Cheap chicken imports

Cheap chicken imports have been flooding the Philippine market.

Official data show that chicken imports for the first six months of 2010 have reached 49.4 million kilograms, which comprise 73.4 percent of the total chicken imports of 67.3 million kilograms in 2009.

If current trends continue, chicken imports may double this year since increased consumption is anticipated in the fourth quarter or Christmas season. Official data show that chicken imports are on a steady rise: 28.1 million kilograms in 2005;  32.7 million kilograms in 2006; 45.0 million kilograms in 2007; and 45.8 million kilograms in 2008.

Current trends indicate that cheap chicken imports could eat nearly 20 percent of the domestic market.

The entry of cheap chicken imports have adverse effects on domestic poultry industry, especially the broiler subsector, where 45-day and 60-day chickens are harvested for sale in the local market.
Data show that the domestic market consumes about 600 million kilograms of chicken a year, of which about 500 million kilograms come from the local poultry growers and the rest are imported.
Per capita consumption is 8.25 kilogram.

Leaders of the local broiler subsector have been warning that if the influx of cheap chicken imports continue, the domestic market would be adversely affected. At the rate the cheap chicken imports have been entering the Philippine market, the threshold has been breached, industry leaders have warned. They are now making a serious dent on the local poultry industry and irreversible losses are imminent for the local growers.

Chicken imports are 35-40 percent cheaper than locally produced ones.

They usually come from the US. Their cheap price comes from the huge government subsidies to poultry and livestock growers. They are being imported mostly by fast food joints like Jolibee, McDonalds, KFC, among others.They usually come in parts and not in whole.

Those that come here are mostly oversized chicken legs, thighs, and wings.The chicken breast part remains in the US market since it is the choice cut because of its low cholesterol content.

This is the reason why big fast food joints do not sell whole chickens; they only sell parts. Also, fast food joins generate a big part of their income from those chicken imports and not from hamburgers, of which the income is miniscule. On the contrary, other fast food joints, retailers, and restaurants use local chickens.

These include Mang Inasal, Max’s Aristocrat, Andok’s Baliwag, Mang Bok’s, Senor Pedro, among others.

Two big issues confront cheap chicken imports: health and taxation. The oversized nature of those imported chickens indicate they are heavily fed by power feeds and antibiotics to make them grow faster and bigger and resist diseases. Some independent studies indicated that the heavy power feeds and antibiotics have become health hazards to consumers since they found their way to the chicken meat, causing diseases including cancer, among others.

The read meat of chicken imports have been an issue of concern among local consumer groups and health advocates. There are a number of studies that seem to corroborate that chicken imports could cause diseases.

Also, imported chickens are said to be resistant to bacteria mainly because of the heavy antibiotic input.

The second issue is taxation. Chicken imports enjoy a zero duty, but importers have to pay the 12 percent EVAT. Although the choice cuts ofchicken cost are sold at between $1 – $1.10 per kilogram in the US market, the price of chicken imports has been undervalued at $0.54 per kilogram for the choice cuts. The price of those chicken legs, thighs and wings, which are not choice cuts, is further undervalued at the landed cost of only about P60 per kilogram.

Since the P60 per kilogram is the basis for the computation of the EVAT, the government loses a lot of revenues.

Domestic poultry growers have the capacity to meet any increase in local demand. Even without the chicken imports, local growers can readily meet the 10 to 15 percent annual increase. Domestic poultry growers are already complaining of the huge capital outlays for their business. Although many of them are contract growers, they have to spend a lot for the construction of their facilities. It has reached the staged of being big-time. If a grower could only have 10,000 heads, he is regarded as very small grower.

He has to have facilities that could accommodate at least 100,000 heads to stay viable.

In short, cheap chicken imports are not necessary. They are only hurting the domestic market and endangering public health. Several policy issues should be met on the issue of chicken imports: taxation; public health; protection of the domestic poultry industry; Philippine commitment to WTO agreement especially on imported chickens; among others. But Congress has to ask the Executive Department to go slow on those importations and consult the local poultry industry leaders on the issue.

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