Commissioned papers (Contd.)

Implications of the recent economic crisis on livestock production, marketing and consumption in the Philippines

Nicomedes P Eleazar

Deputy Executive Director
Livestock Development Council
Philippine Department of Agriculture, Manila

The Philippines is basically an agricultural economy because of its wide range of natural resources scattered over the archipelago. Agriculture, along with fisheries, produces nearly one third of GNP and employs half of the labour force. The livestock and poultry sub-sectors have contributed significantly to the growth of agriculture. They accounted for 29.4 percent of total agricultural production in 1998.

In 1997, the livestock and poultry sub-sectors posted the highest growth rates in value added to agriculture, 8.7 percent and 12.6 percent, respectively, compared with 1996 levels. In real terms, the livestock and poultry sub-sectors exhibited sustained average growth rates in Gross Value Added (GVA) of 5 percent and 6 percent respectively, contributing an aggregate GVA of Peso 97.5 billion to the economy in 1997. This marked performance of the sub-sectors was due to the sustained growth in production in response to the growing demand for meat and meat products in the domestic market.

During 1997, a financial crisis swept across Asia, which ADB described as the most significant event of the year in the world economy. The crisis began in Thailand in July 1997 when the baht was devalued. The crisis, which began as a currency crisis, spread and engulfed Indonesia, the Republic of Korea. Malaysia and the Philippines by the end of 1997. The currencies of these countries depreciated sharply, bringing with them downward pressures on other currencies perceived to be vulnerable, not only in Asia but around the world. The crisis was reflected in the collapse of stock markets, and the poor health of bank and non-bank financial institution portfolios. The speed of the crisis took everyone by surprise.

The Philippines has been slowly but steadily trying to improve the state of its economy for the past six years. The country aims to soon become a “tiger economy” to catch up with the fast-rising economies of its Southeast Asian neighbours. This was one of the main goals of the past Ramos Administration until the advent of the Asian financial crisis, whose after-effects were greatly felt in the first quarter of 1998. The government undertook to tighten its belt; the budgets of government agencies shrank, sometimes to half size.

As a result of the crisis, a number of industries were affected. The livestock industry has been affected because of its dependence on imported inputs (e.g. corn). Prices of meat and meat products, poultry, eggs and milk suddenly increased.

This study hopes to identify the implications of such a crisis for the Philippine livestock industry, more particularly in production, marketing and consumption. The specific objectives are:

• to review the development of the livestock sector in the Philippines;

• to analyse the implications of past developments in terms of socio-economic costs and benefits;

• to describe the changes in macroeconomic policies, policy reforms, and livestock sector adaptation as a result of the economic crisis; and

• to identify the implications of changes on the poor, the environment and supply.

The study will cover livestock data and other information as well as industry performance from 1990 to 1998, and macroeconomic and sectoral policies and policy reforms from 1986 to 1998.

The livestock industry

Cattle

Cattle farms in the country are predominantly of the backyard type. According to 1997 cattle industry figures, animal holdings in backyard farms constituted 91 percent of the population as against the commercial sector's share of only 9 percent.

The cattle industry appears to be the least developed, based on the country's almost absolute reliance on imports of milk and substantial imports of beef, and the alarming decline of the herd population. The overall direction for cattle is, therefore, to build up the population base, increase animal productivity, and lay the groundwork for sustained development.

Among the regions, Ilocos, Southern Tagalog and Central Visayas accounted for over 11 percent each of the country's total cattle inventory during the 1990-1997 period. In 1998, the provinces of Pangasinan, Ilocos Norte, Isabela, Batangas, Cebu and Bukidnon registered high inventories accounting for 26 percent of total cattle inventory.

Carabao

The majority of the carabao population is raised in backyard farms. In 1997, animal holdings on backyard farms constituted about 99.8 percent; the share of the commercial sector was a mere 0.2 percent.

Industry programmes for carabao have traditionally been oriented toward its development as a draught animal. With increasing reliance on mechanisation and a greater demand for beef and milk, the industry needs to be developed also as a source of meat and milk.

