Competitive Industry Report on the Philippines Market for Imported Meat and Poultry A Guide for Canadian Exporters *Abbreviated Prepared for: The Embassy of Canada in The Philippines & Office of Southeast Asia Regional Agri‐Food Trade Commissioner Agriculture and Agri‐Food Canada Prepared by: Stanton, Emms & Sia 80 Raffles Place, Level 36‐01 UOB Plaza 1, Singapore 048624 Tel: +65 6334 7030 Fax: +65 6223 2010 Email:
[email protected] Website: http://stantonemmsandsia.foodandbeverage.biz March 2010 This report contains market information collected by Stanton, Emms & Sia. The Government of Canada assumes no liability for the accuracy and reliability of the market information and intelligence provided herein. *For the complete report, Canadians are invited to contact Ms. Yvette Buendia at the Embassy of Canada in the Philippines :
[email protected] The Philippines Market for Imported Meat and Poultry 1. Introduction This guide for Canadian exporters is prepared by Stanton, Emms & Sia for the Embassy of Canada in the Philippines and the ASEAN Agri‐Food Trade Commissioner, Agriculture and Agri‐ Food Canada. It covers the Philippine markets for: fresh / chilled beef; frozen beef; fresh chilled pork; frozen pork; frozen pigs offal; and, frozen chicken parts. It was researched in February and March 2010. The report was prepared to provide Canada’s ASEAN based Agrifood Team of Trade Commissioners and Canadian producers and exporters with an up‐to‐date understanding of the target market and opportunities in the Philippines for selected Canadian meat and poultry products. The main focus of the study is on the size and development trends of the markets for the selected products mentioned above, the basis of demand, the competitors and the basis of competition, and future prospects and opportunities for Canadian exporters. It should be noted that at the time of the research (March 2010), there was no Philippine data available on meat and poultry imports for the whole of 2009. 2. Market size, nature of supply and development trends 2.1 Overview of domestic supplies There are currently two datasets available on livestock production in the Philippines. One shows the industry producing around 3.6 million tonnes of meat and poultry and being relatively stagnant. The other, that production is around 2.7 million tonnes and has been growing at around 2.7% per annum over the past 5 years (see Chart below). 1 Stanton, Emms & Sia (March 2010) The Philippines Market for Imported Meat and Poultry Production of Meat and Poultry in the Philippines – 2003 to 2008 Source: Government of the Philippines The bulk of meat and poultry production involves pork and chicken (see Chart below). Meat and Poultry Production in the Philippines by Product Type in 2008 Source: Government of the Philippines Locally produced meat and poultry is an important part of the Philippines economy, both at the level of rural SME producers and big businesses, which have a very strong competitive position in the market. There are industry reports of a slump in meat and poultry production in 2008, although this is not reflected in the datasets that are available. 2 Stanton, Emms & Sia (March 2010) Singapore.g. The rationale behind this conversion also includes the ASEAN Free Trade Area (AFTA) and halal meat export markets in Malaysia. In 2008. it imported about 294. and Swift Foods has already launched its products in some countries in this region.000 tonnes of meat and poultry products valued at C$ 354 million. Trade sources comment that 2009 was a more positive year for local producers because the price of inputs.2 Overview of imported supplies of meat and poultry The Philippines has a large market for imported meat and poultry products. is growing in size and also experiencing higher incomes. local meat and poultry products comprise around 94% of total consumption. Trends in the Philippines Imports of Meat and Poultry – 2004 to 2008 (All Products) Source: Philippines External Trade Statistics for Imports 3 Stanton. Swift Foods (RFM Foods Corporation). which accounts for 5% of total population.The Philippines Market for Imported Meat and Poultry Trade sources comment that there is now growth in demand for halal meats in the Philippines because the Muslim population. 2. According to the government. The Middle East is also regarded as a very important target market. e. animal feed. Brunei Darussalam and Indonesia’s key cities.000 tonnes valued at C$ 229 million in 2004 (see Chart below). One of the country’s largest meat processors. up from 213. was lower due to the collapse of global commodity prices. Emms & Sia (March 2010) . has recently converted all of its sausage manufacturing to halal certified status. driven by buoyant economic conditions. The state of local competition is reflected in the profile of imports. lower cost beef and offal (see Chart below) Philippine Imports of Meat and Poultry Products in 2008 – 293. stronger end‐consumer demand for meat and poultry. shortfalls in local supplies of some products due to disease outbreaks. especially those of the larger businesses and localised SME suppliers. and improved market access arising from trade liberalisation by the government. import volumes grew at an average of about 7.734 Tonnes Source: Philippines External Trade Statistics for Imports The Philippines is importing meat and poultry products from around 30 different countries and territories (see Chart below).5% per annum. because imports are generally higher in segments where local producers are challenged to meet local demand. Emms & Sia (March 2010) .The Philippines Market for Imported Meat and Poultry Over the period between 2004 and 2008. 4 Stanton. e. These trends have taken place against a background where local meat and poultry products. are competitive within local market scenarios.g. 863 28.3.798 Fresh/chilled pork 10 ‐ 15 59 ‐ Frozen pork 10.679 148.668 205.151 142. up from about C$ 197 million in 2004 (see Table below).277 23. Brazil and China.168 Frozen chicken parts 15. 