THE local meat processing industry continues to scramble for raw material supply as the entire Europe remains technically shut out, with the industry seeking an easing of the import ban on the United Kingdom to replenish depleting stockpiles.

In what industry players describe as an “unprecedented situation,” Filipino consumers must brace for the absence of their favorite processed meat products, including hotdogs, from supermarket shelves.

Meat processing industry sources told the BusinessMirror that the industry’s supply of mechanically deboned meat (MDM) of chicken is now less than 45 days, forcing some processors to limit their production, with some having suspended selling in Visayas and Mindanao.

“It’s about less than 45 days,” Philippine Association of Meat Processors Inc. Director Jet B. Ambalada told the BusinessMirror, adding that certain brands are now absent from supermarket shelves.

“And that current supply is the more expensive [chicken] MDM. We are greatly concerned of a possible shortage of processed meat products in the soonest possible time,” Ambalada added.

In March, the BusinessMirror broke the story that the meat processing industry foresaw an imminent shortage of supply; and if there would be any supply it would be too expensive due to the temporary import bans imposed on European countries.

(Related story: https://businessmirror.com.ph/2021/03/29/meat-processors-file-price-hike-bids-with-dti/)

Europe accounts for 60 percent of the country’s chicken MDM supply.

Another industry source, who requested anonymity, told the BusinessMirror that even big meat processors are reeling from the lack of chicken MDM supply as they start to pull out certain products from supermarkets.

“There’s really a local supply shortage. We are getting information now that certain hotdog brands are running on very limited supply,” the source said.

Industry sources said the global chicken MDM market has turned into a seller’s market, since the remaining countries allowed to export to the Philippines recognize that Europe is technically still closed.

The price of chicken MDM now has risen to $1.7 per kilogram, which is already higher than a kilogram of a chicken leg quarter that ranges from $1.2 to $1.5 per kilogram. Domestic retail prices of chicken MDM seen by the BusinessMirror have risen to as much as P120 per kilogram, P40 lower than a kilogram of dressed chicken.

Due to the import bans imposed on European countries, the country’s chicken MDM imports from January to April declined by 34 percent to 55,778.675 metric tons, Bureau of Animal Industry (BAI) data obtained by the BusinessMirror showed.

Industry players noted that the meat processing sector is currently in a tight situation that has never happened before.

Aside from the lack of raw material that has pushed available supply to record prices, the industry is also affected by the worsening global shipping problems coupled with rising production costs of cans and cartons.

A source noted that the production costs of cans and cartons, which are necessary to process meat production, have also risen by 40 percent.

Given the current situation, the industry has a supply shortfall of about 20 to 40 percent of the current market demand, Ambalada said.

“What’s worrisome here is that the small processors will be the ones to shut down first, particularly those in Central Luzon and Northern Luzon. These are the ones producing house-hold siomai, longganisa, etc,” he said.

The BusinessMirror reported on Monday that global shipping costs continue to rise, with charter rates expanding by 65 percent this second quarter, dimming the situation for food importers, such as meat processors. (Related story: https://businessmirror.com.ph/2021/05/24/shipping-charter-rates-up-65-in-q2-food-importers-hurting/)

Industry sources told the BusinessMirror that some companies, especially big processors, have resorted to chartering one reefer vessel just to get mechanically deboned meat (MDM) of chicken from South America, which is about 20 percent more expensive than commercial shipping.

In its latest attempt to open up European markets for MDM, Pampi wrote to Agriculture Secretary William D. Dar on May 21 seeking the “zoning” of the United Kingdom for MDM importation, as what the Department of Agriculture (DA) did with the Netherlands.

The DA earlier imposed a temporary ban on poultry product imports from the United Kingdom due to outbreaks of Avian Influenza.

“As you may be aware, Sir, we are in desperate need to round up whatever volumes we can source from UK and EU to help mitigate the non-stop increase in the price of MDM from Brazil and North America,” Pampi said in its letter, a copy of which was obtained by the BusinessMirror.

Pampi told the DA that if MDM prices continue to rise to unforeseen levels, then keeping the prices of processed meat products “stable will no longer be sustainable.”

The BusinessMirror broke the story in March that several Pampi member-companies had filed price increase petitions with the Department of Trade and Industry (DTI) due to rising raw material prices caused by tight supply worsened by shipping delays.

Pampi earlier pronounced that despite the partial lifting of the import ban on the Netherlands, they cannot still source their required MDM volumes since Dutch exporters warned that they cannot comply with the Philippines’s “born and bred” condition for shipments.

“In the case of Netherlands which you had earlier directed to be zoned for MDM importation, there is hesitancy on the part of Dutch producers to export due to the in-country ‘born-and-bred’ condition on the source of the MDM raw material,” the group said.

“The apprehension is that they may not have enough raw material to produce MDM in the quantities we need,” it added.

Given this situation, Pampi argued that if it is allowed to import MDM from the UK, then there is a “good chance” that “UK producers may be able to supply some volumes” to the industry.

“We hope you will look at the UK option to help us continue producing affordable products for our people,” it said.

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