Pork, chicken price hike looms; P5 more for LPG

The prices of chicken and pork will most likely increase as the problem of corn supply intensifies, according to Vice President Noli de Castro.

Members of the LPG Marketers Association (LPGMA), meanwhile, are planning to increase their LPG prices by P5 per kilo next month.

In an interview on the sidelines of yesterday’s National Price Coordinating Council (NPCC) meeting held at the Board of Investments main office, De Castro said the price of corn has been increasing by P2 per kilo.

The movement in the price of corn, which is used as animal feed, has an impact on the prices of chicken and pork.

De Castro said the government is studying a proposal of the poultry, hog and feed-milling sector to remove the 35 percent duty on imported corn.

However, Agriculture Undersecretary Salvador Salacup said there is no reason for an immediate increase in the prices of pork and chicken because raisers still have feed supply purchased when corn prices were lower.

He told reporters that they will not agree to a zero tariff in corn, adding that removing the safety net will hurt over a million corn farmers who are subjected to high fertilizer prices.

Salacup said the country immediately needs 300,000 metric tons of corn. A delivery of 100,000 MT of corn from Brazil is expected to come in today while 120,000 tons of imported feed wheat will be available Friday.

Salacup said they are optimistic that this will ease the pressure on the corn supply. The country is still dependent on imported corn.

For this year, Salacup calculated that 89 percent of the total corn requirement will be imported from Brazil, the United States and Thailand.

The expected demand for corn this year is 7.2 million metric tons. Annual local production is only 690,000 MT.

Salacup cited three reasons for the limited supply of corn. First is global climate change, which resulted in unscheduled rains in corn-producing provinces. Second is the reduction of the use of fertilizer by 30 percent, and last is the peace and order situation in Mindanao.

Corn is currently priced at P18 to P19 per kilo, P2 to P3 more than the retail price during the same period last year.

Salacup also said that the price of pork is rising in spite of the threats posed by the Ebola virus. He said this is because of the carry-over demand from the Christmas season. Pork is priced at an average of P170 per kilo.

The price of chicken, on the other hand, remained unchanged since October at P120 per kilo.

The price of vegetables, on the other hand, is expected to go down because of the bulk production usually experienced during the first half of the year. Fruits are also abundant during the first and second quarters.

For fish, the price of bangus is P110 a kilo while tilapia is at P80 to P90.

Not convincing enough

Meanwhile, LPGMA president Arnel Ty said they are anticipating that LPG international contract prices will increase by $100 per barrel in February. 

This month, LPG prices abroad rose by $40 per metric ton to $380 per MT from $336.50 in December.

LPGMA did not increase their prices when major oil companies implemented a price hike of P2 per kilo.

Zenaida Monsada, Department of Energy (DOE) director for Oil Industry and Management Bureau, told the NPCC meeting that more LPG imports are coming soon.

She explained that the tightness in the supply of LPG is brought about by the increase in demand not only because of the holiday season but also since the price of LPG dropped sharply from P700 to P400 in recent months.

“Those who were not using LPG before started using when the prices dropped, and then when news of a price increase circulated they started to buy spare (supply),” Moncada explained.

Energy Secretary Angelo Reyes earlier announced that the supply of LPG would normalize yesterday instead of the February target the DOE reported during the NPCC meeting.

Monsada clarified that the secretary only meant that bulk suppliers could start serving some of those who are not part of their contractual arrangements.

Vice President De Castro, however, said he is not convinced by the DOE’s explanation.

He said the department stressed that there is no supply shortage, but only an increase in demand, especially during the Christmas season.

He added that consumers have no access to LPG now because suppliers cater first to wholesalers who have contracts with them.

De Castro said the explanation could have been made clearer because “at the end of the day, the public will ask officials what the government is doing to address the problem.”

The Department of Trade and Industry (DTI), for its part, vowed to help the DOE monitor suppliers hoarding their products to create an artificial LPG shortage and jack up prices.

Trade Secretary Peter Favila said he would reinforce their efforts and include LPG in their product monitoring.

“There is nothing to worry about with regard to supply itself because the government is on top of the situation.” – Donnabelle Gatdula, Pia Lee-Brago