The regional distribution of the carabao population (1990–1997) shows Cagayan Valley, Southern Tagalog, Bicol and Western Visayas as the top producing regions, each accounting for 9 to 10 percent of the country's total carabao population.

Pig

Pigs too are mostly raised in backyard farms. Backyard farms accounted for 79 percent of the total hog population in 1997, and commercial firms for the remaining 21 percent.

The swine industry appears to be relatively more developed, given that much of the local demand is met by domestic production. The major direction for this sector is, therefore, to sustain the gains in the industry and explore export markets.

Central Luzon, Southern Luzon, Central Visayas and Southern Mindanao were the major pig-producing regions, and accounted for more than 9 percent each of the country's total pig inventory from 1990 to 1997.

Goat

The goat industry is mainly of the backyard type. In 1997, animal holdings in backyard farms constituted 99.6 percent of the total goat population, the remainder being handled by commercial firms. The raising of goats has an important role to play in farming systems and is a distinct industry. Operating costs are not as high as for other livestock, and demand is there and increasing. By region, Central Visayas, Southern Mindanao and Ilocos accounted for more than 11 percent each of the national goat inventory in 1998.

Poultry

The poultry industry, just like the pig industry, is relatively developed. Local demand is usually met by domestic production. The main directions for poultry are to maintain its sustainability in the local market and to explore opportunities in the export market.

Chicken

The major chicken producing regions are Southern and Central Luzon, Western and Central Visayas, and Northern and Southern Mindanao. These regions contributed 65 percent of the total chicken inventory in 1998. Southern Tagalog was the top broiler-producing region, accounting for about 30 percent of the total broiler inventory in 1998 of 46 million birds. On the other hand, the regions with the highest inventory of layers were Central and Southern Luzon, Central Visayas and Southern Mindanao, which contributed some 82 percent to the total inventory.

Duck

Most of the country's duck population is raised in backyard farms. In 1997, 79 percent of it was raised in backyard farms and the remaining 21 percent in commercial farms. Central Luzon accounted for more than 22 percent of the country's total number of ducks in 1998, followed by Cagayan Valley and Western Visayas. By province, Isabela, Nueva Ecija and Bukidnon were the leading duck producers, accounting for 21 percent of the total duck inventory in 1998.

Livestock production

As of 1998, the Philippines has 2.3 million cattle, about 3 million carabaos, 10.1 million pigs, a little over 3 million goats, 13.7 million chickens and 8.8 million ducks. The livestock inventory figures from 1990 to 1998 for these six major commodities are listed in the following table.

Table 1. Livestock inventory, 1990-1998 ('000 head)

Source: Bureau of Agricultural Statistics

In terms of livestock production, the Philippines has produced the following from 1993-1998:

Table 2. Livestock production, 1993-1998 ('000 tonnes)

Source: Bureau of Agricultural Statistics

Cattle

The cattle population showed an increasing trend during the period 1990–1998. From 1.6 million head in 1990, it slowly increased to about 2.3 million in 1997. Between 1993 and 1997, the average yearly growth was 4.2 percent.

Cattle inventories have been increasing over the last three years (1996–1998). They show an increase in the volume of production, from 232 340 tonnes in 1996 to about 261 000 tonnes two years later. The total output in 1998 was valued at P10 927 million.

Carabao

The total carabao population in 1997 was estimated at about 3 million head and growing, after decreasing from about 2.8 million head in 1990 to 2.5 million head in 1994. The importation of live carabaos for genetic improvement and the implementation of a slaughter ban in 1995, coupled with the importation of buffalo meat from India, contributed to the sustained growth of the carabao population. From 99 240 tonnes in 1996, the carabao output increased to 113 050 tonnes in 1998, valued at about P1 400 million.

Pig

The total pig population showed an upward trend during the 1990–1998 period. Pig inventory remained steady from 1990 to 1993, at 8 million head. In 1994, the population started to increase, by more than 3 percent. The highest growth rate of 8.7 percent was registered in 1994–1995 and the lowest in 1995–1996 (0.9 percent). Pig production has consistently been a major contributor to the total livestock output. The increases in inventory of fatteners and growers as well as in the number of slaughtered animals during 1998 resulted in a 3.5 percent increase over 1997. Pig production in 1998 was placed at 1.4 million tonnes and valued at P68 200 million.