2.456 25.686 186. e.3 Review of markets for the specific products covered by the study 2.621 20.052 8.241 4.734 Tonnes Source: Philippines External Trade Statistics for Imports Origins vary from Developing World countries. with Canada as the main player amongst them in 2008. to various Developed World countries.172 15.348 219.064 23.506 8.398 18. India.365 33.784 Pig’s offal 15.g.166 29.744 Total 196.1 Overview of imports The Philippines imports of the specific products covered by this study were valued at a total of C$ 312 million in 2008.966 180. Overview of Trends in the Value of Imports of the Products Covered by this Study Product 2004 2005 2006 2007 2008 C$ ‘000 C$ ‘000 C$ ‘000 C$ ‘000 C$ ‘000 Fresh/chilled beef 226 434 402 99 59 Frozen beef 155.900 311.553 Source: Philippine external trade statistics (Official classifications) 5 Stanton.The Philippines Market for Imported Meat and Poultry Main Origins of the Philippines Imports of Meat and Poultry in 2008 – 293. Emms & Sia (March 2010) .616 134. regulatory barriers and constraints.6%) (87. especially for products with Tariff Rate Quotas in place.The Philippines Market for Imported Meat and Poultry Four of the markets covered by this study are large.000 tonnes in 2008. strong competition from major businesses that control the market for fresh/chilled meats. Imports of such products amounted to just 29 tonnes valued at C$ 59. The markets for fresh/chilled meats are very difficult to develop because of: general price sensitivity in the meat and poultry markets and.000 in 2008.5%) Source: Philippines external trade statistics Imports of fresh/chilled beef have a minuscule share of the Philippines beef market. Trade sources comment that this demand scenario is highly unlikely to change in the foreseeable future. and. so higher‐priced imported fresh/chilled beef only has limited opportunities. related weaknesses in the Peso. The key reasons being: the structure of the Tariff Rate Quota for beef and its operational aspects. down substantially from 206 tonnes valued at about C$ 226. 6 Stanton. price sensitivity. Emms & Sia (March 2010) . which involved consumption of around 292.000 in 2004 (see Table below).6%) 2008 Tonnes 29 (6. 2. except the fresh/chilled markets. for imports. More information on the TRQ is provided in a following chapter of this briefing. have been growing over the past 5 years. one very large and all. Total % change Philippine Imports of Fresh/Chilled Beef – 2004 to 2008 2004 2005 2006 2007 Tonnes Tonnes Tonnes Tonnes 206 307 250 31 ‐ 49. and. the local currency.2 Fresh/chilled beef The Philippines has a very small market for imported fresh/chilled beef.0% (18. which make it more viable for an importer to bring in frozen beef.3. 69 Shank Local (No brand) 200 4. alongside local beef in the higher end retailers in Metro Manila. boneless Local (No brand) 405 9.75 Sirloin Local (No brand) 290 6.19 Minced beef ** Australia * 189 or 205 4.79 or 4.07 Shin. Source: Supermarkets and hypermarkets in Metro Manila As can be seen from the above. 7 Stanton. **: The higher price is for lean minced beef. Indicative Retail Prices of Chilled Beef in February 2010 Product Country of Origin and Peso Per Kilogram C$ Per Kilogram Brand Tenderloin Local (Farm Fresh) 775 17.92 Lean beef cubes Local (No brand) 218 4.08 Ribeye Local (Farm Fresh) 435 9. boneless Australia * 675 15.75 Brisket Australia * 254 5.59 Striploin.62 Yakiniku beef USA 229 5.47 Brisket Local (No brand) 212 4.88 Lean beef cubes Australia * 265 5. The reality of the imported beef market today is that the Philippines is principally a market for frozen beef.48 Shank Australia * 264 5.23 or 4. The Table below provides a sample of some indicative prices of some of the beef cuts available in February 2010. imported beef generally retails at a premium to the price of local beef. Singapore (Australian corporate brands) or Malaysia (the “Aussie Beef” brand).37 Porterhouse Local (Farm Fresh) 500 11. Trade sources comment that this situation is possible because there is a perception amongst Filipinos that foreign beef is of better quality than local beef.12 Striploin. e. which still make imports of fresh/chilled meat quite risky. bone‐in Australia * 340 7.g.94 Minced beef ** Local (No brand) 169 or 187 3. It is not known whether this is imported fresh/chilled beef or defrosted frozen beef.13 *: These products are not being marketed using an Australian brand as would be the case in other ASEAN markets. including in Metro Manila. It should be noted that imported beef is being retailed as chilled beef.20 T‐Bone Local (Farm Fresh) 450 10.The Philippines Market for Imported Meat and Poultry Challenges also exist because the Philippines cool chain distribution system has weaknesses. unless the local product is subjected to strong local branding. Emms & Sia (March 2010) .50 Sirloin Australia * 378 8. Boneless Bone‐in Carcass or half carcass Total % change Philippine Imports of Frozen Beef – 2004 to 2008 2004 2005 2006 2007 Tonnes Tonnes Tonnes Tonnes 113. down slightly in an erratic manner from 113. Emms & Sia (March 2010) .2 million in 2004 (see Table below).3.075 106.975 94.066 3. in a market environment where there is also high level demand for the product.0) 348 107.281 2. The Philippines imports of frozen beef amounted to 112.8 million in 2008.3 Frozen beef Frozen beef has the highest demand amongst imports of meat and poultry.066 tonnes valued at C$ 219.468 317 112.The Philippines Market for Imported Meat and Poultry 2. 8 Stanton.730 tonnes valued at about C$ 155.9) ( 2.123 95. although the bulk of imports come from 6 countries.745 94. The Philippines is importing frozen beef from up to 18 countries. This situation exists because there are major constraints over the production of beef in the Philippines.329 19 113. India is the market leader (see Tables below for market shares and import trends).844 ( 14.7 2008 Tonnes 109.874 13.730 ‐ ‐ 144 96.9 Source: Philippines external trade statistics Boneless beef accounts for close to 100% of imports in most years.197 588 770 625 1. which has very high volume demand for frozen beef. Emms & Sia (March 2010) .The Philippines Market for Imported Meat and Poultry Imports of Frozen Beef by Key Supply Country in 2008 ‐ 112. 9 Stanton.066 Tonnes Source: Philippines External Trade Statistics (All cuts) Trends in Imports of Frozen Boneless Beef from Key Supply Countries – 2004 to 2008 In Tonnes Source: Philippines External Trade Statistics India has long led the market because it is the lowest cost supplier of beef that is acceptable to users in the Philippine meat processing industry. 5 1.071 1. 