Weak demand weighs down on chicken, egg sectors

The chicken and egg sectors are reeling from a feeble economy, resulting in weak demand as consumer confidence continues to spiral downwards.

"We continue to suffer poor sales because demand is weak. Consumers’ purchasing power has been substantially eroded and the first thing that they do is to curtail their budget for food, because they have no choice but to prioritize payment of other items like electricity and fuel," said Gregorio San Diego Jr., president of the United Broiler Raisers Association during the launching of the Egg and Chicken Expo 2006 to be held Sept. 15-17 at SM Megamall trade hall.

San Diego said the broiler industry which started to take a dive in 2004 with the downturn in the economy and the bird flu scare, has yet to recover, with the surviving entities operating at very minimal margins, while others are piling up their losses.

He said small broiler or backyard producers under UBRA in 2000 made up 20 percent of the entire poultry industry. This, he said, has since increased to 40 percent as some of the major poultry integrators like Vitarich Corp. collapsed. The existing ones like Swift Foods Inc. were forced to downscale operations, while Tyson Agro-Ventures and San Miguel Corp. have not been expanding in the last two years.

"Some of the contract growers of these integrators either closed shop while the ones that stayed on are now small independent growers," noted San Diego.

"We are still on a survival mode trying to survive amidst the weak economy and the continuous influx of cheap imported chicken," added San Diego.

Chicken imports are coming mostly from the US and are being retailed at an average of P65 per kilo compared to locally-produced chicken fetching P95 to P120 per kilo in wet markets and supermarkets.

In contrast, farmgate prices of live chicken have gone down to P60 to P62 per kilo from P68 to P69 per kilo a month ago.

San Diego said the broiler industry will experience more contraction for the rest of the year unless the economy improves and consumer confidence rises.

Aside from the entry of cheaper imported chicken leg quarters from the US, Canada, and Brazil, local producers also have to contend with smuggling of chicken.

On the other hand, the local egg producers are reeling from soft demand.

Arthur Baron, secretary of the National Federation of Egg Producers, said the country has one of the lowest per capita consumptions of egg, resulting in flat growth of the sector.

Baron said the Philippines’ per capita consumptions of egg is only 80 annually, compared to Japan’s 250 and Singapore’s 115.

"Consumers still have the mindset that eating eggs is hazardous to health because of the perceived high cholesterol content of eggs, but it is also a source of protein and eating at least one a day is considered healthy," said Baron.

Farmgate prices of eggs have firmed up and are now averaging P3.20 per piece compared to P3 a year-ago as demand increased slightly due to scarcity of pullets or egg-laying chickens.

Baron said poultry integrators are now very cautious in sourcing egg-laying chickens as the BAI has restricted imports to countries that are bird-flu free.

"Still even with this development, Filipinos’ consumption of eggs is not at a pace that would merit expansion of egg producers," said Baron.