Goat

Goat farming in the country is thriving, as shown by the gains in the yearly inventory. From 2.2 million head in 1990, the goat population grew to about 3.1 million head in 1998.

Chicken

The country's total chicken population during the 1990–1998 period exhibited a slowly increasing trend. The chicken inventory in 1998 of about 138 million birds represents an increase of only about 2 percent over the previous year. In meat equivalent, the total production of chicken increased from 852 000 tonnes in 1996 to about 929 000 tonnes in 1997, but slid down to 919 000 tonnes in 1998, the latter being valued at P24 600 million.

Duck

The duck inventory showed an erratic trend over the 1990–1998 period. From 1995 to 1996, it reached its highest level, with more than 9 million birds. The 1998 estimates show a slight increase in the duck population, compared to the 8.9 million birds of 1997. That year, 79 percent of the ducks were raised in backyard farms and 21 percent in commercial farms. Central Luzon accounted for more than 22 percent of the country's ducks during the period, followed by Cagayan Valley and Western Visayas. By province, Isabela, Nueva Ecija and Bukidnon were the leading duck producers, accounting for 21 percent of the total duck inventory in 1998.

Livestock marketing

One indicator of the Philippine livestock industry performance is the trend in exports and imports of livestock and livestock products. The small volumes and numbers of the commodities traded show the industry's limited access to the export market. Livestock products belong to three main groups, namely: live chicken for breeding and gaming purposes; meat and meat preparations; and dairy products and eggs.

In 1998, milk and milk products accounted for 55 percent of the total value of exports of about US$2 million. Meat and meat preparations contributed 25 percent, live animals 14 percent, and the rest was accounted for by eggs and egg products.

The inability of the cattle and carabao sub-sectors to fulfil the beef and milk requirements of the population is reflected in the continuous importation of a substantial volume of meat and milk products. Moreover, the country has to import feeder cattle to address the problem of the declining cattle and carabao population base due to increased extraction rates.

In terms of value, the largest export of live animals and dairy products and eggs was in 1996. For processed meat, highest export value was registered in 1991.

Meat and meat preparations

Beef

Beef and ‘carabeef’ importation was on the increase from 1990 to 1997, reaching a high of 70 145 tonnes in 1997, compared to only 10 880 tonnes in 1990, which represents an average yearly increase of 78 percent. ‘Carabeef’ accounted for about 44 percent of total beef imports.

Poultry

The Philippines is practically self-sufficient in poultry meat: imports account for less than 1 percent of the supply. In 1997, a total of 496 686 tonnes of poultry meat was produced locally and 966 tonnes were imported to cover the local requirement of 497 652 tonnes.

Pork

As with poultry, the country is almost self-sufficient in pork: 99 percent of total requirements are produced locally. For 1997, when the highest pork importation occurred, the volume imported accounted for only 1 percent of the total requirement of 1.09 million tonnes.

Processed meat

Aside from fresh meat, the country also imports processed meat. Meat and meat preparations primarily consist of all kinds of sausages, pork luncheon meat, corned beef and other processed beef. In 1998, sausages were mainly exported to the United Arab Emirates, pork luncheon meat and other prepared meat and meat offal of swine to Hong Kong, and corned beef to Taiwan. For eggs and egg products, the major countries of destination were Japan, Hong Kong and Guam.

Milk

Milk importation, which amounted to 1,232 million kg in 1992, had increased to 1,671 million kg by 1997, an average increase of 7 percent per year.

Live animals

The Philippines also imports breeding animals, particularly cattle, pigs, and day-old chicks. These breeding animals became the great-grandparents to parental stock maintained in government farms and private commercial farms. For cattle breeders, the largest importation was in 1992, with a total of 15 875 head, while for breeding pigs, the highest was in 1997, with 11,359 head.

