CEBU-based meat processor Virginia Foods Inc. (VFI) is keen on expanding in the Asean region to take advantage of the more than 600 million consumers.
VFI chairman and president Felix Tiukinhoy Jr., in an interview yesterday, said they have already asked the Department of Agriculture (DA) to help them link and arrange with the other agriculture agencies in Southeast Asia to open up their market.
"We've already talked with DA and they have asked us to present the list of exportable products," said Tuikinhoy.
Some selected VFI products like luncheon meat and corned beef are already being sold in Filipino communities in the Middle East through a distributor.
The firm is currently preparing all their meat products for Halal certification to make the products available to the Middle East countries and in the Asean region.
"The Asean integration presents significant opportunities for VFI. We are banking on the 600 million consumers and the continued expansion of the middle class to penetrate the markets like Vietnam, Malaysia, Cambodia and Indonesia, among others," said Tiukinhoy.
The export market within the Asean region alone will require expanded capacity of existing processing plants. In terms of penetrating the Asean region, he pointed out they will tap Filipino communities living in Asean countries to become product ambassadors.
Staying relevant
VFI remains confident in growing their business amid the entry of cheaper processed meat products in the local market.
"It will take some time for Filipinos to adjust their taste to new products. However, we will not remain complacent. We will be flexible and at the same time be aggressive in staying relevant to the domestic market," he said.
The country's meat processing, according to Tiukinhoy, has remained anemic, if not stagnant for so long.
Speaking at the Entrepreneurship Conference yesterday, Tiukinhoy, who is also the president of Philippine Association of Meat Processors Inc. (Pampi) noted that the industry has not grown as fast the as industry players want it to.
"It is beset by too many adverse factors that simply stunt its ability to rise as seen in other industries. In fact, the challenges that we face far outnumber the opportunities that we earnestly desire to take," he said.
Tiukinhoy pointed out that the meat processing industry is over-regulated. The DA, Department of Trade and Industry, Department of Health and Department of Local Government and LGUs directly regulate and control the operations of meat processing plants all at the same time.
"Too much regulation, too many restrictions and controls lead to no growth," he said. "We know very well that in every business, too much government involvement or intervention is not a healthy sign."
Another challenge, Tiukinhoy pointed out, is on the issue on raw materials, as the industry is heavily dependent on imports.
Eighty-five percent of raw materials used in the production of processed meats come from foreign suppliers. Only 15 percent are supplied by local producers, mainly hog farmers.
"The challenge is how to reverse the numbers by sourcing more from local producers," he said.
‘Not compliant’
Tiukinhoy underscored that they have made a "very little progress" towards this end, despite the willingness and cooperation of local producers because locally available raw materials are not compliant with the quality and technical specifications required by manufacturing. He added that local prices are not competitive compared with imported materials and that cold chain and refrigeration requirements cannot be fully met by local producers.
"Local producers find it more practical to simply sell their production to the wet markets rather than spend additional funds and time to meet the requirements of meat processors," he noted.
The increasing trend among consumers to become health-conscious and eat healthy diets also pose a challenge to the processed meat industry.
High price of health
Although there are efforts by companies to come up with new products that are healthier or less in cholesterol, Tiukinhoy said, "There is demand for quality food products but consumers are not willing to pay the price.”
As of June 2015, there are about 185 meat processing plants nationwide accredited by the National Meat Inspection Service (NMIS), of which more than half are located in Metro Manila.
Of this total, only 26 are rated AAA, which means they have the capability to export.
In Central Visayas, there are only nine NMIS accredited plants, of which only five are rated AAA.
In terms of contribution to the economy, the industry turns in over P70 billion to the gross domestic product every year.
The products are exported to overseas Filipino communities such as the UAE, Qatar, Kuwait, Japan, Saudi Arabia, USA, Canada, Guam and Taiwan.
Pampi is a P200-billion sector composed of 48 companies involved in the meat processing business.
Among the members are Cebu-based Belcris Foods, Gold Ribbon Food Inc., Judphilan Foods Corp., King's Quality Foods, Lami Food Products Corp., Sunpride Foods Inc., and VFI.