PH aims to boost dairy output but imports rule

Rene Pastor
The Philiippines faces a long arduous fight to reduce its heavy dependence on the US, New Zealand and Australia

DAIRY PRODUCTS. The Philippines wants to source more dairy products locally. Photo by AFP

Philippine Agriculture Secretary Proceso Alcala said Manila will aim to sharply increase its dairy herd and breeding program, but analysts feel the country faces a long arduous fight to reduce its heavy dependence on the U.S., New Zealand and Australia because of a rapidly growing population and strong demand for products like milk.

The Department quoted Philippine agriculture officials as saying milk production has been expanding by 7% the last 5 years.

National Dairy Authority administrator Grace Cenas said the country produced a record 18.45 million liters of milk in 2012, up 2.0 million liters from 2011.

You would think that sounds impressive. It is not.

Philippine milk production stands at just under 19,000 tons, or less than one pint per person. That means the Philippines is producing less than 1% of the dairy products it consumes in a year.

With resources being eaten up by the politically demanding task of hitting rice self-sufficiency, the idea of reducing dairy and milk imports looks out of reach at this time.

There just does not seem to be enough resources on hand to take care of this issue even though an agreement is in the works with New Zealand, the leading supplier of dairy products in the Philippines.

The U.S. agriculture attaché at the U.S. Embassy in Manila said in a report late last year that “dairy products are the country’s second largest agricultural import after wheat.” Attaché reports are not official data of the U.S. Agriculture Department, but they are considered authoritative and influential by the commodity community.

New Zealand is the market leader with 45% of dairy imports by the Philippines. They are followed by the U.S. with 25% and Australia with 11% of the market.

“After rocketing (up) 50% in 2011, U.S. dairy exports to the Philippines in 2012 are forecast to reach a record $328 million in 2012,” the attaché said. “While milk powder exports dominate this category, there has also been strong growth in U.S. cheese and whey sales as well. The Philippines is the 4th largest market for U.S. dairy exports.”

Livestock experts said that at best, the Philippines will be able to increase its dairy herd by about 1,000 head a year.

Numbers aside, a major hindrance to the Philippines is the productivity of each animal in its herd.

“The average Philippine milk production per animal (of) 8 liters/day remains low due mainly to poor feed and management practices,” the attaché report said.

In contrast, U.S. herds are able to produce 30 to 34 liters per day.

It is obviously not just a question of raising the number of dairy animals in the country. Farm and feed practices need to be overhauled as well.

The United Nations’ Food and Agriculture Organization calculates annual per capita milk consumption in the Philippines at 22 kg, just behind Thailand’s 26 kg, Malaysia’s 26 kg and the 287 kg seen in the United States.

That picture could soon change rapidly. “With a strong economy and a growing population of roughly 100 million in 2012, the Philippines is a large and rapidly expanding market for milk and milk products,” the U.S. agriculture attaché report concluded.

The report said an expansion in cold chain capacity, an increase in the number of supermarkets, and a blossoming food processing industry are helping to boost the market.

The stronger Philippine peso, which rose over 6% against the U.S. dollar in 2012, and the weak U.S. dollar when compared to competing countries would “make the Philippine market attractive for U.S. dairy exporters,” the attaché said. –


Note: The author is with Philippine Commodities Digest, a weekly publication of New Jersey-based A & V Media that provides a comprehensive roundup of developments and trends in the country’s key farming and mining sectors.

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