10 Stanton.137 1.874 112.0 1.0 1. The mainstream retail channels in the Philippines urban areas are not major channels for frozen beef. Emms & Sia (March 2010) .365 59.0 94.182 59.3 1.418 100.3 1. The higher price of Brazilian beef and freight costs also tended to support demand for Indian beef in 2008.0 2.127 0. corned beef.4 1.0 1.2 1. India Australia Brazil Canada New Zealand USA All imports Tonnes Philippine Imports of Frozen Boneless Beef: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008 2006 2007 2008 C$ Per % Market C$ Per % Market C$ Per % Market Tonne Share Tonne Share Tonne Share 1. mainly because of booming demand from the Islamic World.617 12.The Philippines Market for Imported Meat and Poultry Trade sources comment that Indian beef (Carabeef) supply fell into shortfalls in 2008.013 2.7 1.4 1. e.066 Source: Derived from the Philippines External Trade Statistics The market has been growing despite the fact that landed costs of frozen beef from most countries.1 1.370 100. The demand for Indian beef remained strong because of supply chain inertia and strong relationships. The main focus of the meat retailers in these channels is on marketing higher margin chilled beef.974 2.368 65. India.595 0. This prevented a major switch away from Indian beef to other products.7 1.9 1. This tipped the equilibrium in its market and led to higher prices for Indian beef (see Table below).0 1.486 28.8 2.647 7.382 6.844 107. including the market leader.952 3.327 33.g.6 2. sausages and burger patties.8 1.970 100. This growth is underpinned by continued high demand from the meat processors for manufacturing beef for use in lower cost processed meat products.731 0.118 1.790 12. which may include defrosted imported frozen beef. increased in 2008.0 1.6 1. 4 Fresh/chilled pork The Philippines market for imported fresh/chilled pork is minuscule and is inherently unstable in its development trends. Trade sources comment that imported fresh/chilled pork is not attractive because of its high price (pork is a basic staple meat).3. The other issue that severely undermines the market for imported fresh/chilled pork is the strength of the local pork producers in their local market and supply chain. The Table below provides some indicative prices for local fresh pork. and. Total Philippine Imports of Fresh/Chilled Pork – 2004 to 2008 2004 2005 2006 2007 Tonnes Tonnes Tonnes Tonnes 21 ‐ 11 77 2008 Tonnes ‐ Source: Philippines external trade statistics This market is highly undeveloped because of the way in which pork imports are: managed by the government under the Philippines WTO commitments. More information on the TRQs and MAVs are provided in a following chapter of this briefing. which include a Tariff Rate Quota (TRQ) and Minimum Access Volumes (MAV). the Philippine pig industry produces in excess of 1. 11 Stanton. and complications in distributing it under the conditions that prevail in the Philippine channels. unless there are shortfalls in supply which need to be filled to meet demand.6 million tonnes of pork per annum. Fresh local pork is very widely available in the Philippines and there is a broad based perception in government and the industry that imported pork is not needed.The Philippines Market for Imported Meat and Poultry 2. strategised for by importers of meat imports under the TRQs and MAVs. As highlighted earlier. Such demand is only filled by frozen pork and offal. Emms & Sia (March 2010) . as retailed in mainstream supermarkets in February 2010. The country’s official import data indicates that no fresh/chilled pork was imported in 2008 (see Table below). 92 Front leg (Hock) 147 3.9 2008 Tonnes 22. Source: Philippines external trade statistics Trade sources comment that the surge in frozen pork imports since the low point of 2006 resulted from a disease outbreak.5 million in 2004 (see Table below).912 5.419 4.46 to 5. imports will be in decline because pig inventories were already increasing in 2009.The Philippines Market for Imported Meat and Poultry Retail Price of Fresh/Chilled Pork in February 2010 Product Peso Per Kilogram C$ Per Kilogram Belly 175 3.8 million in 2008.76 to 4.093 74 11. Government officials comment that disease has created a situation where local pork supply remained constrained in 2009 and will likely be tight into 2011.29 Ribs 199 to 225 4.7 N: negligible. e.162 ( 37. 12 Stanton.03 Minced pork 160 to 175 3.3.106 1.817 tonnes valued at C$ 28.348 3.092 ‐ 189 N 6.5 Frozen pork Philippine imports of frozen pork amounted to 29.48 Chop 168 to 180 3.23 to 4. Emms & Sia (March 2010) . up in an erratic manner from 11.092 tonnes valued at about C$ 10. Disease is a key driver in the frozen pork market. PRRS.9%) ( 39.588 249 29.817 211. Boneless Bone‐in Carcass or half carcass Total % change Philippine Imports of Frozen Pork – 2004 to 2008 2004 2005 2006 2007 Tonnes Tonnes Tonnes Tonnes 6.6) 55 9.886 4. While this is the case.92 Steak 189 to 200 4.349 365 1.980 6.567 129.59 to 3.g.04 Source: Leading supermarkets in Metro Manila 2.797 8. although the bulk of imports come 4 countries (see Tables below for market shares and import trends). The Philippines is importing frozen pork from up to 18 countries.817 Tonnes Source: Philippines External Trade Statistics (All cuts. Imports of Frozen Pork by Key Supply Country in 2008 ‐ 29. shoulders and other bone‐in cuts or and carcasses or half carcasses. The bulk of demand is for boneless cuts. Emms & Sia (March 2010) . the Philippines demand for frozen pork is mainly oriented around cuts other than hams. excludes pig’s offal) Trends in Imports of Frozen Boneless Pork from Key Supply Countries – 2004 to 2008 In Tonnes Source: Philippines External Trade Statistics (excludes pig’s offal) 13 Stanton.The Philippines Market for Imported Meat and Poultry As can be seen from the data in the Table above. and mainly variety meats. 096 4.655 21. Emms & Sia (March 2010) .8 533 1.0 640 3.2 767 8.0 3.980 Source: Derived from the Philippines External Trade Statistics (Excludes pig’s offal) Trade sources comment that North America was able to deal with the boom in demand for products in 2008 because of its large supply base.797 8.8 984 100. 14 Stanton.3 732 24.8 956 20. It also benefited from its close trading links with the Philippines.017 30.071 1.0 1.6 692 0.0 541 3.094 11.1 787 2. The USA dominated the trade because of its availability of supply and also response to meeting demand. USA Canada France Germany Belgium Spain Denmark Netherlands All imports Philippine Imports of Frozen Boneless Pork: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008 2006 2007 2008 C$ Per % Market C$ Per % Market C$ Per % Market Tonne Share Tonne Share Tonne Share 1.7 910 10.0 1. Canada. The market for imported frozen bone‐in pork saw a similar surge in the 2007‐2008 period.8 1.7 705 22. namely the USA.1 426 8.8 560 18. the 2007‐2008 period saw a surge in imports of frozen boneless pork from 4 supply countries. France and Germany.7 1.The Philippines Market for Imported Meat and Poultry As can be seen in the Chart above.419 22.3 1.0 966 100.3 888 2.0 649 2.346 4. although only involving products from the USA and Canada (see Chart below).1 917 11.7 962 16.2 1.013 21.9 981 44.0 932 100. in particular the availability of variety meats. 