BACKGROUND OF THE STUDY

Pork is the most widely consumed meat in the world. People eat many different pork
products, such as bacon, sausage and pork chops. You might grill pork ribs in the
summer, or you might enjoy a Christmas ham.

A 250 pound market hog yields about 150 pounds of pork. In addition to pork, several
valuable products come from swine (USDA, 2012). These include insulin for the
regulation of diabetes, valves for human heart surgery, suede for shoes and clothing,
and gelatin for foods and non-food uses.

Swine by-products are also important parts of products such as water filters, insulation,
rubber, antifreeze, certain plastics, floor waxes, crayons, chalk, adhesives and fertilizer
(USDA, 2012). Lard is fat from pig abdomens and is used in shaving creams, soaps,
make-up, baked goods and other foods.

The Philippine swine industry is seen to undergo tough production challenges in 2014
due to higher power, fuel and feed costs which could discourage some commercial and
backyard raisers from increasing their herd size.

But demand for pork is seen to remain mild to moderate in the medium term. Thus, live
weight and pork retail prices are expected to stay firm at least until May, allowing
producers to enjoy modest profit from their farms while viajeros (traders) are likely to
continue to benefit from good trading margins.

The Philippine pork industry had a heyday in the first ten months of 2013 compared to
dismal performance in the two preceding years. This was largely because sustained
economic growth of the country (doing at 7% in the first three quarters of 2013) and the
run-up to the mid-term and local elections held in May 2013, generated strong demand
for meat products, notably pork, and consequently good live weight prices of swine that
benefited producers.
But at the start of 2014, the hog industry, along with the entire poultry and livestock
sector, had been confronted with an impending increase in power rates, coupled with
hike in fuel and oil prices. As a result, these adverse development s are seen to put
pressure on production cost, and many hog raisers who lack capital, may be forced to
limit their farm size as they could no longer afford to maintain a huge herd.

Of late, prices of vital feed ingredients, notably US and Argentine soybean meal and
Peruvian fishmeal, have also gone up due to foreign currency fluctuation. With value of
the Philippine peso dropping against the US dollar, importing these feed raw mats have
become more expensive, thus price of finished feed products will likely go up,
discouraging farmers to grow more pigs.

A number of farmers also expect a possible slight drop in pork demand in the early
months of 2014, partly because of the post-Christmas holiday decline in consumer
spending, and a drop in purchasing power of Filipinos especially those in central
Philippines in the wake of Super Typhoon Yolanda.

But from mid- March toward the end of the first semester, pork demand would likely pick
up, albeit not as strong as during the same period of 2013, due to the season of
graduation parties, town fiestas and other social events that normally increase food and
pork consumption. With this expectation, hog raisers may yet be encouraged to grow
more animals despite apprehensions of looming power and oil price hikes, confident
that they could still make money.

MARKET STRUCTURE

Perfect competition exists when: Many firms sell an identical product to many buyers;
There are no restrictions on entry into (or exit from) the market; Established firms have
no advantage over new firms; and Sellers and buyers are well informed about prices.
Pork industry has all the classification of the said type of market structure leading to the
pork be classified as a perfect competition.

Pork is an agricultural market. In some cases, there are several farmers selling
identical products to the market, and many buyers. At the market, it is easy to compare
prices. Therefore, agricultural markets often get close to perfect competition

FACTORS AFFECTING DEMAND AND SUPPLY OF PORK

While supply is influenced by production it is not always the same as production (e.g.
farmers may sometimes grow perishable crops and not harvest them because the price
is too low). For less perishable crops, farmers or traders may decide to store them in the
hope that prices will rise, rather than sell them immediately. When prices do rise they
may take the products out of store to sell. At this time supply is equal to production
harvested for immediate sale plus products taken out of store.

However, it should be stressed that demand is not how much people would like to buy,
nor what they should buy for a healthy lifestyle. It is what they are prepared to buy at the
prevailing price.

1. One factor is income. An increase in disposable income enables consumers to

be able to afford more goods. Higher income could occur for a variety of reasons,
such as higher wages and lower taxes.
2. An increase in the quality of the good affects demand and supply.
3. In rainy seasons there will be increased demand for banana because supply will
decrease.
4. The total amount of suppliers will also affect demand and supply of banana if
producers enter a new markets and supply increases as well.
5. Necessities versus Luxuries - It is harder to find substitutes for necessities so
quantity demanded will change less.
 6. Relative Size of Purchase - Purchases which are a very small portion of total
expenditure tend to be more inelastic, because consumers are not worried about
the extra expenditure.

ELASTICITY
YEAR QTY. DEMAND (number PRICE (per head in
of pigs in Million) Billion)
2009 23.97 2.24
2010 24.13 2.28
2011 24.35 2.32
2012 24.40 2.36
2013 24.55 2..40

2009
2010
Inelastic Elasticity=
2011
2012 0.3759
Inelastic
2013 Elasticity=
0.5219
Quantity Inelastic Elasticity= of demand and price of pork increases
annually. 0.12
Inelastic Elasticity=
0.3647

CONCLUSION

The rise of the US dollar against the Philippine peso, if sustained for a longer period,
could also dampen interest among meat importers to bring higher volume of pork
products. This may force them to look into the local market for their pork needs.
Should this happen, it could auger well for local pork producers because it allows live
weight/farm gate price of pigs and retail price of pork to remain strong to their own
advantage and benefit.
BAI (Bureau of Animal Industry) data show pork the biggest meat import commodity.
The global trend of increasing free trade has sent fears that imported frozen pork poses
a big threat to the local pig industry. This also becomes a sensitive issue to local
producers due to the problem of pork smuggling. On the other hand this globalization
may present opportunities to local pig producers.

RECOMMENDATION

With a higher landed price due to the weakening of the peso, a marked decline in
importation of deboned pork, pork cuts, pork offal, pork rind and skin is projected in the
first half of the year. Meat processors could be forced to look for low cost substitutes for
these pig parts. The large number of overseas Filipino workers is also a big potential for
common Philippine dishes as canned pork products. Importation of pork bellies,
however, could remain strong due to the strong urbanized demand for bacon and pork
barbeque.

Pork product should maintain its production. Through this, it can help build our
agricultural lands and help Filipinos for it can help to solve unemployment. With the
greater production, anything is possible.

Sources:
https://www.pig333.com/what_the_experts_say/philippines-swine-industry-situation-and-
outlook_4176/
https://www.pig333.com/what_the_experts_say/pork-outlook-2014-philippines_8158/
http://www.merck-animal-health-usa.com/species/swine/index.aspx
http://www.epa.gov/oecaagct/ag101/porkproducts.html,