Feeder cattle importation has increased by leaps and bounds: 21 313 head were imported in 1990, and 233 910 in 1997, a more than tenfold increase.

Livestock consumption

Except for pork, all types of meat and milk, whether locally produced or imported, are consumed locally. The local consumption of meat and milk increased during the 1993–1997 period along with the population. ‘Carabeef’ led the way with yearly increases of about 14 percent, followed by beef, 12.4 percent, as significant imports of both made them available and cheap at the market. Chicken and pork consumption also increased, by 9 and 6 percent respectively. The percentage share of beef and ‘carabeef’ increased from 13.5 in 1993 to 15.6 in 1997. A minimal increment was also observed for chicken but pork lost out, its share shrinking from 61.14 percent in 1993 to 58 percent in 1997.

Per capita consumption

Pork, nonetheless, remains by far the most popular meat. Consumption has increased in the last five years, probably thanks to the general increase in income but also in the price of other protein sources, particularly fish. It has grown yearly by 6.2 percent to an average of 6.96 kg per capita in 1997.

Chicken is a poor second to pork in terms of consumption. The average per capita intake of 5.57 kg in 1993 had shot up to 6.96 kg by 1997, a 6.2 percent increase year on year.

Consumption of beef and ‘carabeef’, although significantly lower than that of pork and poultry, has shown proportionately higher increases over the last five years. From an average of 2 kg per capita per year, the intake of beef has increased to 2.74 kg.

‘Carabeef’ is the least popular meat. Nonetheless, its per capita consumption, estimated at 0.8 kg in 1993, was of 1.18 kg by 1997, a yearly increase of about 11 percent.

The main macroeconomic and sectoral policies

The Medium-Term Agricultural Development Plan for 1993–1998 devised by the erstwhile Ramos Administration sought to enable farmers and fishermen to increase their income in order to achieve a better quality of life. The perspective was prosperity by the year 2000. The plan adopted the approach of defining key production areas whose agricultural and climatic features and market conditions would best allow the production, processing and marketing of specific products, given a little help from the government. Thus, key grain areas were defined for rice and maize, as were key livestock development areas for livestock and poultry.

The medium-term livestock development plan was a component of the master plan. It was meant to complement the grain production enhancement programme, which aimed to attain self-sufficiency in rice and corn, by covering geographic areas not included in the key grain areas. It had several main components:

1. a beef cattle development programme focussed on establishing production and breeder farms, upgrading the local stock, undertaking massive breeder and feeder cattle importation, and implementing buy-back and save-the-herd schemes;

2. a dairy development programme to support the establishment of rural-based, co-operative-oriented dairy programmes and projects, in order to broaden the base of the local dairy sector;

3. a carabao programme, to improve the production potential of the riverine breed;

4. a small-ruminants programme, to integrate goat and sheep production into farming systems by introducing improved breeds, designing and implementing credit schemes and training and extension programmes;

5. a poultry programme to assist private-sector initiatives; and

6. a swine programme to increase the pig population to 10 million head by 1998 and explore export market opportunities.

Midway into the implementation of the livestock development plan, a review was done to determine the relevance of its objectives and the progress made thus far, in the context of increased global competition in livestock and poultry products. The outcome of the review was the Gintong Ani or Golden Harvest Livestock programme, whose components are as follows:

• Livestock production - to provide genetically improved livestock and poultry to farmer organisations and individual farmers. Support services such as infusion of genetically improved stock, upgrading of current herds, provision of animal health services, training and extension education are provided in co-ordination with local government units.

• Credit support services - Specific credit packages have been designed. The existing Multiple Livestock Loan Development Programme is being used as a mechanism for animal distribution.

• Post-production marketing - covering transportation and handling, processing and marketing of livestock and livestock products, and the creation of livestock auction markets to facilitate the setting up of abattoirs, dressing and meat processing plants.

• Farmer organisation support - This includes technical services on animal health, breeding and management, and training and education on the technical, financial, social and marketing aspects of the livestock and poultry industries.

• Research and development.

