Pork at P34 discount!

While her neighbors were celebrating their fiesta, Thelma was worried that no one had made any reservation or offered to buy the pig she had hoped to sell at fiesta time. True enough no one did and she simply presumed that her neighbors in their small barangay were not doing well financially and had decided to buy by the kilo instead of buying a whole pig.

A few days later, Thelma met up with her former “sukis” or regular buyers and inquired why they did not buy a pig this year? Her neighbors all had one answer; “We did, but we bought it from the meat shop. We could not resist the wholesale price of P146 per kilo being offered at the ‘Kabayan meat shop’ compared to your ‘farm gate price of P113’ live weight or P180 per kilo at the public market.” I’m sure Thelma would have been willing to sell at the same price just to unload her pet pig, but she was up against a chain of meat shops out on the highway and reportedly even operating in Manila from 4 to 6 a.m. which is when wholesalers and restaurant people buy their meat.

On the surface, readers might suspect that something illegal is going on. Actually, it’s all perfectly legal up to a point. Many of these independent meat shops are simply an extension of farms or a large feed mill that owns several piggeries. Many feed mills produce an excess stock of feeds or have a surplus of unsold feeds that need to be disposed of within 40 days from production. To prevent a loss, feed mills put up huge piggeries. Some sell the hogs for meat while smarter operators use piglets for dispersal to insure they have a chain of consumers buying their products. Unfortunately farms end up with an over supply if they don’t sell the hogs, and since they are not welcomed competition at public markets, these companies need to sell elsewhere.

So they’ve come up with a controversial but pro-consumer solution by putting up independent meat shops that are direct from the farm which eliminates the “viajeros” or middle men as well as the profit of the market vendor resulting in a P34 discount per kilo or P3,060 for a 90 kilo pig.

The problem with this “independent’ solution is that it violates the rule:

“Never bite the hand that feeds you.” A feed mill should manage their production and inventory to an exact science, instead of running farms and selling pigs and by-products in direct competition with their main customers. This is clearly a conflict of interest and detrimental to the interest of hog raisers and the industry as a whole. For many years this obvious and well-known conflict of interest has been practiced but the officials of the Department of Agriculture and the Department of Trade and Industry never acted or did their job of regulating.

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If large farms that are suppose to supply corporate food processors and exporters invade the sidewalks with “laglagan” prices just to minimize their “accounting losses” or dispose their excess inventory to make room for incoming stocks, how on earth can the backyard grower with 2 to 5 pigs compete? Why would they carry on raising pigs at a loss? What will happen is the sector that supplies 65 percent of hogs to the market will seriously shrink in a matter of 2 to 3 years driving the prices of pork to their highest levels and only the feed mill piggeries and large farms will be left standing.

Recently, I have learned of many instances where farms have taken the direct route to running their own meat shops and dropping prices because “It’s either them or us” who goes bankrupt. So what happens when the vendors with pwesto or stalls at the market start going broke because hog raisers decide to sell direct at P30 to P40 cheaper, how will the local governments and the DA address this inevitable fight?

When I inquired from my contacts at BMeg, I was told that in order to address this concern they have been working on a program called BMAP or BMeg Marketing Assistance Program. Aside from providing high quality feeds, organizing the availability of piglets and sows with good quality genetics, and making sure that BMeg technicians are a text or phone call away, BMeg has slowly been working on the developing market linkage so hog raisers have ready buyers or can sell their products directly because all the good materials, hard work and good results would be wasted if the raisers can’t sell their products. Unfortunately this program has not been fast enough to address the developing situation in the market.

As far as hog raisers are concerned, they would rather sell at the farm gate because that simplifies life for them. Failing to do that, a barangay based selling point or outlet would be beneficial to both raiser and residents. The problem is that often times barangay officials are also in the business and have a monopoly. In addition, 50 percent of the neighbor buyers always make “utang” or buy on credit that stretches to the next payday or a month!

Some have tried to work with consolidators or corporate contractors but the feedback I received from that is company representatives issue POs or Purchase Orders that are replaced with checks that require a farmer to have a bank account and receipts, and then they learn that the check is payable anywhere between 60 to 120 days depending on how “tuso” or opportunistic a company accountant can be.

The DA and DTI need to act on the matter and WEAN the feed millers from being hog raisers. The large feed companies need to treat their customers as true and real business partners and not as competitor customers. Give backyard raisers their outlets/meat shops/franchise. This eliminates the viajeros, which results in lower prices, which results in more people eating more pork, which results in raisers raising more pigs that eat more feeds! –Cito Beltran (The Philippine Star)

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