Characteristics of the philippines market for animal feed

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					Characteristics of the Philippines Market for Animal
Feed
March 2009
Prepared for:
Regional Agri-Food Trade Commissioner, Southeast Asia and Embassy of Canada, Philippines

Prepared by:
Stanton, Emms, & Sia
80 Raffles Place, Level 36, UOB Plaza 1,Singapore 048264
Tel: +65 6334 7030
Fax: +65 6234 1083
Email: emmsia@pacific.net.sg
Website URL: http://stantonemmsandsia.foodandbeverage.biz


1. Introduction

This report has been prepared by Stanton, Emms & Sia for the Regional Agri-Food
Trade Commissioner, Southeast Asia, and the Embassy of Canada in the Philippines.

This report has been prepared as a "first view" introduction to Canadian exporters of
feed ingredients and inputs. It should not be construed as a detailed study of the
Philippines feed processing industry or its demand for feed ingredients and inputs.

The products covered by this report are directly linked to agrifood commodities that
are produced by Canadian farmers, e.g. barley, wheat and oats, and those with
secondary links to such products, e.g., canola meal, whey, other industrial waste
products that can be used in feed, etc.




2. Policy affecting feed ingredients, including regulatory

The Philippines livestock industry is covered by the national agriculture development
plan known as "Philippine Agriculture 2020" (PA2020). This plan has a goal of
boosting agricultural output by about 7% per annum over the period between 2005
and 2020. It was launched by the administration of President Arroyo, which has a
focus on raising income levels in rural areas and amongst farming households.

It has three key focuses that are relevant to demand for animal and aquaculture
feed:

      Fishery development, which has been highlighted as a high growth area of
       potential for the Philippines over the period;
      Poultry product production for the export markets; and
      Commercial tie ups between private businesses and livestock farmers, i.e.
       smallholders, in the areas of both meat (all forms) and dairy products.
The area used for aquaculture will be expanded under the program.

The program aims to benchmark future development of these sectors along the lines
of the Philippines global success in the tropical fruit industry, namely for bananas,
pineapples and papaya. The program envisages attracting more investment from the
private sector into postharvest and processing facilities and distribution operations to
support the farmers' new and expanded operations.

Trade sources comment that, if the program is successful, it will almost certainly
boost demand for a range of different imported animal feed ingredients and inputs.
This situation will develop because of the shortages that exists in both energy and
protein inputs from local sources. There are inherent difficulties that exist for the
Philippines to supply all of its animal feed materials and products, e.g. in the
tropical/sub-tropical climatic conditions, and also other issues, such as periodic
typhoon and tropical storm damage to crops.

The government is also aware of this and has established a new program under
PA2020 to promote the growing and usage of cassava as an alternative to imported
corn. Trade sources comment that cassava has been used for a number of years as a
substitute animal feed ingredient by some large integrated producers, e.g. San
Miguel Foods.

The broad policy towards imports of animal feed ingredients or inputs is not
protectionist. Import duties are set at low levels because the government realises
that imports are needed to support effective livestock production in the Philippines.
The only real barriers to imports of such products lie in the area of animal and
human health and safety.

There has been a blanket ban on the import of meat and bone meal (MBM) in the
Philippines for many years. This step was taken by the government because there is
a very high level of unethical businesses practices in the livestock and animal feed
industry. Such a ban was needed to stop the inappropriate use of inexpensive MBM
in cattle feed by small and medium sized animal feed businesses. This would
increase the risk of a damaging BSE outbreak within the Philippines cattle population.

In 2007, the Philippines shifted away from the blanket ban and lifted the ban on
import of MBM from New Zealand because the country is recognised by the OIE as
having a negligible risk of BSE infection. In 2008, the ban on MBM imports from
Australia was also lifted. Some key points to note are as follows:

      The process of lifting the bans was started with the issuance of an
       Administrative Order (AO) titled “The Accreditation of Foreign Rendering
       Plants Exporting Processed Animal Proteins to the Philippines”.
      This AO requires the mandatory accreditation of plants that export all forms
       of animal proteins, not just cattle derived MBM, to the Philippines. It
       establishes a basis under which the longstanding “temporary” ban on cattle
       derived MBM can be lifted, or made permanent in the case of BSE affected
       countries, which includes Canada.

