Meat processors warn of possible price hikes

The Philippine Association of Meat Processors Inc., (Pampi) warned of possible price increase of processed food products by the third quarter of this year, as the new tax law is expected to affect operational costs.

This forecast was made by PAMPI president Felix Tiukinhoy while the industry is closely monitoring the movement of prices within its supply chain, clear price adjustments are seen to be felt by consumers towards the end of the year.

"Definitely prices will increase. But, as to how much we don’t know yet," said Tiukinhoy in an interview.

The P200 billion Philippine meat processing sector is played by 48 meat firms. Cebu-based processors include; Belcris Foods, Gold Ribbon Food Inc., Judphilan Foods Corp., King's Quality Foods, Lami Food Products Corp., Sunpride Foods Inc., and Virginia Foods Inc. (VFI).

The meat processing industry feared that their operational costs will be affected by the projected price increases of fuel, power, transportation, and other production requirements.

Offhand, Tiukinhoy said the industry is in a "wait-and-see" mode, as it is still observing the movement of prices and how the suppliers will react to the rising inflation.

Even the importation of similar products will also be affected by the newly passed Tax Reform for Acceleration and Inclusion (TRAIN) Law, Tiukinhoy added.

Because of this, Tiukinhoy said the industry is also expecting a slower growth this year, a contraction of the consistent double-digit growth the industry has been enjoying the recent years due to expanding population and improvement in purchasing power.

Last year, the industry grew by 10 percent to 15 percent. This year, growth is expected to slide to single-digit, as consumers are expected to tighten their belts.

Although food products are the least commodities that consumers will have to forego in times of budget tightening, Tiukinhoy said the processed food category, such as canned goods, frozen products, hotdogs, bacon, among others can easily take the backseat especially if the prices are higher than what the consumers are used to.

President Rodrigo Duterte recently signed the Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) bill aiming to earn revenues to fund the country’s infrastructure program.

According to Department of Finance (DOF), TRAIN is the first package of the comprehensive tax reform program (CTRP) envisioned by Duterte’s administration, which seeks to correct a number of deficiencies in the tax system to make it simpler, fairer, and more efficient.