The Philippines Pig Farming Sector:
A Briefing for Canadian Livestock Genetics Suppliers

March 2010

Abbreviated 


Prepared for:
the Embassy of Canada in the Philippines
and
Office of Southeast Asia Regional Agri-Food Trade Commissioner
Agriculture and Agri-Food Canada

Prepared by:
Stanton, Emms & Sia
80 Raffles Place
Level 36, UOB Plaza 1
Singapore 048264
Tel: (+65) 6334 7030
Fax: (+65) 6223 2010
Email: emmsia@pacific.net.sg (General)
Website URL: http://stantonemmsandsia.foodandbeverage.biz

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 : yvette.buendia@international.gc.ca

Map: Description of this image follows.
Description

Map - Philippines Provinces - Abra, Agusan del Norte, Agusan del Sur, Aklan, Albay, Antique, Apayao, Aurora, Basilan, Bataan, Batanes, Batangas, Benguet, Biliran, Bohol, Bukidnon, Bulacan, Cagayan, Camarines Norte, Camarines Sur, Camiguin, Capiz, Catanduanes, Cavite, Cebu, Compostela Valley, Cotabato, Davao del Norte, Davao del Sur, Davao Oriental, Dinagat Islands, Eastern Samar, Guimaras, Ifugao, Ilocos Norte, Ilocos Sur, Iloilo, Isabela, Kalinga, La Union, Laguna, Lanao del Norte, Lanao del Sur, Leyte, Maguindanao, Marinduque, Masbate, Metro Manila, Misamis Occidental, Misamis Oriental, Mountain Province, Negros Occidental, Negros Oriental, Northern Samar, Nueva Ecija, Nueva Vizcaya, Occidental Mindoro, Oriental Mindoro, Palawan, Pampanga, Pangasinan, Quezon, Quirino, Rizal, Romblon, Samar, Sarangani, Shariff Kabunsuan, Siquijor, Sorsogon, South Cotabato, Southern Leyte, Sultan Kudarat, Sulu, Surigao del Norte, Surigao del Sur, Tarlac, Tawi-Tawi, Zambales, Zamboanga del Norte, Zamboanga del Sur, Zamboanga Sibugay

http://www.chanrobles.com


1. Introduction

This briefing has been prepared by Stanton, Emms & Sia for Canadian exporters of livestock genetics, the Embassy of Canada in the Philippines and the Southeast Asia Regional Agri-Food Trade Commissioner, Agriculture and Agri-Food Canada.

The objectives of this briefing are to provide exporters and the Canadian government with:

  • a snap shot of conditions in the Philippines market for pork;
  • an update on the government policies covering the pig farming industry and its future development;
  • a review of the state of the pig farming industry and its operations;
  • a SWOT analysis on the pig farming industry;
  • an assessment of the future strategic direction of the pig farming sector; and,

The research supporting this briefing was performed in February and March 2010.


2. The pork market in the Philippines, a snap shot

Pork is the main meat produced and consumed in the Philippines today. It is, like rice and chicken, one of the Philippines staple food products.

Total pork consumption was reported at 1.688 million tonnes in 2008. Imports account for less than 5% of consumption and are principally brought in to cover shortfalls in the local supply of lower end and low cost products for use by the food processing industry.

Frozen pork imports amounted to 29,817 tonnes valued at C$ 28.8 million in 2008. Imports of frozen pig's offal were higher at 56,388 tonnes valued at C$ 33.2 million in that year.

Overall consumption is reported to be increasing on the back of population increases. Today, the population is estimated at around 94 million people. The Philippines has been experiencing population growth at a comparatively high rate of around 2% per annum since 2000.

Pork comprises about 60% of the Philippines meat and poultry production today (see Chart below).

Meat and Poultry Production in the Philippines by Product Type in 2008

Production: Description of this image follows.
Description

Meat and Poultry Production in the Philippines by Product Type in 2008, pig meat - 59%, chicken meat - 27%, cattle meat - 7%, buffalo meat - 4%, goat meat - 2%, duck meat - 1%, other meat - negligible

Source: Government of the Philippines

According to the Government, per capita consumption has been growing. It reached around 14.9 kilograms per capita in 2008, up from around 13.5 kilograms in 2001 (see Table below).