The conditions under which Australia cattle derived MBM are being allowed into the
Philippines are detailed and include the provision of an official veterinary certificate
issued by AQIS (the Australian Quarantine & Inspection Service) that includes
statements that the product:

          Is freely available for sale and use in Australia;
          Is of Australian origin;
          Is only for use in poultry, pig, aquaculture feed and petfood in the Philippines.
          Is not affected by diseases that are relevant to the product, e.g. BSE,
           because the diseases do not occur in Australia.




3. The Philippines livestock industries

3.1 The industry in overview

The Philippines has large industries producing pig and chicken meat. The cattle
industry, which mainly produces meat, is much smaller than these two industries
(see Tables below). Aquaculture is also sizeable with production output reported at
about 625,000 tonnes, which is about 20% of the Philippines total annual fish and
seafood production. All of these industries are mainly focused on servicing demand
from within the Philippines.



Overview of the Philippines Major Livestock Inventories – 2003 to 2007
                             (' 000 Head)




Type             2003         2004           2005           2006          (E) 2007




Chicken *        128,216      122,010        136,001        134,300       136,000




Pigs             12,364       12,562         12,140         13,047        13,250




Cattle **        2,585        2,593          2,489          2,525         2,650




Buffalo          3,180        3,270          3,327          3,358         3,365




*: Broilers and layers. **: Draft, beef and dairy cattle. E: Estimates.
Source: Government of the Philippines and trade estimates
Overview of the Philippines Major Livestock Production Output – 2003 to 2007
                                  (Tonnes)




Type               2003           2004          2005        2006        (E) 2007




Chicken meat       635,131        658,123       649,502     643,126     638,000




Pork               1,345,759      1,365,606     1,415,041   1,466,822   1,501,000




Beef               180,967        179,229       172,759     166,816     170,000




Buffalo meat       76,448         79,720        77,106      74,000      75,500




Raw cow's milk     11,250         11,550        13,000      12,000      12,500




E: Estimate
Source: Government of the Philippines and trade estimates




3.2 The pig farming industry

Pig farming is the second largest commercial agrifood industry in the Philippines,
after the banana industry. According to the 2006 Census of Philippine Business and
Industry (January 2009 Preliminary Data Release), it generated about 16% of the
Agriculture and Forestry Industry sales in 2006.

There are tens of thousands of pig farmers located all over the Philippines today. The
industry is dominated by small and medium sized producers, of which there are
estimated to be between 750,000 and 800,000 operations.

According to the Bureau of Animal Industry (BAI), these producers, who are mainly
“backyard producers” account for more than 75% of all pigs that are slaughtered in
the Philippines today. The balance of pigs is produced by large integrated commercial
farms, of which there are between 200 and 300 located across the Philippines.
The pig farming industry has been suffering from some animal disease outbreaks,
which impacted negatively on about 20% of all smallholder pig farms in 2006/2007.
Most recently, the BAI has been battling with an outbreak of the Ebola-Reston virus
on such farms.

The largest pig farming operations in the Philippines are operated by Foremost
Farms, Monterey Farms (San Miguel Corporation), Robina Agri-Partners (Universal
Robina), Federal Farms and PI Group.

According to the 2006 Census of Philippine Business and Industry, the poultry
industry generated about 11% of the Agriculture and Forestry Industry sales in
2006. Poultry farming is the third largest commercial agrifood industry in the
Philippines.




