Feed millers see weak growth due to rising production costs

The local feed milling sector is facing the prospects of weak growth this year as production costs have risen by as much as 30 percent, a top industry executive said.

Norman C. Ramos, president of the Philippine Association of Feed Millers Inc. (PAFMI), said growth in their business would be highly dependent on the performance of the livestock and poultry sector, their bread-and-butter customer.

“We will have to fight it out, but the feed milling industry will grow if the hog and poultry industry grows,” he pointed out.

He said they are banking on the optimistic forecast by the  Department of Agriculture that the livestock and poultry industry would post a much higher growth this year compared to the 2.38 percent growth registered in 2007.

In a dialog with Agriculture Secretary Arthur C. Yap last week, local feed millers, hog and poultry producers, and other industry stakeholders aired their concerns over the rising cost of production, particularly the 20 percent rise in raw material inputs.

Ramos noted that the price of soya bean meal, one of the primary sources of protein for livestock feeds, is at a 37-year high. The commodity, which previously costs P13 per kilo, now pegs at P23 to P24 per kilo.

Copra meal, also a source of protein and fiber, now costs P11 per kilo as compared to just P5 to P6 kilo as of end-2006.

Likewise, the price of local corn, another primary input for livestock feeds, has increased from P10.50 per kilo to P13.30 to P13.50 per kilo. Corn comprises 35 percent of the total cost of feeds.

The prices of other raw materials such as rice bran (a lower source of fiber and a lower percentage protein but high in starch), coconut oil (source of fat), pollard (a better source of fiber than rice bran but inferior to copra meal) and even wheat (as a substitute to corn), have all similarly gone up, Ramos said.

In addition, he said the price of vitamins sourced from China has increased eleven-fold.

The higher cost of raw material inputs, he said, would result in a “hard squeeze for the industry,” adding that some small feed millers are already struggling to survive.

Thus, Ramos said the feed milling sector has requested the Agriculture Department for assistance in the form of ensuring that its projected 10-percent increase in corn production this year materializes.

He added that growth of the feed milling industry would also be made possible if there is breeding efficiency on the side of hog and poultry producers and disease control and eradication are ensured.