Philippines Per Capita Consumption of Pork – 2001 to 2008 (Kilograms)
2001 2004 2008
13.45 13.67 14.88

Source: Bureau of Agricultural Statistics, Philippines

According to the government, pork's status as a staple food underpins its per capita consumption growth, which has been on-going, irrespective of any fluctuations in economic performance.

Trade sources also comment that Filipinos prefer pork to chicken or beef. Pork is less expensive than beef and is also in more abundant supply than beef. Chicken tends to be viewed as a lower end product than pork, and its lower retail price tends to support this (see Table below).

Retail Prices of Pork and Chicken in the Philippines in 2005 and 2009
Product Peso Per Kilogram (2005) C$ per Kilogram (2005) Peso Per Kilogram (2009) C$ per Kilogram (2009)
Pork lean meat 139.28 3.03 163.49 3.96
Pork meat with bones 124.09 2.70 149.28 3.62
Pork pata (front) 101.85 2.21 125.22 3.04
Chicken fully dressed (broiler) 103.76 2.25 128.05 3.10
Chicken broiler (live) 88.13 1.91 102.06 2.47

Source: Bureau of Agricultural Statistics

Trade sources also comment that:

  • residents in the Philippine urban areas form the largest consumer base for pork;
  • rural households tend to consume more cereals, starchy roots and tubers, and vegetables than meat, when compared to urban households;
  • meat is still not an everyday food in the rural areas. In many cases, families will only consume it on a "payday", or for special occasions; and
  • per capita consumption of pork by the upper-middle to high income families in the Metro Manila area is likely to be higher than 30 kilograms per head, when compared to the national average of around 15 kilograms per head.

3. Government policies covering the pig farming industry and its future development

3.1 The Agriculture and Fisheries Modernization Act

The government has put in place some broad policies to develop the country's agricultural sector. Under the Agriculture and Fisheries Modernization Act (AFMA), which was signed into law in 1997, the government aims to strengthen the agriculture and fishery sectors through:

  • industry modernisation;
  • greater participation of small-holders (or small stakeholders);
  • food security and food self-sufficiency measures;
  • private sector participation; and
  • people empowerment.

The Ginintuang Masaganang Ani Livestock Program is the banner program for agricultural development, which was established by the government as the blueprint for implementing the AFMA.

3.2 The Ginintuang Masaganang Ani (GMA) Livestock Program

The GMA program focuses on achieving food security and poverty alleviation, with Local Government Units (known as LGUs) and other stakeholders developing their own livestock industry development plans and programs that are suitable to their respective localities across the Philippines archipelago.

The objectives of the GMA Livestock Program are as follows:

  • contribute to the development of agribusiness lands (pasture establishment) and reduction of costs of wages and goods through productivity enhancement, more efficient logistics and improved retailing linkages (Goal 1 and Goal 2 of the Medium-Term Philippine Development Plan - Agribusiness Section, 2004-2010);
  • increase livestock production and improve livestock productivity to help ensure the availability, accessibility and affordability of livestock products;
  • increase the incomes of livestock farmers by providing access to technology, resources, support services and infrastructure;
  • ensure the compatibility of practices in livestock and poultry enterprises with environmental standards;
  • transform the livestock industry from a resource-based to a technology-based industry; and,
  • work for the global competitiveness of the domestic poultry and livestock enterprises.

Specific development policies affecting the various livestock sub-sectors have been developed and proposed by the Livestock Development Council (LDC).

Apart from the GMA Livestock Program, policies for each individual livestock sub-sector have been proposed in a Road Map that was developed by the Livestock Development Council (LDC).