5 ‐ ‐ $1.1 866 13.7 887 79. Source: Derived from the Philippines External Trade Statistics (Excludes pig’s offal) The reality of the market situation in the Philippines is that frozen pork.4 451 1. 15 Stanton.0 N: Negligible. e.6 946 27.g.061 0. They are the reason why North America was able to maximise on its opportunities. operate in a market where local pork dominates and imports only come in to deal with shortages.4 $416 10.The Philippines Market for Imported Meat and Poultry Trends in Imports of Frozen Bone‐in Pork from Key Supply Countries – 2004 to 2008 (In Tonnes) Source: Philippines External Trade Statistics (excludes pig’s offal) The points made above about frozen boneless pork are also relevant to bone‐in pork. pork rib imports.0 $528 13.096 1.169 22.6 ‐ ‐ ‐ ‐ $860 100.1 ‐ ‐ ‐ ‐ 1.1 ‐ ‐ ‐ N 1.0 966 100.8 ‐ ‐ 740 2.4 906 1. USA Canada France South Korea China Germany Denmark All imports Philippine Imports of Frozen Bone‐in Pork: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008 2006 2007 2008 C$ Per % Market C$ Per % Market C$ Per % Market Tonne Share Tonne Share Tonne Share $920 42.0 871 100. in particular variety meats.8 968 68. Emms & Sia (March 2010) . 808 ‐ 4. up from 24.1 2007 Tonnes 38.388 tonnes valued at C$ 33.410 56.904 5. the food service industry and the meat processing industry.124 44.2 million in 2004 (see Table below). Emms & Sia (March 2010) .1 Source: Philippines external trade statistics Pig’s offal. Pig’s offal.3 2008 Tonnes 49. Imports have grown because of larger shortages caused by disease outbreaks and a consequent reduction in the pig inventory.The Philippines Market for Imported Meat and Poultry There was no frozen imported pork carried in Philippine supermarkets or hypermarkets at the time of market observations in February 2010.709 tonnes valued at about C$ 15.713 36. 16 Stanton. whether local or imported. frozen Philippine imports of frozen pig’s offal amounted to 56. This situation exists because buyers in the Philippines search the world for the lowest cost products. 2.709 25.5 27.3.364 4. Frozen pig’s offal is imported from a large number of supply countries each year. is in big demand from households.6 Pig’s offal.589 6.657 27.817 32.388 26.978 6.805 20. not liver Pig’s liver Total % change Philippine Imports of Pig’s Offal – 2004 to 2008 2004 2005 2006 Tonnes Tonnes Tonnes 19.160 5.2 million in 2008. The market for imported frozen offal exists because competition for local pig’s offal from the above‐mentioned demand bases causes shortages in supply to exist on a permanent basis.444 24. Emms & Sia (March 2010) .The Philippines Market for Imported Meat and Poultry Imports of Frozen Pig’s Offal by Key Supply Country in 2008 ‐ 56. Not Liver from Key Supply Countries – 2004 to 2008 (In Tonnes) Source: Philippines External Trade Statistics 17 Stanton.388 Tonnes Source: Philippines External Trade Statistics (All types of offal) Trends in Imports of Frozen Pig’s Offal and Variety Meats. 5 527 3.7 530 9.6 531 2.6 487 8.0 535 1.7 547 8.6 518 2.8 509 16.0 572 19.6 530 22.5 485 9.0 585 10.4 574 12.9 610 5. Not Liver Review of Landed Cost Per Tonne and Market Share – 2006 to 2008 2006 2007 2008 C$ Per % Market C$ Per % Market C$ Per % Market Tonne Share Tonne Share Tonne Share 537 25.0 532 1.8 571 5.0 513 100.1 518 8.0 671 2.4 517 6.8 506 11.8 529 13.0 620 23.1 675 4. Canada USA France Germany Belgium South Korea Spain Denmark Netherlands Australia Ireland All imports Philippine Imports of Frozen Pig’s Offal and Variety Meats.9 667 2.3 584 1.1 587 10.8 460 2.0 582 100. Emms & Sia (March 2010) .6 528 3.8 547 9.3 518 5.6 473 12. Imports have grown because pig’s offal is a necessity to keep the Philippines meat processing industry operating at high capacity.The Philippines Market for Imported Meat and Poultry Trends in Imports of Frozen Pig’s Liver from Key Supply Countries – 2004 to 2008 (In Tonnes) Source: Philippines External Trade Statistics Demand has been resilient to increased prices.9 531 12.0 Source: Derived from the Philippines External Trade Statistics 18 Stanton.5 543 100. 206 tonnes valued at about C$ 15.58) per kilogram.903 34.2 641 19.0 604 9.4 573 17.7 2008 Tonnes 44.296 ‐ 22. Total % change Philippine Imports of Frozen Chicken Parts and Offal – 2004 to 2008 2004 2005 2006 2007 Tonnes Tonnes Tonnes Tonnes 21.1 32.617 13.7 590 18.206 25.262 39.3 768 27.0 580 100.0 Source: Derived from the Philippines External Trade Statistics There is no imported pig’s offal carried in any Philippine supermarket today.The Philippines Market for Imported Meat and Poultry Canada USA South Korea Australia Spain All imports Philippine Imports of Frozen Pig’s Liver: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008 2006 2007 2008 C$ Per % Market C$ Per % Market C$ Per % Market Tonne Share Tonne Share Tonne Share 571 47.4 547 52.7 551 10.3 692 17.6 million in 2004 (see Table below).7 Frozen chicken parts and offal The Philippines imports of frozen chicken parts and offal amounted to 44.617 tonnes valued at C$ 29. 2. Local fresh/chilled pig’s liver is retailed at around Peso 115 (C$ 2. up in a consistent manner from 21.3. Emms & Sia (March 2010) .5 ‐ ‐ ‐ ‐ 509 2.5 603 46.7 million in 2008.7 548 5.5 Source: Philippines external trade statistics 19 Stanton.0 639 100.2 580 21.2 14.5 590 100. although only 4 countries are the dominant suppliers (see Charts below). Imports of Frozen Chicken Parts and Offal by Key Supply Country in 2008 ‐ 44.617 Tonnes Source: Philippines External Trade Statistics Trends in Imports of Chicken Parts and Offal from Key Supply Countries – 2004 to 2008 (In Tonnes) Source: Philippines External Trade Statistics 20 Stanton. Emms & Sia (March 2010) .The Philippines Market for Imported Meat and Poultry Imports of frozen chicken parts and offal come from a sizeable number of countries. 1 ‐ ‐ 701 1. or value‐for‐money meat items (chicken legs and thighs).1 443 0.2 623 27.1 747 44. Emms & Sia (March 2010) . All chicken sold in supermarkets and hypermarkets are local fresh/chilled products or local fresh products that have been frozen by the retailer. which are mainly lower income group consumers.8 ‐ ‐ ‐ ‐ 817 1. 