3.3 The poultry industry

The Philippines poultry industry is focused mainly on chicken. Production from the
duck industry equates to around 7% of poultry industry output. The chicken industry
has two broad segments:

      Commercial farms, which are mainly integrated operations that supply over
       80% of all chicken meat and eggs retailed in the Philippines. These farms
       have 40% of the national chicken standing inventory, with about 66% being
       broiler chicken, and, the balance, layer chicken ; and
      Smallholder farms, of which there are tens of thousands of operations mainly
       described in the Philippines as backyard farms. They are well dispersed all
       over the Philippine archipelago and have highly localised markets. These
       farms tend to utilise local breeds of chicken and ducks. In total, their flock
       represents about 60% of the national chicken inventory.

While there are small and medium sized commercial farms, the bulk of production
comes from the large sized integrated businesses run by General Milling Corporation,
San Miguel Pure Foods, Swift Foods, Tyson Agro-Ventures, Universal Robina (Robina
Agri-Partners) and Vitarich.




3.4 The aquaculture industry

The Philippines aquaculture industry is small, relative to others in South East Asia.
The industry has also declined in size over the past 8 to 10 years or so, especially in
the area of prawn farming, which has been the subject of major disease problems.
Periodic typhoon damage has also been a problem for the industry. Prawn farming
reached its peak production in 1992.

In 1985, the industry was the 4th largest in the world. Today, it is around the 15th
largest. The industry now has more of a focus on seaweed than on fish and other
seafood.
The overall situation of aquaculture today is rather strange because the Philippines
positions itself as an Asian region leader in providing technical services to the
aquaculture industry, both locally and overseas. Trade sources comment that, with
its strong technical resource base, the Philippines should have a much larger and far
more successful aquaculture industry than is evident today.

65% of the industry production currently involves Milk Fish. Some trade sources
believe that milk fish comprise 90% of industry output. The other key species farmed
include Tilapia (20% official share), prawns (7%), carp (3%) and oysters (2%). The
industry is fragmented, with around 90% of output coming from well dispersed
brackish water fishponds. The balance of production comes from caged operations.
Freshwater aquaculture produces less than 1% of total production.




4. The Philippines raw materials for animal feed production

The Philippines produces around 6 million tonnes of agricultural products and related
waste products that are used in local animal feed. The Chart below provides an
overview of what is used in the Philippines.

Animal Feed Ingredients in the Philippines – 6 Million Tonnes




Source: Government of the Philippines


Demand for animal feed is currently around 8 million tonnes per annum. Demand
fluctuates with a range of different factors:

       Disease outbreaks, which periodically break out in the smallholder area of the
        pig industry, as mentioned earlier in this report. (Note: According to the
        Department of Agriculture, the Philippines continues to be H5N1 free so there
        are no restrictions on its ability to export chicken meat);
      The price of key feed ingredients, with the highest price sensitivity occurring
       for soybean meal (which represents about 50% of manufactured animal feed
       consumption by weight) and coconut oil; and
      Periodic typhoon and major tropical storm damage.

The structure of demand is reported as follows:

      Poultry feeds – 55%
      Pig feed - 33%; and
      Aquaculture and other feeds – 12%.




5. The feed industry in brief overview

The Philippines currently has about 700 businesses involved in its animal feed
industry. The industry is relatively fragmented with 10 of the businesses operating
about 60% of the industry's total capacity. Today, there are as many animal feed
brands as there are producers.

According to the Association of Philippines Feed Millers, industry sales are about C$
2.1 billion per annum. Some key points to note about the industry are as follows:

      It is composed of commercial millers, which comprise about 37% of
       businesses, home-mixers (43%) and integrated producers (20%).
      74% of the operations are on the main island of Luzon, 14% on Mindanao and
       12% in the Visayas.
      The commercial millers and integrated producers produce about 56% of the
       feed that is available in the Philippines. Home-mixers produce the balance of
       supply.

The largest companies involved on the industry are San Miguel Corporation (25% of
production capacity), Cargill Philippines (14%), Swift Foods (13%), General Milling
Corporation (12%), Vitarich (11%), Universal Robina, Sun Jin Philippines, Foremost
Farms, Tyson Agri-Ventures and Grain Handlers. San Miguel is the Philippines largest
corporation and has animal feed operations all over the country.