The LDC's mandate, as established by the Department of Agriculture, Philippines, is to:

  • serve as a forum between the public and the private sector to discuss the thrust for, and priorities of, the livestock and poultry sector and the industry's problems / issues, which are the basis for formulating development policies;
  • formulate policy recommendations and implement guidelines in collaboration with other government agencies and other stakeholders;
  • formulate long, medium and short-term programs and projects envisioned to attain self-sufficiency in food commodities of animal origin; and,
  • monitor and evaluate the activities of all units in the Department of Agriculture, Philippines, that are directly involved in the implementation of livestock development programs, projects and activities.

3.3 Pig farming development policy and program initiatives

According to government and trade sources, development of the Philippines pig farming industry in the past has largely been driven by the large commercial farms.

The main driver of these development efforts has been highly commercial, i.e. corporate attempts to develop new competitive strengths so companies can better compete in the domestic market. Consequently, industry has tended to grow independently, without much assistance from the government in the past.

Most pig farming industry development initiatives in the past have been spearheaded by the National Federation of Hog Farmers (NFHF), which has taken on the role of protecting and promoting the interest of the industry in the Philippines. It has been heavily involved in influencing trade policy and related issues. Today, the NFHF is comprised of 43 different local member associations based all across the Philippines.

While the NFHF exists, the government recognises the importance of pig farming to the livelihood of rural farmers, i.e. small-holders who may not be members of this federation, and so may not be impacted upon by its industry support and development activities.

In view of this, the Department of Agriculture, Philippines, is supporting the following "imperatives" to assist such farmers:

  • improving the quality of pigs through unified animal insemination and breeder farm accreditation programs, which also entails the restoration of six mini-liquid nitrogen plants in Central Luzon, Central Visayas, Northern Mindanao and Davao regions. This is being done to enhance the artificial insemination services of its local government partners;
  • on-going promotion of food safety, and industry and farm modernisation, by encouraging good agricultural and manufacturing practices as the Philippine works to benchmark its progress against the best pig farming industry operators in the world;
  • bringing science into the supply chain by increasing research activities into bio-security, animal health, post-production, and in the marketing and distribution of livestock products;
  • continuing to carry out interventions meant to bolster the country's bid to secure a new certification from the Office International des Epizooties (OIE), i.e. the declaration of Luzon island as a zone free of Foot and Mouth Disease, and in effect, the entire Philippines;
  • expanding prevention and control measures against the Ebola Reston virus (ERV);
  • stepping up efforts to eradicate hog cholera and continuing to distribute vaccines and medicines to livestock raisers and LGUs on a regular basis; and,
  • addressing the high cost of feed inputs by vigorously pursuing and implementing the Ginintuang Masaganang Ani (GMA) Corn Program.

Trade sources also comment that the industry leaders in the pig farming industry have been actively lobbying the Department of Agriculture, Philippines (DA), on the following issues, although at the time of the research, no agreement had yet been reached with the DA on them:

  • strengthening market linkages between meat importers and pig farmers, so processors can first source their pork requirements on a local basis before turning to imported products; and,
  • meeting with traders with a strategic goal of persuading them to adopt a higher floor price per kilogram at the farm gate level.

In addition to the above, it is also reported that the government has been reviewing the pig farming industry's future export market potential. This study is being done because of the perception that the production capabilities of the industry could facilitate Philippine-origin pork exports within the newly implemented ASEAN Free Trade Area.

While this study is being undertaken, other recent studies, which were conducted by the LDC highlighted two facts:

  • that the Philippines is technically proficient in pig farming; and,
  • that the industry is not competitive at the level of price in the export market.

These findings led to collaborative study between the LDC and the industry's leaders to review potential strategies that will create a situation where the Philippine pig farming industry would eventually become a competitive supplier of pork to the Asian marketplace in future.

3.4 The broader focus of Philippines agriculture development policies

Sources in the livestock industry comment that their industry (as a whole) tends to receive less focus from the government than agricultural crops. The main focus of the government is on increasing the production of important food crops and export crops, so as to enhance the production and export capacity of these agricultural commodities.

This situation is more prominent for the pig industry because of the sizeable involvement of corporate farms, some of which are large sized operations, e.g. Monterey Farms (Annual sales: C$ 144 million), Foremost Farms (Annual sales: C$ 29 million) and Robina Farms, which operates with a standing inventory of around 15,000 sows.

