Farmers Propose Solution to Low Prices

PHILIPPINES - Pig farmers are expressing concern over the continuing fall in farm-gate prices at a time of rising costs and a drop in consumer demand. They have put forward the idea of a standard 'Suggested Retail Price'.
calendar icon 6 October 2008
clock icon 5 minute read

"The current situation is unprecedented, and has significantly affected the whole hog industry," said Albert Lim Jr., president of the National Federation of Hog Farmers Inc. (NFHFI) told SunStar.

Mr Lim pointed to the low consumer demand and the increase in pork importation by meat traders as the primary causes of the industry's problems - on top of its sufferings due to higher production costs.

He explained that while farm gate prices have gone down significantly, this is not reflected in the pricing at the markets, which also affects the consumers' buying habits.

Farm gate prices currently averages at a high of 82 pesos (PHP) per kilo and a low of PHP78 per kilo. Prior to the Holy Week, the average price was between PHP115-117 per kilo.

However, Mr Lim pointed out that pork is still selling in the wet markets at an average of between PHP170-180 per kilo, turning off many consumers who are already suffering from the hike in the prices of basic commodities.

While it is traditional for farm gate prices to go down after the Holy Week, it has not stopped going down.

"It did go down, slowly in the beginning, but we did not expect it to continue until now," Mr Lim said.

In a meeting with Agriculture Secretary Arthur Yap, the members of the NFHFI's council of presidents suggested that the Department of Agriculture (DA) come out with an information campaign to inform consumers of the 'right' price for pork products.

Mr Lim said their suggestion is similar to the 'suggested retail price' (SRP) practice of manufacturing companies. The DA can post SRP of pork products outside the wet markets so consumers are aware of the prices of pork and can themselves call the attention of the retailers.

"We have no control over the traders and the retailers but as consumers, we can tell retailers that they should be selling their products at the right price," he said. "This way, everyone comes out a winner - consumers get lower prices and will buy more pork and producers can sell more hogs."

Domino Effect

Mr Lim said if the current trend of low farm gate prices is not addressed, it will have a domino effect in the pork production all over the country.

"For a time, we thought that the situation affects only Luzon, but it has already started to affect hog producers from Visayas and Mindanao."

Since farm gate prices in Luzon have dipped significantly low, traders and meat processors have started to stop exporting pork products from Mindanao, specifically from General Santos City.

Although hogs and pork products from Mindanao saved the day for the tight pork supply in Luzon when it was hit by hog diseases, GenSan is now expected to take a hit since it adds freight fees to the cost of its pork supply.

"Before, we knew that pork prices fluctuate but this is the first time that we've been hit by very, very low prices," Mr Lim explained.

He added, "This situation is a double whammy for hog producers, especially those who were hit by the swine diseases last year. Now that they have recovered from the effects of the disease, they cannot sell their hogs because of the low farm gate prices and demand."

Production Cost Rises

Many hog producers are contemplating on shutting down their businesses due to the high cost of production vis-à-vis the low farm gate prices.

The NFHFI president said many hog raisers are complaining and very worried over the 'very low price'. They said they barely make ends meet due to the increasing cost of production.

The cost of production is currently at an average of PHP90-95 per kilo, compared to the low end of farm gate price pegged at PHP78 per kilo.

"How will hog farmers continue in this kind of situation?" asked Mr Lim.

"Although some commercial producers can continue doing business, take note that about 77% per cent of swine producers are backyard farmers."

He added that the DA's latest report noted a significant decrease in hog production for the first six months.

"Instead of going down, it should go up especially with the expected demand during the Christmas season," Mr Lim said.

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