6. Overview of the markets for feed ingredients and inputs

The Philippines is importing both prepared animal feeds and feed ingredients and
inputs. Imports of the products covered by this report amounted to C$ 573.3 million
in 2007, up from C$ 496.6 million in 2003 (see Table below for details on majority
import categories).
                                                                   Import Market Shares
Product                2003 Imports          2007 Imports          of Leading Supply
                                                                   Countries




                                                                   In 2007, based on tonnes
                                                                   landed:
                       67,869 tonnes         116,523 tonnes
Prepared animal                                                    -Netherlands: 19%.
                       valued at C$ 77       valued at C$ 97.3
feeds                                                              · USA: 17%
                       million.              million.
                                                                   -China: 7%.
                                                                   -Canada: 1%.




                                                                   In 2007, based on tonnes
                       1.3 million tonnes    1.3 million tonnes    landed:
Soybean meal           valued at C$ 376.5    valued at C$ 417.6    -Argentina: 69%.
                       million.              million.              · USA: 23%.
                                                                   -India: 7%.




                                                                   In 2007, based on tonnes
                       20,104 tonnes         37,015 tonnes
                                                                   landed:
Palm oil cake          valued at C$ 2.7      valued at C$ 8
                                                                   -Indonesia: 58%.
                       million.              million
                                                                   · Malaysia: 40%.




                                                                   In 2007, based on tonnes
                                                                   landed:
Other vegetable oil    2,854 tonnes valued   4,278 tonnes valued
                                                                   -Canada: 52% *.
cake, type undefined   at C$ 0.6 million     at C$ 0.8 million
                                                                   · China: 20%.
                                                                   -India: 11%.




                                                                   In 2007, based on tonnes
                       44,748 tonnes         23,983 tonnes         landed:
Fish meal              valued at C$ 31.4     valued at C$ 18.4     -Peru: 24%.
                       million.              million               -USA: 15%.
                                                                   -Thailand: 14%.




                                                                   In 2007, based on tonnes
Animal proteins        11,814 tonnes         25,262 tonnes         landed:
(non-cattle derived    valued at C$ 6.3      valued at C$ 10.6     -Netherlands (42%).
only) **               million               million               · Denmark (17%).
                                                                   -USA (14%).
                                                                         In 2007, based on tonnes
                                                 32,305 tonnes           landed:
Starch industry          6,564 tonnes valued
                                                 valued at C$ 5.1        -Thailand: 75%.
residues                 at C$ 2.1 million
                                                 million.                · USA: 11%.
                                                                         -India: 5%.




Brewing and                                      66,067 tonnes           In 2007, based on tonnes
                         170 tonnes valued
distilling industry                              valued at C$ 15.5       landed:
                         at C$ 34,000.
residues                                         million.                -USA: 99%.




                                                                         In 2007, based on tonnes
                                                                         landed:
                         38,644 tonnes           43,084 tonnes
                                                                         -USA: 39%.
Whey                     valued C$ 37.2          valued at C$ 67.8
                                                                         -Australia: 13%.
                         million.                million.
                                                                         -France: 10%.
                                                                         -Canada: 1%.




*: Based on Canadian export data, this is Canola meal that has been incorrectly classified by the
Philippines importer.
**: The first cattle derived products (MBM) entered from New Zealand in 2008.


Trade sources comment that the higher prices of traditional animal feed ingredients
(soybean meal and corn) in 2007 and 2008 saw feed producers seek out lower cost
ingredients. This resulted in large increases in imports of alternative feed
ingredients, including palm oil cake and residues from the food processing and
brewing industries. This has introduced new inputs and feed formulations to the
industry and, to an extent, may have altered the feed ingredient demand profile into
the long term.