As mentioned earlier, the policy objectives of the Philippine livestock sector focus on improving the economy of the rural residents, creating employment in rural regions, while at the same time contributing to better food security for the mass market. There is a general viewpoint within the government that the corporate farms are now powerful enough to look after their own future development.


4. The pig farming industry and its operations

4.1 The status of the pork production industry in Philippines agriculture

Within Philippines agriculture, the pork production industry is the second largest revenue earner after rice. It generated Peso 149.59 billion (C$3.42 billion) in 2008. This is larger than the poultry meat industry which generated Peso 130.91 billion (CS3.0 billion) in revenue in that year.

Pig farming is generally more developed than the other livestock industries, as is evidenced by the fact that it supplies the bulk of local demand for pork.

According to the government, the Philippines is currently about 98% self-sufficient in pork supply. This situation exists in an environment where the pig industry has almost no government subsidy applied to it.

As mentioned earlier, imports form only a small proportion of the market, i.e. about 2% of the total national pork demand. Imports are regulated under a WTO compliant Tariff Rate Quota and related Minimum Access Volumes, which for the import of meat of swine, fresh, chilled or frozen (HS code 0203) is currently set at 54,210 tonnes per annum.

Currently, the Philippines does not export any pork.

The Table below shows the level of domestic production and import of pork over the five years to 2008.

Pork Supply in the Philippines – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Domestic production 1,365,606 1,415,041 1,564,957 1,616,715 1,605,984
Imports 34,083 31,315 35,551 52,383 83,014
Total supply 1,399,689 1,446,356 1,600,508 1,669,098 1,688,998

Note: 2009 data were not available at the time of writing this report.
Source: Bureau of Agricultural Statistics

In 2008, imports were higher than the minimum access volume for pork imports because the Philippines shortfall in pork was higher than normal due to a major disease outbreak.

The bulk of imports are frozen products, mainly deboned pork, fats, offal, rind or skin and other pork variety cuts that are used by the local meat processors to make sausages, luncheon meat and other processed pork products. The USA and Canada are both major suppliers of frozen pork products to the Philippines.

Trade sources comment that:

  • imported pork is usually demanded by price sensitive institutional buyers;
  • Filipino consumers are very particular about the freshness of their pork. They generally prefer freshly slaughtered warm pork and tend to regard frozen pork as an inferior product;
  • this "freshness demand trait" supports very strong demand for local pork. This has allowed the larger businesses in the pork production industry to build a strong competitive position that has established barriers to broad based imports of pork, albeit that imports are controlled by a TRQ and MAVs.

4.2 The trade in live pigs overviewed

The total population of live pigs was officially reported at 13.6 million head in 2008, up from 12.2 million head in 2004. This equates to an average annual growth rate of 2% per annum in the population over the period.

The Table below provides details of the supply and disposition of live pigs in the Philippines from 2004 to 2008.

Live Animal Supply and Disposition in the Philippines – 2004 to 2008 (Head)
  2004 2005 2006 2007 2008
Beginning inventory 12,561,690 12,139,690 13,046,680 13,459,330 13,701,020
Born alive 22,743,970 24,637,483 26,356,014 27,177,744 26,646,231
Imports 732 2,142 1,636 769 844
Total supply 35,306,392 36,779,315 39,404,330 40,637,843 40,348,095
Slaughtered 20,241,998 20,974,759 23,196,923 23,964,112 23,805,045
Death/losses 2,924,704 2,757,876 2,748,077 2,972,711 2,946,651
Total disposition 23,166,702 23,732,635 25,945,000 26,936,823 26,751,696
Ending inventory 12,139,690 13,046,680 13,459,330 13,701,020 13,596,399

Note: 2009 data were not available at the time of writing this report.
Source: Bureau of Agricultural Statistics

4.3 Imports of live pigs and porcine semen

As highlighted in the Table above, the Philippines is importing a small number of live pigs every year. These pigs are also reflected in the import data.