21 Stanton.S.The Philippines Market for Imported Meat and Poultry The market for frozen chicken parts and offal is underpinned by a high level of price sensitivity.9 710 30.3 553 0.0 647 32. low cost fillers to processed meats (manufacturing chicken meat and chicken offal) targeted at the Philippine mass market.0 667 100.5 447 13.S.6 573 0. or.7 753 54.4 518 0. The products being imported are deemed: low cost staples (chicken wings). origin).0 546 13. The only imported poultry available in supermarkets in Metro Manila are frozen turkey (U.3 685 100. A sample of the prices of local fresh chicken parts and offal are provided in the Table below.0 597 100.1 700 19.0 553 7.6 510 9. origin) and frozen duck (U.0 Source: Derived from the Philippines External Trade Statistics There are no imported frozen chicken parts being retailed in the Philippines retail channels.9 506 13. Canada USA Brazil Australia France Ireland Denmark All imports Philippine Imports Frozen Chicken Parts and Offal: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008 2006 2007 2008 C$ Per % Market C$ Per % Market C$ Per % Market Tonne Share Tonne Share Tonne Share 662 26. e.27 Chicken breast. and. The Philippines meat and poultry distribution channels 3.69 to 3. SM Mart.80 to 3. the modern trade. fresh/chilled 146 3. Landmark. with the key identifiable product being beef. February 2010.27 Chicken thigh. This control includes access to shoppers. Some key points to note are as follows: o there is control over the meat trade in most of the Philippines modern retail channels. Such products are niche products in supermarkets. chicken parts or offal in the retail market at the time of the study. 22 Stanton. i. Rustans.09 Chicken livers 128 2. which include: the traditional channel. It should be noted that: market observations conducted in February 2010 found no evidence of any type of imported pork or chicken in the modern trade channels. This is underpinned by the activities of the local meat industry association.87 Source: Sample of supermarkets in Metro Manila 3. i.The Philippines Market for Imported Meat and Poultry Retail Prices of Fresh/Chilled Chicken in February 2010 Product Peso Per Kilogram C$ Per Kilogram Chicken drumstick. fresh/chilled 138 3. There was no evidence of any imported fresh/chilled pork. in contrast to beef. fresh/chilled 125 to 146 2. Imported meat and poultry does not pass through the traditional channel. Robinsons.e. Emms & Sia (March 2010) .g. hypermarkets and some cash and carry stores. and some smaller operators. e. which includes supermarkets. the meat channels in the modern trade are generally oligopolistic in nature. fresh/chilled 120 to 140 2.1 The retail channels The Philippines has highly fragmented channels for meat and poultry.14 Chicken wings. localised meat markets. 3.2 The food service industry The food service industry has very strong demand at mass urban market level. This situation makes it very difficult for foreign brands to break into the retail market. Emms & Sia (March 2010) . o this situation keeps the current retailers out of the meat trade. The situation in the Philippines is therefore very different to that existing in most of the other ASEAN markets. The key channels at this level in the market are the fast food and casual dining restaurants.S beef under their own brand‐name. The key fast food chains operate on a nationwide basis and include: Jollibee Foods Corp. In contrast to the situation in the fresh meat channels. or to run effective country specific marketing activities in retail channels. with 166 outlets. o the association is also a very strong lobby with the government over meat market. which is the McDonald’s group’s largest chain in ASEAN with about 300 outlets (Annual sales: C$ 187 million). In fact. with over 600 outlets (Annual sales: C$ 505 million in 2008). industry.The Philippines Market for Imported Meat and Poultry o the retail channels are shared amongst the main meat and poultry companies because of a co‐operation agreement between them as association members. o the association members do not really compete against each other. the retail displays of frozen processed meats are generally more generic involving a number of different Philippine brands. and. which are controlled by the key meat and poultry companies. and. The bulk of fresh meat and poultry (including fresh processed meat) sales are made through Philippine corporate brand specific deli‐style points of sale. most of which operate in chains. rather than using a foreign brand name to market the products. McDonalds. o some of the companies that run meat points of sale in the supermarkets do sell Australian and U. 23 Stanton. supply chain policy and imports. they try to avoid competing on a head‐to‐head basis with each other. KFC. Kenny Rodgers Roasters (35 outlets) and Delifrance Bistro (26 outlets). Some key points to note are as follows: according to Department of Tourism. including 4 and 5 star hotels. Tony Roma’s and Racks.S. there is currently no evidence of fresh/chilled pork or frozen pork in the food service market. Trade sources advise that U. Trade sources comment that they are a key demand base for imported beef and chicken parts. European and Japanese food outlets. foreign branded restaurant chains and single site high end restaurants. All of these have some form of demand for imported meat and chicken. which is highly price sensitive. especially beef. Australia and New Zealand. food service buyers are generally price sensitive because of the state of the consumer market. e. Some other key points to note are as follows: fresh/chilled beef has its market in high end restaurants. in the past. that have demand for steaks. when pricing changes and impacts negatively on the profitability of their menu.g. especially steaks. the Philippines has 21 Deluxe Class (5 star) hotels and 15 First Class (4 Star) hotels. including hotels. The other restaurants that use imported meat and poultry are based in hotels. including those sourced from the USA.g. operate as chains of outlets. or are single site specialty restaurants. pork has been promoted in some of the higher end restaurants. There are a sizeable number of American‐style outlets. This is the market that is being targeted by the USA. Emms & Sia (March 2010) . e. European. Canada. and the casual dining chains that operate in the Philippines include Pancake House (68 outlets).g. e.The Philippines Market for Imported Meat and Poultry Some smaller fast food chains. These outlets use a range of meat and poultry items on their menus. These hotels are used by the USA and Australia for promotional activities that do cover meats. North and South American and Mexican outlets. including Wendy’s (around 40 outlets) and Burger King brand (22 outlets). Trade sources comment that buyers in the food service industry will shift from one source to another if they can. ribs and chicken. 