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Aboitiz food unit banks on exports for further growth

Iligan City – The expansion efforts of Pilmico Foods Corp., the food subsidiary of listed conglomerate Aboitiz Equity Ventures (AEV), is now more focused on growing its export business as part of its strategy to adjust with ASEAN integration, which somehow left them with no choice but to look for markets elsewhere.

Florencio Sebandal, Pilmico Vice President for Operations for Iligan, said the more liberalized ASEAN free trade caused more imported food products to gain foothold in the country, prompting local companies like Pilmico to expand its export business.

ASEAN Economic Community (AEC), which started in 2015, involves an established common market among some of the ASEAN countries, including the Philippines.

Pilmico Foods Corp. logo(courtesy of Pilmico.com)

Pilmico Foods Corp. logo(courtesy of Pilmico.com)

The Department of Agriculture (DA) earlier said the free movement of goods and services within the AEC must be thought of as an advantage as it fuels the need to lower cost, propagate value-adding techniques, and pull stakeholders together to make the Philippine agriculture sector competitive versus other ASEAN countries.

But as of now, local companies are still coping with the impacts of the integration.

“We are seeking growth through the ASEAN market. The demand is currently being eaten up by the imported products. We can no longer grow here in the Philippines so we really have to boost our export markets,” Sebandal told reporters in an interview held in the firm’s Iligan plant.

As of now, Pilmico sells its flour products to Hong kong, Vietnam, Myanmar, Malaysia, and Thailand, while it is also looking to start selling feeds abroad this year.

Pilmico started its export business last year and now sells 10 percent of its total output for flour abroad, which is equivalent to 2,000 metric tons a month.

Sebandal said the company is now on the process of completing a R200-million packing facility solely dedicated for flour products to be sent abroad.

He said the completion of this facility will help the company boost the quality and quantity of its export products.

The facility will be fully constructed by the end of this year.

In terms of flour, 40 percent of the company’s production goes to Mindanao, 30 percent goes to Luzon, 20 percent goes to Visayas, and 10 percent goes abroad.

As of now, Pilmico has four plants including two feedmill facilities located here in Iligan City and Tarlac, one flour milling plant in Iligan City, and one feed mill in Vietnam.

A previous report showed that while certain ASEAN countries as Singapore and Thailand have already been taking advantage of the more liberalized ASEAN free trade, the Philippines’s poorer agricultural producers still need to be assisted into taking advantage of trade tariff eliminations.

The ASEAN Merchandise Trade Statistics Database indicated that as of June, 2016, Philippines intra-ASEAN exports was at $8.536 billion, only 14.6 percent of intra-ASEAN exports.

However, its intra-ASEAN imports was at $17.063 billion, a higher 24.3 percent of  intra-ASEAN imports.

The Philippines had a share of 19.9 percent or $25.6 billion in intra-ASEAN trade in the same period.

Those that enjoyed higher export from intra-ASEAN trade were Lao, 71.2 percent; Malaysia, 28.1 percent; Myanmar, 37.5 percent; Singapore, 32.3 percent; and Thailand, 28.9 percent.

Nevertheless, the Philippines is projected to become the largest economy in the Southeast Asian Region by 2050 and that the country is well positioned to seize opportunities and benefit from the full integration of the AEC.

Based on the second quarter report of AEV, Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation and Pilmico International Pte. Ltd., posted R885-million income contribution to its first half earnings, relatively flat year on year during the compared to previous year.