The Table below provides an overview of the imports of pure-bred swine for breeding in the period from 2005 to 2009.

Import of Live Pure-Bred Pigs for Breeding (Kilograms)
Source 2004 2005 2006 2007 2008
Australia 133,394 18,877 54,900 10,866 13,386
Belgium 0 0 1,650 0 0
Netherlands 0 1,400 0 0 0
Canada 0 0 7,800 0 2,640
France 0 0 1,800 0 0
Spain 0 0 11,000 0 0
USA 0 32,538 5,757 15,912 24,337
United Kingdom 0 10,000 0 2,200 0
Total (kg) 133,394 62,815 82,907 28,978 40,363
FOB Value (US$) 472,768 641,001 761,723 423,947 815,642

Notes: Unit disclosed is in kilograms. In earlier years, the data was for head imported. At the time of writing this briefing, the 2009 data was not available.
Source: Government Trade Statistics

According to the government, live breeding pigs and pig semen are regularly imported by the industry and government as part of efforts to improve the performance of the local pig population.

No import data is readily available on the amount of pig semen that is being imported into the Philippines. Trade sources comment that the supply countries and suppliers involved in pig semen supply are usually the same as the suppliers of live swine.

Some key points to note are as follows:

  • Australia and the USA have been the most consistent suppliers of pure-bred breeder pigs to the Philippines;
  • both live pure-bred boars and gilts are being imported; and,
  • in times of pig disease outbreak, or other forms of natural disasters, e.g. typhoons, volcanic eruptions or earthquakes that reduce the national pig population, it is quite common for the commercial pig farming sector to increase its imports of breeding stock to replenish their breeding inventories. Typhoons regularly destroy pig farms in the Philippines.

4.4 Pig breeds and their usage in the Philippines

According to the government, the Philippines pig population comprises several breeds that are distributed across the country and exist on different farm types that practice different pig production systems.

There are many breeds of pigs in the Philippines. Some points to note are as follows:

  • the most common pig breeds in use are Landrace, Yorkshire or Large White, Pietrain and Duroc;
  • other important, although less common breeds, are the Hampshire and Berkshire;
  • according to trade sources:
    • the Landrace and the Large White are extensively used by commercial swine farms for the production of a crossbred sow line; and
    • the Duroc and Pietrain are commercially used for boar line;
  • the Philippine native pig is usually small in size and is either black coloured or black with a white coloured belly;
  • the native pig population are commonly raised in subsistence pig farms and are composed of several genetic groups, including:
    • Visayan and the Ilocos breeds; and,
    • the Berkjala, Diani, Kaman, Koronadel and Libtong breeds that were all developed from a breed known as the Jalajala, which is now thought to be extinct;
  • in the rural areas, Philippine native pigs are usually kept either for home consumption or raised for slaughtered for a special occasion. These pigs are only sold during emergency periods when cash is needed by the household; and,
  • trade sources also comment that native pigs are preferred for preparing "lechon baboy" (whole roasted pig, a Filipino specialty). Such pigs are sold at a premium price in the market.

4.5 The location of pig farming operations in the Philippines

Pig farming is practised all across the Philippine archipelago. The Table below provides details of the number of pigs located in each region in the Philippines from 2004 to 2008.

Pig Population in the Philippines by Region – 2004 to 2008 (Head)
Region 2004 2005 2006 2007 2008
CAR 268,890 247,220 247,040 206,150 209,725
Ilocos Region 507,140 513,120 513,340 518,030 539,411
Cagayan Valley 713,780 748,930 657,450 539,070 495,134
Central Luzon 1,666,910 1,805,070 1,955,350 1,893,580 1,713,836
Calabarzon 1,582,890 1,634,600 1,675,500 1,794,470 1,848,951
Mimaropa 394,240 398,340 431,330 471,540 469,399
Bicol Region 680,460 826,370 815,670 776,160 859,794
Western Visayas 1,152,080 1,281,550 1,376,490 1,477,500 1,500,004
Central Visayas 916,890 934,420 1,004,420 971,210 965,643
Eastern Visayas 745,730 979,630 984,000 988,990 1,029,444
Zamboanga Peninsula 713,720 799,710 792,110 809,070 801,252
Northern Mindanao 768,860 841,140 825,420 798,020 833,926
Davao Region 898,160 895,660 947,990 937,640 890,166
Soccsksargen 662,880 654,280 673,930 849,140 839,547
Caraga Adm.Region 409,050 408,530 404,070 397,970 363,992
ARMM 58,010 78,110 153,220 272,480 236,175
Total 12,139,690 13,046,680 13,459,330 13,701,020 13,596,399

