processed meat - Securing the Future of Philippine Industries

PROCESSED MEAT
INDUSTRY
JUDITH P. ANGELES
Regional Director, DTI-3
Roadmap Localization & AEC Game Plan
30 September 2015 | Xenia Hotel, Clark Freeport Philippines
Industry Development Program
• DTI also active in coordinating with international partners to assist in
formulating industry roadmaps.
USAID-COMPETE
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DTI IDP
Processed Shrimp
Carrageenan
Dried Mango
Cacao Tablea
Condiments, Sauces
PH Processed Foods
Industry
EU-TRTA
 Processed Meat
 Processed Fish
Products
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Philippine Processed Foods Industry
Relative Size
DTI IDP
PH Processed Foods
Industry
•
Global Foods/Beverage Industry
– According to IMAP’s Global Food and
Beverage Industry Global Report, the global
Food and Beverage Industry was estimated
at US$ 7 Trillion in 2014.
•
Philippine Processed Foods/Beverage Industry
– In 2012, output of the processed foods and
beverage sector’s output was valued at P
489 Billion (≈US$ 11 Billion).
– About 99.6% of food manufactures are
considered as MSMEs (DOST-PCIEERD)
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Philippine Processed Foods Industry
Domestic Industry Size, 2014
Vaues in Million P (Constant 2000 P)
7,177,872
666,657.0
GVA - Processed Foods &
Beverage
1,666,514.0
Total Manufacturing GVA
Total GDP
•
In 2014, the Processed Foods/Beverage Industry’s GVA comprised 40% of the
country’s Total Manufacturing GVA in 2014 and almost 10% of the country’s Total
GDP.
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Industry employed more than 270,000 employees in 2012 (PSA).
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Philippine Processed Foods Industry
Dynamic Industry
2014 Export Value:
US$ 1.76 B
The Processed Foods/Beverages
industry’s output value increased by
as much as 56% between 2010 and
2012.
DTI IDP
PH Processed Foods
Industry
Processed foods and beverages
exports grew at an average rate of 12%
per year in 2006-2014.
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Processed Meat Industry
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Processed Meat Industry
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Revenue (2010): PhP 44 Billion
Employment (2010): ≈10,000 (direct) jobs
Gross Value Added (2012): PhP 7.257 Billion
Exports, 2014 : ≈ US$ 18 Million (FOB)
Sources: PSA and DTI-EMB
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Meat Processing Companies
Included in PH’s Top 1,000
Corporations, 2013
Structure
NCR
59
Region 1
5
Region 2
1
Region 3
38
Region 4-A
30
Region 4-B
1
Rank
117
218
257
426
759
948
Region 5
3
Source: Business World
Region 6
11
Region 7
10
Region 8
-
Region 9
-
Region 10
4
Region 11
7
Region 12
-
Region 13
2
CAR
4
ARMM
-
Region
No. of Meat Processing Establishments
Total:
175
Firm Name
Purefoods Hormel Company, Inc.
CDO Foodsphere, Inc.
RFM Corporation
Pacific Meat Co. Inc.
Meatworld
Pampanga’s Best, Inc.
957 Foods Corporation, | Alpha Alleanza Manufacturing, Inc. | AMC
Food Products | Arbee’s Food Products | Atu’s Meat Products | Betis’
Best Meat Products, Inc. | Bounty Fresh Food, Inc. | Bretto’s
International Food Corp. | Cabanatuan Meat Products | Classic Baker
Corporation | Country Ham & Sausage Factory | Ghee & Rica Food
Products | Gourmet’s Delights Food Products | International Ham &
Sausage Manufacturing Co., Inc. | Jess-nor Food Products | Jon Jon
and Minda Food Storage | Kim’s Toll Packaging Services (Ariel’s Meat
Products) | Len Meat Products | Malows Meat Products | Mama Mia
Meat Products | Maricon Food Storage | Mekeni Food Corporation |
Merle O. Ramos Enterprise | Minette’s Meat Products | MJB Food
Products | Mother Earth Products, Inc. | Nadeco Mei Food | NAN
Foods Corp. | National Agribusiness Corporation (Agri-Freeze) |
Odessa Foods | Pampanga’s Best, Inc. | Roel’s Food Corporation |
Romac Industries, Inc. | S.G. Farms Food Processing | Tita’s Special |
Toprind Enterprises, Inc. | VWA Food Processing, Inc. | Wholesaledge
Corporation
Organization
51 company members as of 2014
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Consumption
Tabl 19. Annual per capita consumption of pork,
beef and chicken (inkg/person/year), Philippines
2008-2009
2012
Pork
9.152
9.466 ↑
Beef
1.248
0.926 ↓
Chicken
7.904
8.077 ↑
Increasing meat consumption
Total:
18.304 18.469 ↑
Middle class Filipino families
 consumes around 4.4% to
5.0% of the total family
expenditure on meat/meat
products or PhP 2,376/year
to PhP 3,950/year.