• Monitoring and evaluation - to inform programme implementers of the status of activities and to guide future action to be taken under the programme.

Implications of past developments

Socio-economic costs and benefits

The economic crisis caused a peso devaluation, which led to an atmosphere of uncertainty in the livestock sector. Small and medium-sized industries dependent on imported raw materials closed down. The uncertainty drove interest rates high and no long-term loans were available. Unemployment followed and the declining purchasing power of consumers had a negative impact on the demand for livestock. Within the beef cattle industry, the number of feedlot operators shrank from about 80 before the crisis to less than 20, as lack of working capital and high production costs made most operations unsustainable. This led to relatively higher prices of livestock products. The same held true for cattle ranchers and integrators.

If any benefit came out of the crisis, it is that agribusiness firms involved in livestock have had to adopt more efficient operations and to target quality products for institutional buyers.

The general closedown of industries, the unemployment surge and the decline in purchasing power among rural and urban consumers created a recession of sorts which greatly reduced demand. Yet, in the case of livestock products (e.g. beef), the supply in 1998 simply was not there. It was a seller's market despite the crisis. The demand for beef from institutional buyers (hotels, restaurants, high-income customers) remained high and could not be met by meat producers.

Persistent poverty

The livestock and poultry sub-sectors have consistently played a major role in agriculture, accounting for about 22 percent of GVA each year between 1993 and 1997. In 1997, they posted the highest growth rates in value added to agriculture, of 8.7 and 12.6 percent respectively, compared to 1996 levels.

In real terms (at constant prices), they showed sustained average growth rates in GVA of 5 and 6 percent respectively, contributing an aggregate of GVA of P97.5 billion to the economy in 1997. This marked performance was due to sustained growth in production in response to the growing demand for meat and meat products in the domestic market.

For all that, the majority of livestock raisers belong to the poorest segment of the population: 96 percent of the ruminants, 80 percent of the swine and 55.7 percent of the poultry is handled by smallholders, with little or no equipment, some household labour, and little or no knowledge of scientific methods of feeding, breeding and health care, resulting in low productivity and marginal income.

Although they account for a lower percentage of the animal population, the commercial raisers, on the other hand, are highly efficient and most often go for an integrated system in their operations.

A recent development in the commercial production of poultry is the switch from the monopolistic, self-contained production system of large corporations with individual poultry breed franchises to a more open system which involves individual contract growers. This has resulted in the rapid expansion of the poultry sector and worked toward the integration of some smallholders in the commercial production system. However, these smallholders are actually medium-sized poultry raisers who can afford to satisfy the equity requirements (over poultry housing, and labour) for a semi-commercial operation (25 000–40 000 birds per cycle). As for the backyard raisers, this development has adversely affected them, as they cannot compete with the lower price set by the integrators and thus are slowly driven out of the market.

It is in the swine industry that traditional backyard producers benefit, as their access to imported breeds allows them to make their operations more profitable. The majority of producers are family enterprises with 10 to 20 animals each. The medium-sized breeder farms raising 100–200 sows become the main sources of pigs for the backyard raisers to fatten. Some corporate farms are fully integrated and have production contracts with individual pig raisers.

Cattle and carabao raising is predominantly done by small-scale producers. The implementation of the Comprehensive Agrarian Reform Programme and the security problems of the 1980s even brought about a shift from traditional cattle-ranching operations to smallholding production. The decline in ranching operations has resulted in a decline in the breeding base, worsened by an increase in the extraction rate to meet the growing demand for beef.

To address the gap in the supply and demand for beef, the massive importation of feeder stock was allowed, and this led to the setting-up of several commercial feedlot operations in the country. To date there are about 17 big feedlot operators, holding a total of 44 098 head of fatteners, an average of 2 600 head per farm.

Dependence on imported inputs

The low productivity of the livestock sector can be primarily attributed to the poor-quality breeding base and the high cost of feeds and feed ingredients, which amount to about 70 percent of total production costs. The high cost of inputs, on the other hand, can be traced to the sector's dependence on imported feeds, equipment and breeding animals.