Note: The 2009 data was not available at the time of writing this briefing.
Source: Bureau of Agricultural Statistics

As can be seen from the data in the Table above, over 70% of the pigs are farmed in:

  • the Luzon island regions, which include Central Luzon, Calabarzon and Bicol Region that represent that key production base for the Metro Manila urban area market.
  • the Visayas islands; and,
  • the northern and north western regions of Mindanao island.

4.6 The structure of the Philippines pig farming industry

The pig farming industry comprises two broad sub-sectors today, namely:

  • the backyard sub-sector; and,
  • the commercial farm sub-sector.

In 2009, around 70% of the total pig population was held on backyard farms (see Table below).

The Philippines Pig Population by Sub-Sector – 2004 to 2008 (Head)
  2004 2005 2006 2007 2008
Backyard 9,257,900 9,728,640 9,825,510 9,726,820 9,602,822
% of total population 76.3 74.6 73.0 70.9 70.6
Commercial 2,881,790 3,318,040 3,633,820 3,974,200 3,993,577
% of total population 23.7 25.4 27.0 29.1 29.4
Total 12,139,690 13,046,680 13,459,330 13,701,020 13,596,399

Source: Bureau of Agricultural Statistics (BAS)

As can be seen from the Table above, the proportion of the pig population carried on commercial farms is now close to 30% of the total inventory, up from around 24% in 2004. This situation arises because of new investments in commercial pig farms across the Philippines.

According to the government:

  • backyard pig farming operations are found all over the country, while commercial pig farming operations are centred around the major urban area market of Metro Manila (Population: 12 million persons), especially in the Central Luzon and Calabarzon regions; and,
  • in 2008, Central Luzon and Calabarzon were reported to be home to about 63% of the total population of pigs carried by commercial pig farming operations.

Trade sources also comment that:

  • the proliferation of backyard pig producers is evidence of the popularity of pig raising in the Philippines;
  • the average rural Filipino family usually raises a small number of pigs to augment their needs for cash and/or food. The initial capital investment requirement is minimal, allowing easy entry into the sector by most rural households. This is a key reason why backyard producers still have a larger share of the national pig inventory than commercial farms today; and,
  • another reason for the existence of backyard farms is cultural:
    • Filipinos (apart from Muslim Filipinos) consume pork on special occasions, such as annual festivities (e.g. Christmas and Easter), birthdays, weddings, graduation celebration and other celebratory events; and
    • an all-time favourite menu item for such events is the "Lechon Baboy", namely a whole roasted pig. This dish makes a celebration "extra extravagant" and serving it is even commonplace amongst lower income households.

4.7 Profile of the Philippines backyard pig farming sub-sector

4.7.1 Overview of the structure of this sub-sector and its live pig inventory

The backyard pig farming sub-sector operates with around 9.6 million head of pigs today. This sub-sector is comprised of two different types of pig farming operations today:

  • the subsistence backyard pig producers; and,
  • the small-holder pig producers.

There is no firm data on the numbers of producers in either of these groups, although they number in the tens of thousands.

The Table below provides details of the structure of, and trends in, the backyard pig population.