24 Stanton. which is relatively concentrated around medium to large companies with a national or regional (island specific) orientation.3 The meat and meat processing industry 3. pig and poultry industry has two broad sectors within it: the commercial sector. which cannot be satisfied in sufficient quantities by local producers. and revolves around small and micro‐sized family owned businesses. meat loaf. 3. and so have very strong bargaining power in the local market and distribution channels. Many of the businesses in this segment are integrated operators and have significant industrial power bases in the Philippines. Emms & Sia (March 2010) .g. fast food companies have big demand for chicken drumsticks of consistent quality. sausages (Vienna‐type). luncheon meat and liver spread (a paté type product). The backyard sector rarely interacts with imported meat and poultry because its products mainly operate in the traditional meat markets. pig and poultry industry The Philippines cattle. the backyard sector.1 The cattle. and. e. 25 Stanton.3. and not supermarkets or hypermarkets. and. local ready meals in cans. the giant San Miguel Corporation.The Philippines Market for Imported Meat and Poultry food service companies do not wish to tie themselves to country of origin because this makes their buyers very inflexible when attempting to buy the lowest priced acceptable meat or poultry for use in their menu items.2 The meat and poultry processing industry Key players in the meat and poultry production industry are integrated along the supply chain from farms to retailing.3. Trade sources comment that the most important demand base for imported meat and poultry is the Philippines processed meat industry. which is highly fragmented and localised. Some key points to note are as follows: the industry produces: o canned meats and poultry: corned beef. 3. if not all.g. offal and fat. It is a captive market for foreign bovine inputs because its demand far outstrips local supply. Some trade sources believe that halal will become even more important as the Philippines meat companies start to interact more with the ASEAN Free Trade Area opportunities. pork and chicken. Traditionally. byproducts (fats) and offals that are not in high volume demand in Canada. if the price is right. e. pig tails. the Philippines meat processing industry has demand for meat from pig heads and feet. offcuts. This shift in inputs has been facilitated by USMEF and its marketing programs. There is also sizeable demand for pork variety meats and offal. there is very high demand for Indian buffalo meat. Exports of Philippine canned processed meats are already accessing Malaysian supermarket channels. the sausage industry is using mixed meats in its products. frozen cattle hearts. and o fresh/chilled processed meats: sausages. Bovine variety meats and offal are in big demand due to large shortfalls in local supply. Emms & Sia (March 2010) . livers and gizzard) and MDM chicken is in demand as low priced inputs by the meat processing industry. fat. chicken offal (hearts. Liver spread is a big user of beef and pork liver and other variety meats. the mass market on a nationwide basis. This industry is highly price sensitive because of its target market. and as mentioned earlier. e. but due to higher prices of this product. one sausage manufacturer has recently altered strategy so that it will only produce Halal sausages. corned beef is a massive user of imported beef.g. pork skin is used by snack producers. aside from pig skin.The Philippines Market for Imported Meat and Poultry o frozen processed meat and poultry: sausages.g. Latent demand for these products is reported to be very big. ham and corned beef. pork crackling (fried rind) snacks. e. bacon. canned corned beef made in the Philippines is halal certified. corned beef manufacturers are using more variety meats in their corned beef. burger patties and bacon. mentioned above. This demand covers a wide range of meats. chicken nuggets. and chicken offal. and will continue to do so in future. 26 Stanton. and the full range of edible offals. This is not a new strategy because most. boneless Frozen bovine carcasses and half‐carcasses Frozen bovine cuts. with bone in Fresh or chilled meat of swine (excl. then 32% from 2020. phasing down to 0% in 2020. carcasses and half‐carcasses) Frozen. 30 or 35 Yes 40 For in‐quota 30% until 2019. The Table below provides an overview of the Philippines MFN tariffs and the import duties that will apply under the recently ratified ASEAN‐Australia‐New Zealand Free Trade Agreement (AANZFTA). 40% until 2019. For out‐of quota. Emms & Sia (March 2010) . then 24% from 2020. This was established by its GATT Uruguay Round commitments. HS Code Description 020110 Carcasses or half‐ carcasses of bovine animals. with bone in (excl. The Philippines regulatory environment for imported meat and poultry in overview The Philippines has a complex and protectionist regulatory environment for meat and poultry. carcasses and 1/2 carcasses) Fresh or chilled bovine meat. which established today’s WTO compliant Tariff Rate Quotas and related tariff structures. fresh or chilled Fresh or chilled bovine cuts. Minimum Access Volumes and Special Safeguards on a range of sensitive products. with bone in (excl. boneless meat of bovine animals Fresh or chilled carcasses and half‐carcasses of swine Fresh or chilled hams.The Philippines Market for Imported Meat and Poultry 4. shoulders and cuts thereof of swine. phasing down to 0% in 2020. carcasses and half‐carcasses. with bone in) 020120 020130 020210 020220 020230 020311 020312 020319 Tariff Rate Applied % 10 Active Quota ‐ Tariff Rate Out of Quota % ‐ ASEAN‐Australia‐ New Zealand FTA % 0% (2012) 10 ‐ ‐ 0% (2012) 10 ‐ ‐ 0% (2012) 10 ‐ ‐ 0% (2012) 10 ‐ ‐ 0% (2012) 10 ‐ ‐ 0% (2012) 30 or 35 Yes 40 30 or 35 Yes 40 20% in 2012. including meat and poultry. shoulders and cuts thereof. 20% in 2012. and hams. 27 Stanton. boneless 30 or 35 Yes 40 020329 Frozen meat of swine (excl. i. Emms & Sia (March 2010) . It should be noted that: the ASEAN Free Trade Area is now in full force. 5% until 2014. For out‐of quota. phasing down to 0% in 2015. then 24% from 2020. then 4% into perpetuity. 0% import duty and no non‐tariff restrictions. For Wings. the market will be fully open. then 24% from 2020. Source: Philippine Government commitments to the WTO and AANZFTA. carcasses and half‐ carcasses. frozen (excl. For out‐of quota. then 32% from 2020.The Philippines Market for Imported Meat and Poultry HS Code Description Tariff Rate Applied 30 or 35 Active Quota Yes Tariff Rate Out of Quota 40 020321 Frozen carcasses and half‐carcasses of swine 020322 Frozen hams. livers) Frozen cuts and edible offal of fowls of the species Gallus domesticus 10 ‐ ‐ 40 or 5 Yes 40 020714 ASEAN‐Australia‐ New Zealand FTA For in‐quota 30% until 2019. then 32% from 2020. to ASEAN‐content meat. In 2011. and hams. 40% until 2019. For out‐of quota. shoulders and cuts thereof of swine.e. shoulders and cuts thereof. then 32% from 2020. 