The Philippines also imports large quantities of wheat and corn (maize). Additionally,
small quantities of barley and oats are also imported for use in specialty feed, as well
as some grain sorghum (see Table below). Most wheat is imported to produce flour
for human foods. The Table provides information on corn (maize) so the reader has a
full appreciation of the size of the Philippines demand for imported feed ingredients
and inputs.



                                                                      Import Market Shares of
Product         2003 Imports              2007 Imports
                                                                      Leading Supply Countries




                2.8 million tonnes        1.8 million tonnes          In 2007, based on tonnes
Wheat           valued at C$ 669.4        valued at C$ 467.4          landed:
                million.                  million.                    -USA: 68%.
                                                                      -Canada: 20%.
                                                                 -China: 11%.




                                                                 In 2007, based on tonnes
                                                                 landed:
Corn         99,797 tonnes valued at   152,855 tonnes valued
                                                                 -Argentina: 89%.
(Maize)      C$ 30.9 million.          at C$ 51.9 million.
                                                                 · Indonesia: 3%.
                                                                 -Thailand: 3%.




                                                                 In 2007, based on tonnes
             2,131 tonnes valued at    2,304 tonnes valued at    landed:
Barley
             C$ 0.5 million.           C$ 0.7 million.           -USA: 55%.
                                                                 -Australia: 44%.




                                                                 In 2007, based on tonnes
                                                                 landed:
             3,889 tonnes valued at    4,185 tonnes valued at
Oats                                                             -Australia: 43%.
             C$ 0.9 million.           C$ 1.3 million.
                                                                 · Canada: 31%.
                                                                 -China: 18%.




                                                                 In 2007, based on tonnes
Grain        22,513 tonnes valued at   11,559 tonnes valued at
                                                                 landed:
sorghum      C$ 3 million.             C$ 3 million.
                                                                 -China: 93%.




Feed wheat is reported to be a very important input, which has comprised between
30% and 40% of feed ingredients every year over the past 5 years. Demand for feed
wheat fluctuates from year to year with the price of corn, for which it is a substitute.
As Canadian wheat has preferences for use in higher value bread/baked products
flour, it is unlikely that Canada has any significant involvement in the feed wheat
area of the market.




7. Developed country involvement in the market (incl. Canadian
exports).

The Developed World supply base has a sizeable impact on the Philippines market for
animal feed ingredients and inputs. This situation arises because of strong links
between Philippine users and suppliers in the USA, the EU and Australia.

These countries, and Canada, are regarded highly for the quality of their products
and service, which is an important part of the value-for-money demand criteria from
the larger feed producers and users in the Philippines.
         The leader amongst the Developed World supply countries is the USA, which
          has very strong longstanding links with importers and users. The USA is often
          the “first port of call” for Philippine buyers seeking feed ingredients and inputs
          for their operations.

          The USA supplies over 400,000 tonnes of such products to the Philippines
          each year. The main products supplied are soybean meal (310,000 tonnes),
          brewer and distillery residues (65,000 tonnes), prepared animal feeds and
          additives (20,000 tonnes), whey (17,000 tonnes) and other meals.
         The other leading Developed World suppliers are the Netherlands (36,000
          tonnes per annum), France (9,000 tonnes), Denmark (6,000 tonnes), Italy
          (4,000 tonnes) and Germany (4,000 tonnes). These countries supply
          prepared animal feeds and additives, whey and some meals.

Canada has a small and variable market for prepared feeds and animal feed inputs in
the Philippines. Although this is the case, it is a major supplier of wheat and oats.
The Table below provides an overview of Canada's fodder/feed exports to the
Philippines in the period from 2004 to 2008.



