Genesus Global Market Report South-East Asia June 2022
Paul Anderson, General Manager South East Asia – International Sales Manager Genesus Inc.
The Swine Market
The Philippines has elected its new set of leaders to run the country. The newly elected president is Ferdinand “Bongbong” Romualdez Marcos, the son of another former president. Usually, as an aftermath of each and every election, the buying power of the people is lessened and goes back to its real picture.
Prices of pork have started to go down after the national elections. It coincided with the cyclical trend that usually happens during the 3rd quarter of each year. As of end-May, the average live weight price was 194 PhP per kg, lower by 4 PhP during the previous month but is still higher than the average recorded price in May 2021 which was 181 PhP per kg.
The cost of production continues to squeeze farmer profitability. Feed, feed raw material, and fuel continues to contribute to the increase in production cost, not to mention the mandate of the government to increase the salaries of workers. Other production inputs like electricity costs and imported animal health products are also on the rise. The Philippine Peso is devaluating at a fast rate vs the US Dollar. Pressure coming from the influx of imported frozen pork added to the fast and sharp decline of locally produced pork. In 2021, prices started to soften up on June 7, 2021 (ProPork price monitoring), but for 2022 they started to go down on May 01.
In an article published by the Philippine Star last June 24 titled “Meat imports up 5% in 5 months”, it stated that there was a registered increase of 4.8% in meat product imports in the first 5 months of 2022, mainly driven by pork (BAI data). Data from the BAI showed that the Philippines imported 460.9 mio kgs of meat and other meat products from January to May, higher than the 439.9 mio kgs imported same time as the previous year.
The outgoing has signed Executive Order 171 which extends the lower tariffs on pork under EO 134, which was signed in 2021. The new EO 171 aims to further bring down prices and stabilize the pork supply in the country. Under this new EO, the 15% in-quota and 25% out-quota tariff rates for pork will be extended to December 31, 2022.
|March 2022||April 2022||May 2022||May 2021|
|Reg Slaughter Hogs (LW) PHP/kg||188||198||194||181|
|Culled sows PhP/kg||113||120||124||95|
The ASF Situation and Repopulation Efforts
Filipino pork, poultry, and feed producers gathered in a face-to-face International Farmers Summit in the early part of June. Despite all of the challenges faced by the local industry, the majority of pork producers are optimistic about the future. Given the current supply situation, technified commercial farms are still in their expansion and repopulation modes. Smaller farms on the other hand wanted to continue producing but are worried because of the ASF situation. Both segments are hopeful that the ongoing ASF vaccine trials and the ASF vaccine from Vietnam gets Philippine approval secondly, the smaller farms would like to have easier access to the government’s grant under the project INSPIRE (Integrated National Swine Production Initiatives for Recovery and Expansion).
The Philippine Economy
According to the Philippine Statistics Authority, inflation, as measured using the consumer price index, accelerated 5.4% in May. This was higher than the reported figure in April which stood at 4.9%.
Higher expected inflation is primarily due to elevated prices of global non-oil commodities such as food and agricultural products and metals, a continued shortage of domestic pork supply, higher fish and poultry prices, and probable transport price increases due to higher oil prices are the upside risks. Meanwhile, slower global economic recovery, as well as possible re-imposition of quarantine measures due to domestic COVID cases resurgence, may weaken demand and slow down inflation, this might be the downside risk according to a a Banko Sentral report.
Recovery of the pig industry in Thailand questioned
Thailand’s Ministry of Agriculture said the number of sows in Thailand had been recovered to nearly one million heads, ensuring the country would have sufficient pork for consumption.
The ministry estimated that 20-30% of sows were destroyed from ASF outbreaks over the past year. The recovery of the sow population boosted commercial pigs to about nine million heads based on a monthly survey conducted by the ministry from January to June 2022.
“With this commercial pig population, it is sufficient to meet the domestic consumption of about 1.5 million heads/month,” the ministry said in a statement.
Some pig producers, however, are curious whether the ministry’s statement is accurate. They said if the recovery of the sow and commercial pig were true, it would only be major producers that could expand their herds.
Medium and small-scale producers who were hit by ASF would hardly be resuming their operations in the time that construction materials, energy, and feed raw material costs keep on rising since the war between Ukraine and Russia took place in late March.
Due to these impacts, buying power of consumers in Thailand is much lower than last year. Nevertheless, the price of live pigs at present is increased by 37.5% year-on-year to THB 110/kg (USD 3.2). And this price has been stable for eight consecutive weeks.
This signals that sows and commercial pigs in Thailand remain in short supply.
- The price of the pig now is 56,000 – 61,000 vnd/kg in the North; 51,000 – 57,000 vnd/kg in the center; and 55,000 – 59,000 vnd/kg in the South. Average will be around 56,000vnd/kg. More detail, please see the link: https://vietnambiz.vn/gia-heo-hoi-hom-nay-276-tang-1000-dongkg-rai-rac-mot-vai-noi-2022626202158751.htm.
- The price of breeders and animal feed has continuously increased while the selling price of products has increased slowly and below the cost level, causing many fish and pig farming households in Tien Giang to stop raising (source: http://nhachannuoi.vn/chi-phi-tang-cao-nguoi-chan-nuoi-o-tien-giang-dieu-dung/).
- After more than a year of research, even sleeping in the barn to monitor the pig herd’s activities, a group of alumni of Hanoi University of Science and Technology has successfully built a climate control system in the barn (source: http://nhachannuoi.vn/cuu-sinh-vien-bach-khoa-ngu-trong-chuong-heo-de-nghien-cuu/).
- [Vietnam Livestock Magazine] – Informa Markets and the Department of Livestock Production (MARD) have strengthened their partnership and cooperation, by signing a Memorandum of Understanding for a common goal, to promote the livestock industry. raise Vietnam to develop sustainably. Accordingly, the Department of Livestock Production will be the host and market consultant for VIETSTOCK 2022 and pre-exhibition activities (source: http://nhachannuoi.vn/informa-markets-cuc-chan-nuoi-ki-bien-ban-ghi-nho-ve-quan-he-doi-tac-chien-luoc-dai-han/).
- The price of animal feed increased sharply: Solving difficulties by finding alternative materials (source: http://cucchannuoi.gov.vn/gia-thuc-an-chan-nuoi-tang-manh-go-kho-bang-tim-nguyen-lieu-thay-the/).
- Vietnam successfully produces vaccine against African swine fever (source: https://www.vietnamplus.vn/viet-nam-san-xuat-thanh-cong-vaccine-phong-benh-ta-lon-chau-phi/793490.vnp).