The Philippines imports a substantial volume of feed and feed ingredients. Although the value of imports was erratic from 1990 to 1998, it registered an average annual increase of 8 percent. The total value of imports amounted to US$282.84 million in 1998 as compared to US$173.84 million in 1990. Oil cake from soybean (imported mostly from the United States) is the primary imported feed, accounting for 73 percent of the total. Other feeds include alfalfa meals, bran, flour meals and other preparations for making feed.

Table 3. Volume of imports of feed and feed ingredients (1990–1998)

Importation of farm equipment and facilities

The importation of equipment and facilities has greatly contributed to improve the efficiency of livestock and poultry production, particularly for the commercial raisers and for both government and private stock and breeding farms.

The equipment and facilities imported consist of dairy machines and parts, poultry-keeping machines and parts, and machinery for preparing animal feed. During the last nine years (1990–1998), a total of US$24.42 million worth of poultry-keeping machines was imported, US$19.5 million worth of machinery for the preparation of feed, and US$16.11 million worth of dairy machines - the total bill amounting to US$60 million, or an average import of US$6.67 million per year.

The import value of dairy machinery and parts was high in 1991 and 1994, amounting to US$4 million; most of the equipment came from Switzerland, Germany and the Netherlands. As for poultry-keeping machines and parts, and machinery for feed preparation, their importation significantly increased in 1995 and 1996, with an import value of US$5.7 and 7 million respectively; most of this came from the United States, Canada and the Netherlands. Regarding the machinery used to prepare feed stuff, importation was highest in 1997 (US$8.7 million) and most of it came from the Netherlands, China and the United States. It was also observed that the sources of this equipment have increased during the last four years.

Table 4. Value of imports of equipment and machinery for livestock and poultry, 1990–1998 (US$ million)

Importation of breeding animals

The Philippines also imports breeding animals, particularly cattle, pigs and day-old chicks. These breeding animals became the great-grandparents to parental stock maintained in government stock farms and private commercial farms. Since breeding requirements depend on needs, no clear trend can be observed in their importation. The import value was highest in 1996 (US$23.74 million), but it has gone down since then, to US$6.9 million in 1998. In terms of numbers, for cattle breeders, the largest importation was in 1992, with a total of 15 875 head, whereas for breeding pigs, the highest was of 2.1 million head in 1995 and the lowest, 831 000 head, in 1997. A few cocks were also imported for breeding and gaming during the same period.

Table 5. Animal breeder imports, 1990–1998

Effects on the environment

The intensive livestock production system allows increases in production within the constraints of the population, particularly in terms of land use. The system also results in problems of waste disposal and pollution; appropriate policies have to be formulated to safeguard the environment and research efforts must focus on the conversion of waste into economic resources.

The 1998 economic crisis

Macroeconomic changes

As a result of the economic crisis, the peso, once overvalued, has become undervalued, interest rates have sky-rocketed, the credit supply has shrunk and its expansion has not been pursued for fear of inflation. This situation has prevented industrial expansion.

In order to support economic growth under a revitalised rural development programme, President Joseph (‘Erap’) Estrada signed an executive order for the creation of Economic Recovery through Agricultural Productivity (ERAP) Bonds. One of the priority areas to be given financial assistance under the ERAP bonds is the livestock sector, particularly in swine and cattle breeding, feed and feed-mill projects and other agri-processing support services and facilities.

The specific policies for the livestock sector in the Medium-Term Philippine Development Plan are as follows:

• promote livestock development in major grain-producing provinces to facilitate the growth of livestock production centres in these areas;

• promote contract-breeding, contract-growing and contract-processing schemes in areas with comparative advantage to increase production and provide the incentive for the development of production support as well as post-production facilities;

• enhance the competitiveness of livestock products in the export market by increasing the number of accredited slaughterhouses, feed mills, processing and dressing plants and by improving the operation and management of slaughterhouses through greater private sector participation; and

• improve the delivery of animal health services to reduce losses due to animal diseases by maintaining the entire island of Mindanao as a foot-and-mouth disease-free area through strengthened prevention, control and surveillance operations and a policy to encourage the local manufacturing of vaccines for the following livestock diseases: foot-and-mouth, Newcastle, rabies, anthrax, haemorrhagic septicaemia and Black-leg.