              Canada's Fodder/Feed Exports to the Philippines – 2004 to 2008
                                       (In $Cdn)




         PRODUCT
HS                                  2004        2005        2006        2007        2008
         DESCRIPTION




         TOTAL                      4,115,672   5,371,975   9,315,410   3,015,005   2,304,688




         Food industry residues &
23                                  4,115,672   5,326,229   9,307,532   2,872,150   2,275,441
         waste, prepared fodder




         Grains products, malt,
11                                  0           45,746      0           87,667      0
         starches




10       Grains, bulk or cereals    0           0           0           46,943      0




         Oilseeds, seeds for
12                                  0           0           7,878       8,245       29,247
         sowing, fodder
Source: Agriculture & Agrifood Canada




8. Market access for the products covered by this report

The Philippines import duties for the products covered by this report are generally
low, unless the product could have an impact on a sensitive agricultural products
that is grown in the Philippines, e.g. corn, or could impact on the local feed
processing industry (see Table below).



Product                                           Import Duty (MFN)




Prepared animal feeds                             1% or 35%




Soybean meal                                      3%




Maize meal                                        10%




Canola and rapeseed oil cake                      3%




Other vegetable oil cake, type undefined          3%




Fish meal                                         1%




Meat meal, includes poultry based products        1%




Brans and sharps, cereals and legumes, not corn   3%




Starch industry residues                          1%
Brewing and distilling industry residues          3%




Whey                                              1%




Wheat                                             3%




Barley                                            7%




Oats                                              7%




Source: Government of the Philippines


The Philippines is a full member of the ASEAN Free Trade Area. Its import duties on
all of the above products have been set at 0%, except for corn/corn based products
where the Philippines has retained the right to maintain a level of protection from
other ASEAN region products until 2010.

Under the ASEAN – Australia – New Zealand Free Trade Area agreement that was
signed on 27th February 2009, ASEAN, Australia and New Zealand will establish a
free trade area from the 1st July 2009. This agreement will see the phasing in of
lower tariffs on Australian and New Zealand products that are exported to the ASEAN
member states. The Table below provides details of these tariffs that will be
applicable to any such products that enter the Philippine market.



                  New ASEAN – Australia – New Zealand FTA Tariff Rates




                                      MFN Base    AANZFTA Preferential Tariff
Product
                                      Rate        (Mainly phased-in rates)




                                                  0% in 2010 and 2013, or 5% from 2018,
Prepared animal feeds                 1% or 35%
                                                  depending on product type.
Soybean meal                      3%    0% in 2010




Maize meal                        10%   0% in 2012




Canola and rapeseed oil cake      3%    0% in 2010




Other vegetable oil cake, type
                                  3%    0% in 2010
undefined




Fish meal                         1%    0% in 2010




Meat meal, includes poultry
                                  1%    0% in 2010
based products




Brans and sharps, cereals and
                                  3%    0% in 2010
legumes, not corn




Starch industry residues          1%    0% in 2010




Brewing and distilling industry
                                  3%    0% in 2010
residues




Whey                              1%    0% in 2010




Wheat                             3%    0% in 2010




Barley                            7%    0% in 2011
Oats                               7%             0% in 2011




Source: Philippine tariff commitments under the ASEAN – Australia – New Zealand Free Trade
Agreement


Based on the information in the above Table, the new ASEAN – Australia – New
Zealand Free Trade Agreement will result in an immediate market entry price
disadvantage for the range of Canadian origin products that are covered by this
report. This could be a very important factor in making sales in a market where
ingredient buyers are generally price sensitive.

The Philippines' laws on import of animal feeds require that the importer and product
be registered with the Bureau of Animal Industry and that an import permit be
obtained before the products are imported to the Philippines.




9. User purchasing criteria

The Philippines has two markets for animal feed:

       The small and medium sized farmers, which include backyard farmers and
        aquaculture operators that use commercial feed. The use of trash feed is a
        major practice amongst backyard pig raisers.
       The large integrated livestock producers and aquaculture operations.

The difference between these two markets lies in the feed buyers' and users'
different emphasis on price, technical specifications and feed functionality.

Small and medium sized farmers have a very high level focus on feed price rather
than on the technical or functional characteristic of the feed that they buy. This price
sensitivity is driven backwards along the supply chain to the feed manufacturer and,
even, to the feed ingredient importer.