40% until 2019. poultry and processed meats from all of the ASEAN member states. For in‐quota 30% until 2019. boneless) 30 or 35 Yes 40 020641 Frozen edible livers of swine 5 or 7 ‐ ‐ 020649 Edible offal of swine. 40% until 2019. For in‐quota 30% until 2019. then 32% from 2020. 28 Stanton. 0% from 2012 For Chicken Livers: 10% in 2010. then 24% from 2020. Thighs and Other Offal: 40% until 2019. 570 0202 Meat of bovine animals. Pork and Poultry in the Philippines HS Group Metric Tonnes 0201 Meat of bovine animals. chilled or frozen Note: MAVs also exist for goat meat (not within the scope of this study). fresh. which enjoy the reduced tariff rates. 01. Minimum Access Volumes (MAV) for Beef. are allocated to Philippine companies on an annual basis.The Philippines Market for Imported Meat and Poultry There are two different viewpoints about the ASEAN Free Trade Area (AFTA) within the meat and poultry industry: o one negative. o the other positive. The SSGs would almost certainly be implemented if imports were deemed to have a negative impact of the Philippine meat and livestock industry. chilled or frozen 54. fresh. The MAV allocations. 29 Stanton. The companies that do have AFTA in their strategies are San Miguel Corporation and RFM Corporation/Swift Foods.490 heading No. Philippines (February 2010) It should be noted that the Special Safeguards (SSGs) are well entrenched in Philippine government policy. The Table below provides an overview of the current Minimum Access Volumes that still apply to the products that are deemed sensitive by the Philippine government.210 0207 Meat and edible offal of the poultry of 23. While this is the case. frozen 158.05.502 0203 Meat of swine. and. Source: Department of Agriculture. fresh or chilled 5. which is supported by a high degree of anger at successive governments for opening up the meat and poultry markets to “any form of competition”. with meat producers foreseeing new opportunities for their products in the other ASEAN member states. Trade sources comment that the above referenced TRQ and MAVs make the meat and poultry markets that are affected by them irrational in terms of the normal interaction between supply and demand forces. most Philippine meat and poultry producers have not yet started to consider the implications of AFTA on their industry or their company. Emms & Sia (March 2010) . g. and. which also apply under the AANZFTA. known as the National Meat Inspection Service (NMIS). This agency liaises with overseas agencies on permissions for their country’s abattoirs / exporters to trade in meat. when compared to the MFN of 10% that will apply to Canadian beef. meat and poultry. is required to ensure that imported meat and meat products are produced under acceptable conditions and systems.g.The Philippines Market for Imported Meat and Poultry According to some trade sources. provide a range of benefits to Australia and New Zealand. started in February 2010. 30 Stanton. The other regulatory provisions for meat and poultry imported from countries. This license is part of the Philippines food health and safety procedures for such products. e. such as Canada. the allocations are still not wholly transparent and there are occasions where it is difficult to know exactly how much of the MAV has been used. poultry and offal with the Philippines. The AANZFTA does. e. only Philippine registered companies that are accredited by the Department of Agriculture as meat importers are permitted to import meat and poultry into the Philippines. beef from these two countries will enjoy 0% market access. These companies have to operate within the confines of the relevant TRQ and MAVs. poultry and offal to the Philippines. are reported to be quite straight forward: the Department of Agriculture’s Bureau of Animal Industry (BAI) is responsible for regulating the flow of domestic and imported animals and animal products in the country. The accredited importer is required to obtain a Veterinary Quarantine Clearance (VQC) certificate prior to the importation of meat and meat products into the Philippines. This clearance is reported to act as the import license. versus the situation for Canada. It should be noted that the Philippines government has just started a process of a detailed review of its tariff regime in consultation with its local industries. by 2012. which come into effective operation in the case of animal disease outbreaks in foreign countries. another Department of Agriculture agency. there are different tariffs arising from the TRQ. As can be seen from the above Table of tariffs. Emms & Sia (March 2010) . and is expected to continue for the next 12 to 18 months. at the time of the BSE outbreak in North America. depending on the level of debate with players in the more sensitive industries. This exercise. however. For example. an import license is required for all imports of meat. Canada is doing well as a supplier of the meat and poultry products covered by this study. e. As highlighted earlier in this report. i. 70% 30% Australia Canada (7%) New Zealand Beef. fresh 29 The market for fresh/chilled beef is serviced by local suppliers. 5. to a lesser extent. Emms & Sia (March 2010) . Brazil and China. and. This situation provides opportunities for: premium and better quality. Review of the Competitive Position of Canada’s Direct Competitors in 2008 Product Imports Developing Developed Top 3 Developed World Supply Countries World World * and Their Market Shares ** Tonnes % Share % Share Leader *** No 2 No 3 Beef.2 Overview of the involvement of Canada and its main competitors As can be seen from the information in the Table below. frozen 112. which chilled include some very powerful and large locally owned meat companies. India.e. around 10 million persons. higher priced meats and poultry from the Developed World. and lower cost alternative meats and poultry from the Developing World. Canada supplied 20% of all imported meat and poultry products in 2008. Key suppliers and their market shares 5.g. Price is very important because the Philippines only has a small middle and upper income segment within its 86 million persons. India is the largest supplier of the products covered by this study because of the larger volumes of beef that it is exporting to the Philippines. it has been mentioned that Philippine buyers tend to search the world for the lowest cost and best product for their requirements.1 The scenario in the meat and poultry market and its impact on country of origin Throughout this report.066 (13%) (7%) 31 Stanton. Today.The Philippines Market for Imported Meat and Poultry 5. demand for meat and poultry is highly segmented and incorporates a range of different products from different countries of origin. and. Emms & Sia (March 2010) . frozen Nil The market for fresh/chilled pork is serviced by local suppliers.The Philippines Market for Imported Meat and Poultry Pork. although there are some concerns about them. 29. have a disruptive influence in the market. which is now required for corned beef manufacture because all canned corned beef products made in the Philippines are halal certified. 