Meat and meat products to the Philippines

Trends and opportunities

The market

The meat processing industry is divided into two general categories – both have roughly equivalent sales volumes:

• Fresh processed meats, such as hot dogs, ham, bacon and cold cuts
• Grocery products or canned meats, such as corned beef, meat spreads, luncheon meats and canned sausages

Meat volumes are predicted to grow in the Philippines because of the following reasons:

• Requirements are increasing due to a population growth of 2.3 per cent per annum that will take the population from its current 80 million to over 152 million within the next two decades.
• The supply of frozen beef to major local manufacturers is increasing. The majority of Filipino consumers still prefer to purchase locally manufactured meat products such as canned beef and hotdogs.
• The growth of the food service sector and, in particular, fast food chains, should fuel continued demand for beef meat patties and prime cuts.

Given the frequency of mad cow and foot and mouth disease outbreaks in Europe and the Americas, Australian meat exporters are well placed from a food safety point of view but have been suffering from lack of competitiveness in recent times.

While beef consumption in the Philippines has grown significantly in recent years, the relatively small cattle population and the Filipinos’ strong preference for pork and chicken, still limit production. Pork and chicken are less expensive and in more abundant supply than beef.

Opportunities

There are opportunities in the Philippines for Australian suppliers to capture a greater share of the increasing market for meat related products. Demand for quality, price-competitive meat and meat products is growing rapidly in accordance with the expanding economy, the increasing consumer purchasing power, which is fostering a growing restaurant and fast-food industry, and an expanding smallgoods manufacturing sector.

Opportunity areas in the Philippines meat industry are in beef and lamb prime cuts for food service; and by products/non primal cuts of beef, lamb, chicken and pork for processing.

Competitive environment

The Philippine meat industry consists of a few, large-scale, highly mechanised commercial producers and hundreds of backyard farmers. The industry produces pork and pork products, chicken and chicken products and, to a lesser extent, beef and beef products.

Both large and medium-scale meat processors utilise local and imported meat products. In recent years, buffalo meat from India and beef products from Brazil has become a cheaper alternative to beef as an ingredient in processed meat products.

Tariffs, regulations and customs

Import duties for fresh, chilled and frozen beef and sheep meat are 10 per cent and five per cent, respectively.

Fresh, frozen and chilled meat products are exempt from the payment of a 10 per cent Value Added Tax (VAT). However, the 10 per cent VAT is still applicable to processed meats.

A minimum-access volume (MAV) restriction for pork and poultry continues to be implemented and currently stands at 40,955 metric tonnes and 17,746 metric tonnes, respectively. The tariff rates for pork and chicken range from 30-60 per cent, depending on the cut and whether they are in or out of quota.

In-quota and out-quota tariffs are applicable due to local production. The MAV policy instructs local importers to apply for an allocation per year with the Department of Agriculture. The in-quota tariff applies to products imported within the approved allocation and the out-quota tariff applies to products imported in excess of the allocation.

Philippine importers of meat and meat products require a Veterinary Quarantine Clearance to Import (VQC) from the Bureau of Animal Industry. Products covered by an MAV requirement must bear an MAV Import Certificate, which is issued by the MAV Management Committee of the Department of Agriculture prior to the issuance of the VQC.

Exporters need to secure a Veterinary Health Certificate from the concerned authority of the country of origin prior to shipment of product.

Marketing your products and services

Market entry

The market for imported meat and meat products in the Philippines is clearly segmented. There are two distinct sectors:

• Supermarkets, deluxe hotels and first-class restaurants for prime cuts
• Fast-food chains and smallgoods processing companies who use manufacturing grade meat

Food processing companies, hotels, restaurants and fast-food chains obtain imported meat from local importers or indentors. The majority of meat importers are based in Metro Manila. Several major manufacturers and fast food chains import directly.

