports to the Philippines is just 2,745 MT shy of surpassing its 2020 shipments of 33,999.3 MT, which was the highest in seven years.
“That’s an unprecedented volume. It’s the highest ever through the reported period,” USMEF Senior Vice President Joel Haggard told the BusinessMirror. “I think we are [on track for a record-high volume].”
The US posted its highest pork export volume to the Philippines in 2010, when it reached 43,951.3 MT, based on USDA data.
Haggard also said that aside from the need of the Philippines for pork, two other factors will affect US shipments to the Philippines.
For one, Haggard said demand from China—the world’s top pork consumer—would continue to have a big impact on the volume of shipments to Asia.
He said prices in China have crashed in recent weeks and the EU is benefiting from this. This, he said, is creating a spillover effect on US pork exports to other countries, such as the Philippines.
However, Haggard noted that rising domestic pork prices in the US have reached record levels and this could limit American exporters’ shipments to the Philippines.
“We are concerned with the competitiveness of our prices. Because of our strong domestic market, our restaurants have been reopened in the past three months, there has been exceptional demand, driving up our prices,” he said, adding that the US is not competitive against Europe in certain pork cuts like bellies.
Nonetheless, Haggard said the US is “willing to supply” the Philippines with its pork requirements since there is still “plenty of room” to expand in the Southeast Asian market.
The Philippines lowered its pork tariffs to as low as 10 percent and increased its pork minimum access volume (MAV) by 200,000 MT in its bid to boost domestic pork supply, arrest rising pork prices and temper inflation.
MAV plus
More than a third of the additional 200,000 MT of pork MAV must be sold in the next four months, based on the approved MAV plus rules to boost domestic supply.
The MAV Management Committee (MAV-MMC) divided the pork MAV+ distribution into two batches: 70 percent or 140,000 MT must be sold from July to October, while the remaining volume of 30,000 MT must be distributed within November 2021 to January 2022.
The MAV-MMC’s allocation was higher than the 55 percent-45 percent allocation recommended by a Department of Agriculture (DA) inter-agency technical working group (TWG). (Related story: https://businessmirror.com.ph/2021/06/02/d-a-panel-import-55-of-mav-plus-within-july-september/)
The final pork MAV+ distribution allocation is also higher than the one-year spread proposed by the MAV Advisory Council (MAV-AC) to distribute the volume equally every month. (Related story: https://businessmirror.com.ph/2021/05/20/higher-pork-mav-panel-pitches-1-year-period/)
The MAV-MMC thumbed down the proposal of the DA inter-agency TWG to allocate a certain volume of the pork MAV+ to specific sectors.
Instead, the pork MAV+ will be allocated on a “first-come first-served basis” with a maximum limit of 50 full container load or about 1,250 MT per application per importer, based on the approved guidelines.
The higher distribution and scrapping of the allocation per sector is intended to ensure “faster” arrival of the much needed pork supply, government officials told the BusinessMirror.
“No more allocation per sector. It is open on a first come, first serve basis so that we ensure faster arrival of the needed pork supply,” Agriculture Undersecretary William C. Medrano said via SMS on Sunday.
The MAV-AC earlier pushed for the allocation of MAV+ for the pork producers’ sector as a way of helping them recoup the losses they incurred due to ASF.
Socioeconomic Planning Secretary Karl Kendrick T. Chua hailed the approved distribution allocation scheme, saying the country needs more supply “now than later.”
Under the approved rules, other importers or new entrants will be “given equal opportunity subject to the agreed manner of distribution.”
“Certain flexibility based on historical data and importation experiences of [Bureau of Animal Industry] and [National Meat Inspection Service] shall be applied to facilitate the full utilization of the additional volume within the MAV year,” read MAV-MMC Resolution 1, a copy of which was obtained by the BusinessMirror.
The pork MAV+ rules were unanimously approved by the MAV-MMC, noting that the guidelines meant to “ensure compliance and attain the real intent and purpose” of President Duterte’s EO 133 which seeks to immediately address domestic pork supply shortfall and “provide consumers with adequate and affordable food and to lower inflation.”
Agriculture Secretary William D. Dar confirmed to the BusinessMirror that pork imported through the MAV+ mechanism cannot be used for processing purposes to produce bacon, hams, and other processed meat products.
However, Dar said meat processors may still participate in the MAV+ mechanism provided that they sell the imported pork directly to buyers.