Policy reforms

AFMA

The Agriculture and Fisheries Modernisation Act of 1997 was implemented to support the livestock sector. AFMA is an act prescribing urgent related measures to modernise the agriculture and fisheries sectors of the country. The State empowers these sectors to develop and sustain themselves, according to the following principles:

1. poverty alleviation and social equity - to ensure that the poorer sectors of society have equitable access to resources, income opportunities, and basic and support services and infrastructure especially in areas where productivity is low as a means of improving their quality of life compared with the other sectors of society;

2. food security - to assure the availability, adequacy, accessibility and affordability of food supplies at all times;

3. rational use of resources - to adopt a rational approach in the allocation of public investments in agriculture and fisheries in order to assure efficiency and effectiveness in the use of scarce resources and thus obtain optimal returns on investments;

4. global competitiveness - to enhance the competitiveness of the agriculture and fisheries sectors in both domestic and foreign markets;

5. sustainable development - to promote development that is compatible with the preservation of the ecosystem in areas where agriculture and fishery activities are carried out;

6. people empowerment - to promote empowerment by enabling all citizens, through direct participation or through their duly elected, chosen or designated representatives, the opportunity to participate in policy formulation and decision-making by establishing the appropriate mechanisms and by giving them access to information; and

7. protection from unfair competition - to protect small farmers and fishermen from unfair competition such as monopolistic and oligopolistic practices by promoting a policy environment which provides them priority access to credit and to a strengthened co-operative-based marketing system.

The objectives of the current livestock programme of the Department of Agriculture address the main concerns of AFMA. These are as follows:

• narrow the gap between the per capita nutritional requirements and actual per capita consumption of food commodities of animal origin;

• make livestock and livestock products available, accessible and affordable by increasing the overall livestock production and improving livestock production coefficients;

• ensure accessibility to resources, support services and infrastructure by increasing the income of livestock farmers, especially those whose income depends solely on livestock production;

• ensure that livestock business practices are compatible with the preservation of the ecosystem;

• transform the local livestock industry from a resource-based to a technology-based industry; and

• enhance the competitiveness of the local poultry industry in both domestic and foreign markets.

There was a redefinition of the mandate of the Land Bank of the Philippines. Funding support is now focused on the agriculture sector. In accordance with its original mandate, the bank will focus primarily on plans and programmes related to the financing of the agrarian reform and on the delivery of credit services to the agriculture and fisheries sectors, especially to small farmers and fishermen.

Agrikulturang Makamasa livestock

In 1998, the Department of Agriculture started to carry out President Estrada's Agrikulturang Makamasa, a cluster of eight programmes, one of which concerns livestock. This programme seeks to modernise livestock farming in such a way that the ultimate beneficiaries will be the smallholding animal producers. Conceived to operate the Agriculture and Fisheries Modernisation Act of 1997, the programme equips and prepares the livestock and poultry sectors to various challenges. These include trade globalisation, world-wide economic and currency crisis, extreme weather disturbances, and agricultural land conversion.

The components of the Agrikulturang Makamasa livestock programme include the following:

1. Livestock enterprise development

Livestock production is a capital-intensive enterprise where access to credit is vital. Hence, institutionalisation of rural credit facilities is imperative. The implementation of this component provides the acquisition of livestock through the Multiple Livestock Development Loan Programme (Window 1) and the Barangay Livestock Breeding Loan Programme (Window 2). Window 1 is a supervised credit programme for livestock and poultry which encourages members of farmer co-operatives to raise different livestock of superior germ plasm. Loan packages with a 10-percent interest are available through accredited rural banks and co-operative rural banks countrywide. Loan terms range from 5 to 8 years with a 2-year grace period for loans payable in 8 years. Window 2 is an alternative facility for farmers to avail themselves of quality breeding animals. The animals distributed to beneficiaries are repaid in kind through the offspring produced. In the short term, however, the activities will be geared toward increasing investment in livestock and poultry projects. For example, feasibility studies and investment proposals can be made available to interested farmers.

