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Oversupply Worries Chicken Farmers in the Philippines

10 February 2014

PHILIPPINES - Poultry farmers have requested government help to reduce retail prices in order to address current over-supply in the market.

A group of poultry growers is asking the Department of Trade and Industry to lower the suggested retail price in anticipation of an oversupply of chicken, reports GMA News.

Jose Inciong, president of the United Broiler Raisers Association (UBRA), said the group expects a chicken glut "unless there are interventions put in place by players and other stakeholders."

He said current farm-gate prices average 82 pesos (PHP) per kilogram of live weight, up from a 2013 low of PHP45 per kilo. With an oversupply expected this quarter, those prices could fluctuate between PHP60 to PHP85 per kilo. "Prices will remain volatile because of oversupply," he said.

Chicken retails for from PHP120 to PHP135 in most public markets. Mr Inciong said the usual mark-up on farm-gate price is PHP30 unless other middlemen are involved.

"The problem is, even if farm-gate prices are low, this is not felt by consumers. Right now, we are trying to coordinate with the DTI and the [Department of Agriculture] to adjust the suggested retail prices when farm-gate prices are low so that the excess supply can be absorbed," he said.

The normal annual frozen inventory for chicken is usually placed at 5,000 tonnes but supply reached 20,000 tonnes in October 2013, a record high for the industry.

Last November, Typhoon Yolanda caused billions in damage in the central Philippines. According to a report on Sun.Star Cebu, the Department of Agriculture estimated damage to the poultry industry on Bantayan island in Cebu at PHP421 million. Bantayan is a major supplier of poultry and eggs to the Visayas.

"Prices fall because there are speculative breeders who anticipated a large demand because it was the Christmas season. Most new players have this mindset, so farm-gate prices have been depressed," said Mr Inciong.

He told GMA News said that despite the expected oversupply, lower retail prices will allow for a faster turnover to absorb that extra supply.

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