Virus duo puts Philippine feed to the flame

Like their neighbours in the region, Philippine feedmillers face an uncertain future on the back of two viral outbreaks in quick succession writes ISA Q TAN.

Since the country recorded its first cases of ASF late last year, feed demand from the pig industry has already dropped. The segment accounts for about 60% of the overall feed market, though the shortfall has partially been offset by higher demand from poultry customers.

But while ASF remains a concern, coronavirus has led to even bigger problems due to its impact across the board.

“The pandemic has led to a drop in the economy due to a halt in tourism, the closure of restaurants and malls and limited movement,” Rey Evangelista, AVP for Sales and Operations at Unifeeds, told Asian Agribiz.

Rey Evangleista

Another industry figure said that from a low starting point, live pig prices slowly gained traction until the lockdown pulled down demand. But because ASF had already caused a fall in pork supply, farm prices remain acceptable for producers.

On the other hand, lower demand for chicken has led to a glut in supply, causing farm prices to drop below production cost. This has discouraged producers from loading, and in turn has stifled feed demand.

“If the current situation persists, the industry may see a contraction this year, since many raisers will be discouraged from producing,” said Mr Evangelista.

Current concerns

Feed millers are facing challenges in both production and marketing. On the production side, industry figures agree that the availability of raw materials has become a serious concern.

“Limited inter-island movement is posing problems for the industry, as we have to continue feeding our poultry and livestock,” said the industry figure, who declined to be named. “Delivery of essential micro and macro-ingredients have been facing some delays due to numerous checkpoints and congestion in ports.”

Mr Evangelista said it is also possible that other countries will prioritize their own need for raw materials, meaning fewer are available for markets like the Philippines. To protect itself from supply shortages, Unifeeds has been increasing storage, finding raw materials from new sources and using alternative products. Other feed producers have been doing likewise, he added.

A lack of skilled manpower at feed plants during the quarantine is also a concern. Some feed producers report that initial confusion surrounding movement protocols, when their staff were not considered essential workers, prevented many workers from clocking on.

Meanwhile, low demand is a major concern, and even where there is demand, problems with logistics have affected the delivery and distribution of finished feed to customers.

Opportunities

Problems do breed opportunities, however.

Mr Evangelista notes that the pandemic has reinforced the need for food self-sufficiency, with an emphasis on increasing local production.

“Because the Philippines is a group of islands, our transport costs are quite high,” said the industry source. “This could present opportunities to source raw materials locally. It may even lead to smaller feedmills targeting specific areas.”

The situation has also forced many feedmills to rethink their approach to modernization and automation.

“The movement restrictions showed us the vulnerability of an industry that cannot operate without manpower,” said Mr Evangelista.

“I think this will pave the way for more automated feed milling operations. Besides, workers are potential carriers of pathogens into farms and feedmill facilities. By automating operations, this can be avoided.”

For his part, the source said that “many feedmills have started to think about how to streamline operations and cut down costs. One of the key factors is labor and how it contributes to the total cost of production.”

To this end, feed producers are considering automation and bulk handling facilities.

“Consolidation of feedmills may also start, but we need an updated law to govern animal feed for the industry to modernize and ensure that it is relevant to the current best practices and food safety certification,” he added.