Philippine manufacturers, retailers and institutional users rarely buy direct from overseas companies due to the lengthy paperwork associated with importing. Some methods recommended for entering the meat industry in the Philippines include:

• Appointing a distribution partner to handle importing and customer liaison
• Managing key customer accounts from Australia and finding a fulfilment company to warehouse and ship to customers
• Setting up a representative office in the Philippines
• Working with an Australian consolidator to share distribution with other Australian companies with synergistic product range

Price is still the key factor in the decision making process for major processors and fast food companies. Companies attempting to sell to these companies should consider the following:

• At what cost will the end product be sold?
• How can I add value to give the buyer better value for money?
• How can I innovate to improve convenience and reduce costs?
• How can I assist in logistics and supply chain management?

Selling prime cuts to the retail or restaurant/ hotel sector can be difficult due to smaller consumer demand. When presenting your product to this sector of the market, whether direct or through your distributor, you will need to consider the following:

• What is the value of your product to the buyer?
• How does your product fit with its current offerings/ branding?
• Who are the target end consumers?
• What are the projected levels of sales?
• What will the retail price be?
• What margins will the retailer and the distributor expect?
• How are you going to promote the product?

The market for beef and lamb is extremely price sensitive. Margins will depend upon the projected sales volumes and the grade of the meat. Arrange this carefully as it can have a big impact on your success and your profits. Build in your distributors’ and the end users’ margins when you are determining your product pricing.

Distribution channels

Distribution within the Philippines is still developing and cold storage and quality control can be a problem. Exporters should work closely with local distributors to ensure products are stored and distributed in a way that does not affect quality and shelf life.

Links and industry contacts

Meat-related resources

Bureau of Animal Industry - www.da.gov.ph
Visayas Avenue
Diliman, Quezon City
Philippines
Tel: (63 2) 927 0871
Fax: (63 2) 928 2746

National Meat Inspection Commission (NMIC) - www.da.gov.ph
Bureau of Animal Compound
NMIC Visayas Avenue
Diliman, Quezon City
Philippines
Tel: (63 2) 924 7977
Fax: (63 2) 924 3118

Philippine Association of Meat Processors Inc. (PAMPI)
c/o Suite 203-204 Sunrise Condominium
Ortigas Avenue, Greenhills 1502
Metro Manila
Philippines
Tel: (63 2) 721 1813
Fax: (63 2) 721 2365

Meat Importers and Traders Association
c/o Mayon Consolidated
91-95 Panay Avenue
Quezon City
Philippines
Tel: (63 2) 372 3944
Fax: (63 2) 372 3253

Government, business and trade resources for the Philippines

Department of Agriculture - www.da.gov.ph
Department of Health - www.doh.gov.ph
Bureau of Food and Drugs - www.doh.gov.ph/BFAD
National Food Authority - www.nfa.gov.ph
Board of Investments - www.boi.gov.ph
Department of Trade and Industry - www.dti.gov.ph
Bureau of Product Standards - www.dti.gov.ph/bps
National Statistics Office - www.census.gov.ph
Association of Food Industries - www.philexport.org/members/afi/food.htm

Philippine Chamber of Food Manufacturers
12/F Room 1216 Cityland 10 Tower 2
HV dela Costa St. Corner Ayala Avenue
Salcedo Village, Makati City
Philippines
Tel: (63 2) 892 4163, 894 0388
Fax: (63 2) 893 3893

Australia New Zealand Chamber of Commerce - www.anzcham.com
7/F Oakwood Premier
Glorietta 4, Ayala Centre
Makati City 1200
Philippines
Tel: (63 2) 755 8840/41
Fax: (63 2) 755 8843/44
Email: anzcham@anzcham.org

Service providers

MBT Customs Brokerage
Richworld Building, Suite 301
8060 Estrella Street
San Antonio Village 1203
Makati City
Philippines
Tel: (63 2) 897 1001
Fax: (63 2) 895 1186
Email: mbt@epic.net

Contact details

The Australian Trade Commission (Austrade) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.

Austrade offers practical advice, market intelligence and ongoing support (including financial) to Australian businesses looking to develop international markets. Austrade also provides advice and guidance on overseas investment and joint venture opportunities, and helps put Australian businesses in contact with potential overseas investors.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

(Last updated: 17 Jul 2007)