Supporting smallholder pig farmers in the Philippines

The rapidly growing pig-rearing industry has great potential to reduce poverty in the Philippines. Smallholder farmers provide close to 80 percent of production. However, there are indications that they are being replaced by larger commercial farmers, who are better able to compete in the current markets.

Pig-rearingis the most important part of the Philippines’ livestock sector. In a countrywhere 40 percent of rural people live in poverty, the potential of pig-rearingfor increasing income cannot be underestimated. Research from the InternationalFood Policy Research Institute in the USA examines the factors affecting thecompetitiveness of smallholder pig farmers. The authors compare the performanceof different groups of farmers, and suggest ways to overcome barriers tocompetitiveness.

Trendsfrom the major pig-producing regions of Southern and Central Luzon show a rapiddecline in the share of smallholder producers. Consumers are demanding quality,convenience and a range of meat products. The government’s National MeatInspection Service also demands these requirements. Only larger companies canprovide this, because they control their own breeding farms, feed, and animalhealth services, and for a few, their own slaughtering and processingfacilities.

Theauthors analysed household participation in pigfarming and their relative efficiencies. The research shows:

• Theavailability of household resources (such as family labour, money to pay foragricultural resources), pig prices, and access to external markets influencehousehold participation.
• Pig-producingsmallholder households are either independent or contract farmers. They can begrouped according to their production levels. The largest producers, which are mostlycontract farmers, produce about 40 times more than the smallest (mostlyindependent) farmers.
• Householdsproducing the least have the lowest profits, and are unlikely to surviveincreased competition. The next two groups manage profits comparable to orbetter than larger farms, and should be able to compete.

Contractfarmers are more competitive than independent farmers for several reasons. Theyhave better access to quality feeds and stock, feed credit, veterinary health servicesand credit for expansion. They are often linked to feedmillingand multipurpose cooperatives. Also, contract farmers are more competitive thanindependent farmers when the cost of family labour is taken into account. Thishas helped them overcome cost barriers through access to information,technology and markets.

Smallholderswho cannot compete need alternative options. The researchers suggest:

• Smallholdersnot expected to stay in pig-rearing can be helped by improving opportunitiesfor non-farm employment through general knowledge and skills enhancement, and opportunities  for businesses (such as in local foodspreparation, household appliances repairs, among others).
• Commercialenterprises with resources and technological expertise in livestock productionshould be encouraged to invest in more efficient smallholders.
• Informationon feed quality (through labelling) should be provided and quality maintainedthrough monitoring. Coordination between commercial firms and smallholders is alsonecessary.
• Theprotected domestic corn industry, which provides food for pigs, can be mademore efficient through liberalisation (for example reducing tariffs andremoving artificial import controls) and improvements in corn production anddistribution; this would boost the livestock sector.