Poultry output seen to drop next year due to bird flu

The specter of a bird flu virus amid a feeble economy is expected to further weaken consumer demand and bring down poultry production in 2006.

"We are on a survival mode, we have already scaled down poultry production this year and yet consumers are not buying," said Gregorio San Diego, president of the United Broilers Association of the Philippines (UBRA).

San Diego said chicken production this year is projected to reach 470 million kilograms which is seven percent lower compared to the output in 2004. He noted that while poultry producers slowed down on their production, consumption also weakened.

"Normally, demand picks up after All Soul’s Day all the way until the Christmas holidays. It’s only a month before holidays but our sales are stagnant," said San Diego.

As a result of poor demand, farmgate prices have been dropping. The current average is P43 to P48 per kilo from an average of P68 per kilo last year. In contrast, the cost of production has steadily risen and is now at the level of P56 per kilo.

The grim outlook for the poultry sector will extend to the feedmilling industry which is already anticipating a steady decline in feed demand in the region because of fears of a bird flu pandemic.

Data from the United States Department of Agriculture show that the Philippines consumes around 5.30 million metric tons (MT) of corn and 2.75 million MT of wheat annually and a huge volume is used for feed production.

The USDA is projecting that the Philippine feed industry will need 300,000 MT of copra meal and 1.4 million MT of soymeal in 2005.

The low farmgate prices is discouraging small poultry producers from improving production as they are also reeling from higher cost of inputs such as feeds and electricity.

"We can definitely expect the smaller producers to significantly reduce output next year if farmgate prices don’t improve to a level that would allow producers to recover their losses," said San Diego.

The situation could get worse in 2006 because consumers are not confident about the economy.

While the government expects to earn additional revenues from the implementation of the expanded value added tax, consumers expect to pay more for products and services and this will considerably weaken their purchasing power as their disposal income also contracts.

Another threat to the industry is the specter of a highly pathogenic avian influenza, or HPAI that has ravaged billion-dollar poultry farms across the globe.

"There is always that cloud of uncertainty hanging over our heads because no matter how prepared we are for the bird flu epidemic, it will definitely have a huge impact on the industry. So many producers, especially the backyard growers are taking on a more conservative approach when it comes to production," noted San Diego.

The Philippines is one of a few remaining countries in Asia that has managed to protect its borders from the bird flu virus that has killed more than 60 people in the region. The virus has since then spread to various parts of the globe, heightening fears of a global pandemic.

The Department of Agriculture is carrying out measures to prevent migratory birds from infecting the country’s poultry sector. It has for instance, limited the movement of duck flocks and kept them from wetlands frequented by migratory birds, especially during the migratory months of October to March.

Migratory birds that cruise along the East Asia-Australia flyway are most visible in the Philippines during these months and ducks are particularly vulnerable to an infection coming from migratory birds since ducks prefer marshy areas. Chicken farms, on the other hand, are usually situated in dryland areas, he said.

Among other biosecurity measures, the DA has also imposed a ban on all poultry and poultry products, including pet birds, coming from avian-infected countries.