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Trade
34% of PH’ meat exports
are “processed”
Major export markets:
UAE, Qatar, Japan, Saudi
Arabia, USA, Kuwait,
ASEAN countries,
Canada, Guam and
Taiwan*
Ave. Export Growth:
29% per year
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
(Net) Trade
 In most years from 2006 to
2014, the country has been
a net exporter of processed
meat products
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Industry Supply Chain
Industry Supply Chain
RM Sourcing
85%
15%
Industry Supply Chain
RM Sourcing
85%
Meat Importation of the Philippines
Industry Supply Chain
Imported PORK products: pork cuts, fats, bellies, rind/skin, jowls and
liver (forms which are directly utilized/needed by the meat processing
industry)
Imported CHICKEN products: 20% in the form of deboned (or
mechanically-deboned chicken meat. MDMs are basic input for the
Philippine meat processors (particularly in the production of hotdogs).
Most of imported buffalo is in the form of forequarters while beef cuts
and fats represent chunk of total beef importation.
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
RM Mismatch
1. Locally-produced livestock products are primarily supplied to wet
markets and domestic institutional buyers.
2. Philippine meat processors require manufacturing-grade raw
materials which cannot be complied with by locally-available RMs.
 Technical Specifications
 Refrigeration Requirements
 Price Difference
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Industry Supply Chain
Finished Products Market
92-95%
5-8%
Industry Supply Chain
Finished Products Market
5-8%
AAA Meat Processing Facilities
Low processed meat
exports may be due to few
number of AAA meat
processing facilities in the
Philippines.
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
AAA Meat Processing Support Facilities
There are only few AAA meat handling facilities
established, to-date. These facilities are necessary,
especially if a meat processor desires to export its
product/s.
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks
Industry and AEC
Case: RM Sourcing
Scenario: A heavily import-dependent meat processing
industry.
2 factors: Reduction of import tariff rates and ease of
importation directly.
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
2015 Tariff
• RMs
02.03
02.07
0207.14.91
Meat of swine, fresh chilled and frozen
Meat and edible offal, of the poultry of heading
01.05, fresh chilled or frozen
----Mechanically deboned or separated meat
ATIGA
Rate of Duty
5%
5%
5%
• Finished Products - 0%
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Indicative Impact of AEC
• Currently, the most-used raw materials of the Philippine meat
processing industry are imported at duties between 5% to 40%.
• Upon implementation of the AEC in 2015, import duties will be
lowered to only 5% for all of these RMs [lower cost for processors].
• Import duties on finished products will be removed
– ASEAN: a market of 600 million consumers
– Global competition may happen in our backyard [increase
competitiveness, address SWOT correspondingly]
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
UA&P Study: RM Industry
• Derived Wholesale Price vs. Domestic Wholesale Price
• At current level of tariff: mostly competitive for pork and pork
products and chicken leg quarters
• At 0% MFN: mostly not-competitive
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Prospects
LOCAL
EXPORT
 12th largest population in the
world
 Increasing meat consumption
 Food cart/retailing business
rapidly expanding – 80,000
Volume: The world’s fresh and
processed meat market is
expected to hit the 300 million
tons mark by 2015
Value: World market for
processed meat is predicted to
grow at almost 4% a year to
reach nearly $340 billion in 2015
Asia-Pacific as center of
expansion
retail food stations and
increasing
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Taking Advantage of AEC – Region 3
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DTI IDP
Region 3 Population (2010) 10.20 million (big enough
market?)
RM Security:
– For imported RMs – near to Manila/Clark ports.
– If RM will be sourced locally:
• Region 3 supplies 7% of total PH cattle
production.
• Region 3 supplies 16% of total PH hogs
production.
• Region 3 supplies 33% of total PH cattle
production.
Availability of ports
Support Facilities: Presence of NMIS-accredited Poultry
Dressing Plants, Cold Storage Warehouses, Meat
Cutting Plants and Slaughterhouses.
HR: 226 higher education institutions in Region 3
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
+ Government Support Programs:
DTI-BOI
•Industry Development - DTI Roadmapping Program
•Investment Promotion - Incentives vis-a-vis 2014 IPP’s
listing on “Agribusiness/Fishery”
DTI-ROG
•Clustering (Regional TWGs)
•Shared Service Facility (SSF)
•SME Roving Academy
DTI-EMB, DTI-CITEM
•Matching Missions
•Annual Trade Fairs (IFEX)
DOST
Small Enterprise Technology Upgrading Program (SETUP)
DA
Roadmaps, Infra Support
BSP
Small Business Guarantee and Finance Corporation
(SBGFC) to address SME financing needs
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Some additional interventions needed:
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Food Safety (RA 10611, Food Safety Act of 2013)
Competitive livestock and poultry industries (DA)
Establishment of additional/new support facilities
– Sufficient Poultry Dressing Plants (many AAA-accredited)
– AAA Meat Cutting Plants
– AAA Slaughterhouses
– Additional Cold Storage Warehouses
Predictable and transparent import regulations (RMs)
Country-specific export market promotion approach
– Identification of competent national authority (EU)
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat visà-vis AEC
Closing Remarks
Concluding Remarks
• Roadmap Acceptance (Target: Not later than December 2015)
• Implementation
• Areas for enhancement:
 Comprehensive value/supply chain analysis
 Benchmark (Comparative) Study [goal: optimize the country’s
position in the regional/global value chain and facilitate the
country’s integration into the international and regional trading
and investment system]
 Investment opportunity studies within or related to the industry
 Role of Regions (Region 3)
DTI IDP
PH Processed Foods
Industry
Processed Meat RIA
PH Processed Meat vis-àvis AEC
Closing Remarks