The purchasing criteria of the larger users are oriented around obtaining value-for-
money from trusted suppliers in terms of:

       Technical characteristics and on-farm performance of the feed;
       Price, including how market entry price works in the “feed versus input cost”
        formulation in the Philippines; and
       Service to buyer and user, including facilitating compliance with Philippine
        laws and assisting with technical aspects of usage, as is required.
10. Conclusion for Canada

Over the past 3 years, the Philippines has been in a period of economic growth that
has been better than at anytime over the past 30 years. Analysts comment that this
is the result of policies that were promulgated and activated by the administration of
President Arroyo. This situation has established higher levels of confidence in the
Philippines than have existed at other times of global, regional or national crisis.

Generally, the livestock industry remains buoyant. The primary drivers of demand for
imported feed in ingredients and inputs will be the pig/pork and chicken meat/eggs
industries over the next 5 years. Trade sources also comment that demand for
aquaculture feeds will continue to grow at rapid rates from today's relatively small
demand base because of the planned expansion in the area used by aquaculture
farms.

Trade and government forecasts indicate that domestic consumption could rise by
the following rates over the next 10 years or so:

      Pork – 3% to 4% per annum;
      Chicken meat – 4% to 5% per annum; and
      Eggs – 2% to 3% per annum.

These forecasts are underpinned by growth in the Philippine population and higher
disposable incomes on a nationwide basis.

The higher growth rate forecast for chicken meat also takes into account increased
overseas demand for chicken meat exported from the Philippines. There is a belief
amongst the larger livestock producers that they will be able to take benefit from the
ASEAN Free Trade Area in a big way once the tariffs on meat and poultry trade are
reduced to between 5% and 0% in 2011, and to 0% within 5 years or so thereafter.

The feed industry is equally buoyant about the future and continues to see strong
demand for imported ingredients and inputs because of the large deficiencies that
are inherent in Philippines agricultural production.

The Philippines has to import feed products otherwise its meat, poultry and
aquaculture industry would cease to operate effectively, which would result in supply
shortages and higher prices for local consumers. Lower landed costs, as a result of
the collapse of commodity and ocean freight cost in the second half of 2008, are also
seen as positive for demand over the next 2 years.

The economic forecasts for the Philippines in 2009 now range from a recession of
1.9% to growth of around 2.5%. 2010 is expected to see higher growth under
circumstances where the economic downturns in the USA and Japan bottom out (see
Table below).
Year    Worst Case Growth Scenario       Best Case Growth Scenario




2009    (1.9%)                           2.5%




2010    1.4%                             3.5%




Source: Government of the Philippines, Asian Development Bank and the Economist (Latest at time
of writing).


Based on these forecasts, meat and poultry producers and animal feed
manufacturers do not see their market crashing as it has at times of political or
economic crisis and slowdown in the past. In reality, they see some level of
slowdown in demand, higher caution in the consumer market, and an increase in
price sensitivity along the supply chain over the next 12 to 18 months. Under these
circumstances, there will still be strong demand for feed ingredients and inputs and
this will also cover valued products from Developed World.

Canadian exporters should note that the Philippines larger feed companies have
strong demand for feed ingredients and inputs from the Developed World, including
the USA and various EU countries, especially the Netherlands. As buyers are
interested in alternative ingredients and inputs, there are likely to be prospects for
Canadian exporters to explore in the markets where U.S. and EU exporters are
involved, e.g. prepared animal feeds, meals of various types, food processing
industry residues and whey.

Under these circumstances, Canadian suppliers who wish to participate in the market
should remain engaged in it by continuing to promote their products to the major
importers and users of feed ingredients and inputs in the Philippines.

Canadian producers with other products related to opportunities in the markets
profiled in this report, and who would like more market information or contacts,
may contact the Agri-food Trade Commissioner at the Embassy of Canada in the
Philippines at: infocentre-manila@international.gc.ca.

				
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