Philippines Backyard Farming Sub-Sector Pig Population – 2004 to 2008 ('000 Heads) - Backyard farms
  2004 2005 2006 2007 2008
Sow 1,166.49 1,132.36 1,146.86 1,155.82 1,155.41
Gilt 610.92 467.87 492.23 498.06 498.41
Fattener 2,401.85 2,353.53 2,426.12 2,308.50 2,340.51
Grower 2,988.45 2,701.91 2,878.03 2,907.35 2,916.03
Others* 2,554.32 2,602.23 2,882.28 2,857.09 2,692.46
Total backyard farms 9,722.03 9,257.90 9,825.51 9,726.82 9,602.82
% annual growth - (4.8%) 6.1% (1.0%) (1.3%)

Note: The 2009 data was not available at the time of writing this briefing.
* This category includes piglets, weanlings and boars.
Source: Bureau of Agricultural Statistics

As can be seen from the Table above, this sub-sector's inventory is unstable and has been fluctuating from year to year.

4.7.2 Characteristics of the subsistence backyard pig producers

Subsistence backyard pig producers raise native and upgraded pigs that are commonly acquired as piglets from within their locality. The characteristics of these operations are as follows:

  • generally, these pigs are allowed to roam freely and fend for themselves with very minimal care and management by the owner;
  • the subsistence farms with a larger inventory confine their pigs to simply constructed pens;
  • these backyard producers mainly practice wet feeding. The most common feed materials provided to these pigs is a combination of kitchen waste, edible farm by-products, cassava, corn and corn by-products, root crops, and other vegetation that is available in the area of the farm; and,
  • health care procedures, such as vaccination, de-worming and alike, are rarely performed.

This type of production system is normally practiced in remote rural areas where most pig production inputs are not easily accessible, and access to information and other farming support services is very limited, even from the local government. This heightens the risk of disease outbreaks.

The subsistence backyard pig producers are generally operated by family members and do not employ any paid labour from outside the family that owns and operates the farm.

4.7.3 Characteristics of the small-holder pig producers

The small-holder pig production system is mainly practiced in urban and peri-urban areas across the Philippines archipelago. The characteristics of these operations are as follows:

  • the majority of producers are family enterprises (households) with 10 to 20 pigs each;
  • this type of pig production is commonly undertaken by individuals or families with another source of income for use as investment capital, e.g. well paid employees, skilled workers or small business owners, usually sari sari retail store operators.

They raise pigs using their own capital with the main goal being an additional source of income for themselves or their family. As with the subsistence backyard pig producers, the farm workers are usually only family members, and not outside paid labour;

  • pig producing small-holder households are either independent producers or contract farmers. The larger sized producers are mainly contract farmers.

Trade sources comment that contract farmers are more competitive than independent farmers because they have better access to quality feeds and breeding stock, feed credit, veterinary health services and credit for expansion of their operations.

According to government sources, the production efficiency and product quality of pigs from small-holder pig producers is quite similar to pigs that are produced by the commercial pig farms;

  • pigs raised by small-holder pig producers are mainly hybrid pigs or crosses of exotic standard breeds that are acquired from either nearby commercial pig farms or government breeding stations;
  • although these operations are classified as backyard from the point of view of their scale, such pig producers do invest in facilities and capital equipment. For example, they utilise pig housing and pens, modern production equipment and other facilities that are lower cost versions of those used by larger commercial farms;
  • the feeding and management practices used by small-holder pig producers have been adopted and adapted from those used by larger commercial pig farms. Their pigs are generally fed commercially formulated feed with nutrient supplements that are sourced from local agricultural and veterinary products distributors;
  • vaccination, de-worming and other animal health measures are commonly practiced by these farms;
  • small-holder pig producers commonly use artificial insemination. AI is a longstanding practice, with a 40 year history in the Philippines, which is readily used by both commercial and backyard pig farmers; and,
  • technical services and information is generally sourced from government livestock technicians or veterinary products suppliers operating in the area of the farms.

4.8 Profile of the Philippines commercial pig farming sub-sector

As highlighted earlier in this briefing, the commercial pig farming sub-sector is slowly growing in size, when compared to backyard farming sub-sectors. The Table below provides details of the structure of, and trends in, the commercial farming sub-sector pig population.

