SMFB streamlining pork business but keeping Monterey brand

Amid a pork crisis caused by the African swine fever (ASF), San Miguel Food and Beverage Inc. (SMFB) plans to streamline its pork business and rely instead on outsourcing supply from local hog raisers to support its Monterey brand.

In a disclosure to the Philippine Stock Exchange on Tuesday, SMFB said it was looking to transfer its nationwide hog inventory and facilities to local raisers to allow them to supply the requirements of their respective regions and help strengthen biosecurity protocols among smallholder farmers.

“We want to provide our local piggery businesses a chance to thrive in these trying times, and encourage more smallholder farmers to grow this industry locally and responsibly,” said Ramon Ang, president and chief operating officer of SMFB parent conglomerate San Miguel Corp.

The ban on the transportation of pork and pork products due to the ASF has gnawed on the business of Monterey, prompting this change in business model.

“This opens the doors for more Filipinos to become agri-entrepreneurs,” Ang said.

SMFB has been depending on its contract growers for its inventory.

With this outsourcing strategy, SMFB will offer contract growers the opportunity to take over ownership of hogs and the processing operations. The company will just buy from the growers fresh and processed pork, which it will continue to sell under the Monterey brand. SMFB said it would assist the growers in putting in place biosecurity controls.

The move is also seen as a way for SMFB to hedge against further challenges caused by the ASF, particularly the price controls set by the government.

To address the pork supply shortfall, there have also been calls to liberalize pork importation as an alternative to price controls.

The Philippines maintains a two-tiered tariff policy for sensitive agricultural products, including pork. Imports outside of the minimum access volume are taxed 40 percent while in-quota imports enjoy a lower rate of 30 percent.

The Foundation for Economic Freedom (FEF)—an organization advocating market-friendly reforms—recently wrote to Agriculture Secretary William Dar to suggest the unification and lowering of the pork tariff rate on pork to 5-10 percent to quickly bring in the volume needed to stabilize supply and prices. The group noted that the rice price spike in 2018 had been quickly nixed by the rice trade liberalization law.

FEF also called for a realistic program to control the ASF—the root of the current crisis—alongside a collective hog management program for backyard small producers. INQ