Supply Chain Analysis of Philippine Native Pigs in Tiaong, Quezon

Date

8-2022

Abstract

Native pig is one the indigenous species conserved and developed by the Philippine Native Animal Development (PNAD) program. The production and reproductive performance of Philippine native pigs are generally inferior relative to the exotic commercial breeds and hybrids. However, due to its low capital requirement and simplicity of its operation, this breed is highly favored by smallholder producers. The economic value of native pigs was further realized after it has found a niche market for lechon processing. This was attributed to the commodity’s small size, thick and crispy skin, and palatable meat. Currently, the demand for native pigs is primarily driven by the increasing requirement for lechon. Quezon is the main producer of native pigs in Luzon, with La Loma serving as its primary market. One of the municipalities of Quezon that is largely populated by native pig producers is the Tiaong. Native pig production in this area was driven by dispersal programs and capability-building initiatives implemented by the National Swine and Poultry Research and Development Center (NSPRDC). However, despite the technical support of the NSPRDC and the year-round demand for lechon, native pig farming remains a secondary source of income for the Tiaong farmers. Moreover, the activity has been long confined at the backyard setting rather than on a commercial scale, which limits the commodity’s economic utilization. Hence, through a supply chain analysis, this study attempts to figure out the production and marketing issues that hamper the industry’s growth and prevent the key players from capitalizing on the opportunities in a native pig enterprise. The study employed descriptive and evaluative research designs to present and analyze the supply chain performance of the Philippines native pigs produced in Tiaong. Specifically, the research aimed to: (i) present the profile of the key players involved in the supply chain of native pigs in the study area; (ii) describe the existing supply chains of native pigs and the factors influencing it; (iii) analyze the financial efficiency of the native pig supply chain in terms of cost and profitability; (iv) identify the problems and

opportunities which influence supply chain performance; and (v) formulate recommendations to improve the performance of the supply chain of native pigs in Tiaong, Quezon. The primary and secondary data gathered to achieve the aforementioned objectives were analyzed and presented in both qualitative and quantitative manner. The demand and supply analysis reveals that Quezon province accounts for a small percentage of La Loma’s requirement for lechon. The insufficiency in the volume of supply is largely felt during the peak season, when the demand for lechon quadruples from its regular demand. In a positive light, the province appears to have a competitive advantage in terms of serving the huge demand for lechon in the major markets. This is due to its proximity to the NCR area compared to other native pig producing provinces. Moreover, the Provincial Veterinary Office (PVO) and the NSPRDC provide the technical support needed in boosting the native pig industry in the area. Producers, intermediaries and processors were the identified key players in the native pig supply chain. They are formed into four distinct market channels, coded as Supply Chains A, B, C, and D. Supply Chain A is the shortest supply chain. It is composed of a small-scale commercial producer who directly supplies slaughtered native pigs to the lechonero in Manila. Supply Chain B involves an assembler in between the production and processing nodes. This assembler serves as an extension of the farm sector by raising weaner to finisher pigs, and distribute them slaughtered to the lechonero in Quezon. Supply Chain C is the longest among the four supply chains. This is due to participation of three intermediaries, providing the market linkage and consolidation of native pigs for La Loma processors. Supply Chain D, on the other hand, is a branch of Supply Chain B. It also involves assemblers who take part in the production node but sell the native pigs to the wholesaler supplying to La Loma. In general, the industry structure is characterized by a weak production node, represented by fragmented backyard raisers, who rely on intermediaries for their production, marketing and logistical needs. These intermediaries are classified as locators, assemblers and wholesalers, whose function is to provide linkage between the production and processing nodes, and to serve as an extension of the farm sector. The

majority of the native pigs that circulate in the supply chain are sold in live forms (70%), which are collected and distributed by the wholesalers to the lechoneros in La Loma. Slaughtered native pigs (30%), on the other hand, were distributed directly to the lechoneros based in Manila and Quezon. The enabling environment of the supply chain is characterized by strong technical support at the production node, attributed to the initiatives implemented by PNAD. However, credit facilities and hard infrastructures are lacking, which could have complemented the mentioned technical support. Meanwhile, policies and regulations, particularly those pertaining to biosecurity and food safety, were found to be existent in the supply chain. The main issue, however, has been the lack of stringent implementation of the imposed policies. Each node of the supply chain is faced with varying risks relative to their operations. The risk posed by the African Swine Fever (ASF) was identified as the most common and the most serious risk present across the supply chain. Though the disease initially caused disruptions in the farm sector, it created a domino effect affecting the rest of the actors downstream. After evaluating the key players’ efficiency performance, it was found that native pig production and lechon processing are good investment entry points in the supply chain. Moreover, a direct transaction between these two components is recommended to eliminate intermediaries that cause supply chain inefficiency. However, the supply chain in Tiaong is largely dominated by these actors. This means that a large portion of the farmers’ output are being marketed inefficiently. The results of the study show that the native pig supply chain in Tiaong Quezon is characterized with numerous issues that are basically rooted from the production node. Hence, a list of business model options, organizing the farm sector, were recommended to address these problems. These models include: 1) Public-Private Partnership on breed improvement and the establishment of multiplier farm, 2) Public-Private Partnership on production of affordable and commercially feeds, 3) Collective Marketing (i.e., LGU-, Producer- or Intermediary-led), and 4) Contract- growing through cooperative.

Document Type

Master Thesis

Degree

Master of Management major in Agribusiness Management and Entrepreneurship

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Dinah Pura T. Depositario

Committee Member

Glenn N. Baticados, Melodee Marciana E. De Castro, Dinah Pura T. Depositario, Mar B. Cruz

Language

English

LC Subject

Supply chain management, Swine industry

Location

UPLB College of Economics and Management (CEM)

Notes

Award: Best Field Study

Not available to the general public. Access is available after consultation with the author/adviser and to those bound by confidentiality agreement.

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