2. Technology, information promotion and capability-building

Technology, information promotion and capability-building is a sustainable, technology-based training and information dissemination programme which promotes an environment conducive to profitable livestock activities. It enhances the capabilities of regional field units and local government units in promoting technology packages and services to the masses.

3. The genetic improvement programme

Projected increases in the demand for food compel us to ensure that production is maintained and intensified. Livestock production systems respond to economic conditions, and production systems move from subsistence to commercial operation. The current efforts of the livestock industry on genetic improvement, conservation and use need to be strengthened through the institutionalisation of a scientific selection and breeding programme. Through this programme, animal genetic resources will be managed efficiently and the production of genetically superior animal and genetic material accelerated. The programme focuses on:

• the government-run farms and selected private farms which will serve as the nucleus centres or gene pools that will produce pure-bred stocks for distribution to multiplier farms and production centres;

• the private farms and other regional field units and local government unit stations, which will serve as multiplier farms to produce commercial breeders for distribution to smallholders; and

• the smallholders who are the ultimate beneficiaries of the programme.

4. Animal health services

An efficient system of livestock farming operates in an environment conducive to growth. In order to ensure this, adequate animal health services are required. A healthy herd allows for unhampered growth of the livestock industry.

5. Post-production, regulatory and marketing services

There is a need to make safe, quality livestock products available to consumers. At the same time, products have to be globally competitive. This can be achieved through the efficient handling, processing, inspection and marketing of products.

6. Policy, industry research and strategic projects

In accordance with global trade and the need to modernise livestock production, current policies, rules and regulations have to be assessed and reformulated to address the above concerns. Likewise, the technological needs of the industry have to be addressed by policymakers to enhance competitiveness.

The effects of the crisis

Livestock production

Though there were increases in some animal inventories, the rate of growth of livestock production declined noticeably after 1997. One of the most affected sectors is the poultry industry.

Table 6. Growth rate of livestock production, 1994–1998

Cattle. Despite the financial crisis in 1997, cattle inventory steadily increased in 1998. However, population growth somewhat slackened, from 6.5 percent in 1997 to 4.9 percent. Due to the increase in cattle inventory, production likewise increased from 232 340 tonnes in 1996 to 260 810 tonnes in 1998. Growth in production, however, shrank to almost a third of its original figure, from 9.04 percent in 1996 to 3.71 percent in 1998.

Carabao. A very minimal increase in the 1997–1998 carabao inventory was observed as compared with the pre-crisis period figures of 1990–1996. The 1997 figure of 2 988 000 head rose only to 3 025 000 head in 1998. Growth in carabao inventory sharply declined, from 5.17 percent in 1997 to 1.24 percent in 1998, whilst growth of production remained almost unchanged.

Pig. After 1997, pig inventory shrank abruptly from 8 040 000 to 3 770 000 head. Growth of production slowed down from 6.87 percent in 1996 to 3.59 percent in 1998.

Goat. Goat production seems to have been unaffected by the crisis. It increased from 1996 to 1998, though only marginally. The growth rate of production improved, from minus 0.75 percent in 1996 to 1.54 percent in 1998.

Chicken. Chicken production seems to have been the most adversely affected by the financial crisis. Though chicken inventory increased from 1996 to 1998, there was an alarming decline in production. From 13.9 percent in 1996, chicken production decreased to 9.14 percent in 1997 to a dismal -1.10 percent in 1998.

Duck. The duck population decreased from 9 470 000 head in 1996 to 8 824 000 in 1998. This marked some negative figures in growth for 1997–1998 after the financial crisis struck. Duck production similarly experienced a decline in 1997, as evidenced by the minus 0.35 percent growth in production. Production figures slightly improved, to a paltry 1.02 percent in 1998.

References

ADB. Annual Report 1997, Manila

Agrikulturang Makamasa Livestock Programme. 1999. Manila

Bureau of Agricultural Statistics. Manila

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