Philippines Commercial Farming Sub-Sector Pig Population – 2004 to 2008 ('000 Heads) - Commercial farms
  2004 2005 2006 2007 2008
Sow 353.60 348.59 488.08 510.59 511.55
Gilt 88.31 93.76 120.04 126.95 129.01
Fattener 563.96 667.46 850.82 864.85 912.80
Grower 759.33 782.63 970.15 1,017.52 1,064.47
Others* 1,074.46 989.35 1,204.73 1,454.30 1,375.75
Total commercial farms 2,839.66 2,881.79 3,633.82 3,974.20 3,993.58
% annual growth - 1.5% 26.1% 9.4% 0.5%

Note: The 2009 data was not available at the time of writing this briefing.
* This category includes piglets, weanlings and boars.
Source: Bureau of Agricultural Statistics

As can be seen from the data in the Table above, the commercial pig farming sub-sector has a growing pig inventory. This contrasts to the fluctuating inventory held by the backyard sub-sector. Government sources comment that this scenario exists for two reasons:

  • the better animal health scenario in the commercial pig farming sub-sector; and;
  • the strategic investment plans of commercial pig farming operations that have an eye on:
    • taking more market share in the Philippines pork market as it grows in future; and
    • building new demand for better quality commercially farmed pigs from pork producers and processors.

Pork from the commercial pig farming sub-sector is supplied to a diverse range of channels, including the traditional wet meat markets, supermarkets and hypermarkets in urban areas, meat processing plants, and to food service operators. The core market for this sub-sector today is the Metro Manila conurbation.

Trade and government sources comment that commercial pig production in the Philippines is already a multi-billion Peso industry. It is characterised by a high level of sophistication in its production system, and supported by highly organised distribution and marketing operations.

The key characteristics of this sub-sector are as follows:

  • corporations with sizeable to large financial resources are participating in commercial pig farming. They range from medium through to very large sized businesses;
  • large scale production of pigs with inventories numbering in the thousands is common. Many businesses also have numerous farms under their management;
  • some corporate farms are fully integrated and have production contracts with individual pig raisers. Some businesses are also integrated to the extent that they operate their own slaughtering and meat processing facilities; and,
  • the corporate farms generally control their own breeding farms, feed and animal health services. They:
    • use exotic breeds of swine and their hybrids;
    • manage their pig farming operations using the latest nutrition, health, reproduction and farm management technologies and practices. These are reported to be adopted and adapted from the Developed World, e.g. North America or Europe; and,
    • they use pig housing facilities and other farm equipment that are imported or are adapted from foreign designs.

According to the government, commercial pig farming in the Philippines is highly import-dependent. Significant proportions of feed and other production inputs and, to a lesser extent, breeder stocks and genetics have to be sourced from outside of the Philippines to keep the sub-sector operating in an efficient and effective manner.


5. Trade and government opinions on the future strategic direction of the pork market

The Philippine economy has been growing at an average of about 4.4% per annum over the past 5 years.

Economic analysts are now forecasting future growth of between 2.6% and 3.6% in 2010 and 2011. These forecasts are underpinned by a belief that there will be continued strong domestic demand, an improving global economy, a recovering export sector and increased government spending, ahead of the May 2010 national elections.

These forecasts are positive for future consumer market development over the next 2 to 3 years, providing the political environment continues to remain stable and the government continues to implement policies that support the business environment in the Philippines.

In addition to this, the population is projected to grow to 103 million people by 2015, according to a recent projection made by the National Statistics Office. This will increase the pool of future consumers of staple products, one of which is pork.

According to the government, it is possible that annual consumption of pork could increase to 2.2 million tonnes by 2016. This is a big jump from the 1.7 million tonnes that was reported as consumed in 2008. If this happened, there would need to be a substantial investment in new pig inventories over the next 5 years. This would also establish sizeable new demand for imported breeding pigs and genetic materials.

Overall, the broader forecasts are positive for future growth in demand for pork and also future development of the pig and pork production industries. Trade sources comment that pig farmers of all sizes across the Philippines will invest in larger operations over the next 3 to 5 years to capitalise on these opportunities.