56.617 parts and offal. fresh/chilled Pork. functionality as a value‐for‐money meat manufacturing input. Trade sources comment that their products are viewed as “OK”.4% 99. which are longstanding. for frozen beef. and relationships between exporters and importers. which include some very powerful and large locally owned meat companies. Brazil for frozen chicken parts and offal. frozen 0.5% 99.817 0. The key selling point is price and “acceptable quality”.6% USA (50%) Pig’s offal.5% 20% 80% Canada (26%) Canada (33%) Canada (22%) USA (21%) France (13%) USA (30%) Australia (13%) France (9%) *: OECD countries. ***: Amongst the Developed World countries. These two countries. **: Share of total imports. which are not generally spoken about. and China (still a minor player today). Indian beef is supported by its lower price. and. Source: Philippines External Trade Statistics It should be noted that the main alternative (Developing Country) suppliers are based in: India. 32 Stanton.388 frozen Chicken 44. The other factor that is important is the halal status of its meat. 33 Stanton.g. Emms & Sia (March 2010) . albeit under conditions of continuing high price sensitivity.The Philippines Market for Imported Meat and Poultry 6. This has been a period when the Philippines experienced the fastest rates of economic growth in its recent history. and economic growth based on current forecasts. there are some shorter term concerns about: the real impact of the global economic crisis on the Philippines into the longer term. typhoons. which will be very important for lower priced cuts and products. which suggest that the Philippines will grow at rates of between 3% and 5% per annum over the next 3 years. subject to the outcome of the Presidential election and situation regarding periodic major natural disasters. jobs. Conclusion for Canada and its exporters 6. although the main concern is that change could undermine the positive changes that have been seen in the broader economy over the past 5 years. export earnings and inward investments. the outcome of the 2010 Philippine presidential election on future government policies and development of the economy. The main growth drivers are cited as: natural population growth. and. etc. At present. food service and retailers generally believe that the next 3 to 5 years will be positive for their businesses. Trade sources comment that this has not been revealed yet.1 Growth forecasts and scenarios for imported meat and poultry Producers of meat and poultry are generally positive about the demand for their products over the next 3 to 5 years. e. especially the impact of China’s economic position and power on the Philippines industry. earthquakes. The meat and poultry processors. There are some mixed opinions on this issue. e. Canadian products. While this is the case. especially for inputs to the processed meats that are consumed by the mass market. This will still impact negatively on the ability of Canadian exporters to initiate supply push marketing activities in the Philippines. there are weaknesses in the ASEAN pig and cattle industries that undermine a major reorientation towards exports on an ASEAN regional basis. This. and chicken parts and offal. While the ASEAN Free Trade Area and its next stage development. i. namely the ASEAN Economic Community. The TRQ and MAV is likely to continue in place for non‐ASEAN content meat. e. as a demand base for imported manufacturing meats. The existing industry appears to have sufficient power to defend itself against large imports of meat and poultry from the other ASEAN countries. it is. over the next 3 to 5 years. Having stated this. combined with the above drivers. depending on the state of economic growth over this period. Additionally. While the government is promoting the production of more meat and poultry. and investments are going into new inventories. Emms & Sia (March 2010) . if the retail industry is liberalised and new foreign investment enters it. possible that some AFTA threats might develop for the Philippines chicken industry from the strong.g. although at the present time this industry is still focused elsewhere. unless the new President decides to change top line policy. well organised and industrialised poultry industry in Thailand. demand will outstrip supply. the C and D socio economic groups (as referenced earlier in this report). it is unknown whether these FTAs will have major short or medium term impacts on the Philippines meat and poultry industry. demand will still exist from importers who require products for: 34 Stanton. will provide solid support for higher volumes of imports.e. and the new FTAs.The Philippines Market for Imported Meat and Poultry Meat importers believe that there will continue to be shortfalls in local supply of beef (major shortfall). could start to alter competitive scenarios in some segments of the Philippines food industry. pork variety meats and pig’s offal. Demand for meat and poultry in the broader Philippines market is forecast by trade sources to grow at between 3% and 7% per annum over the next 3 to 5 years. however. Change may come faster. Foreign retailers would almost certainly seek new sourcing opportunities arising from the FTAs. i. gc. items for the food service industry. Emms & Sia (March 2010) .The Philippines Market for Imported Meat and Poultry inputs to their processing plants. Canadian producers with other products related to opportunities in the markets profiled in this report. and who would like more market information or contacts. and.ca. may contact the Agri‐Food Trade Commissioner at the Embassy of Canada in the Philippines at: infocentre‐ manila@international. 35 Stanton.