An Industry Study on the Intensive Pig Farming Industry
Executive Summary
Intensive pig farming is an agricultural industry that operates by raising live pigs for slaughtering which will then be turned into pork for human consumption. Piggeries, as the firm is called, serve as a major food source in the Philippines, with the highest grossing per capita consumption among red meats. The industry is fairly attractive to investors as its high capital requirement and risky nature is effectively balanced out by the steady demand of a readily available market.
The competitive structure of the industry consists of two groups. The first being commercial firms, examples of the biggest are Robina, Monterey and Foremost farms. These firms partake in large scale production of pigs; with herds usually numbering in the thousands and with numerous farms spread throughout a wide geographical area. Backyard farms, which are far more numerous, make up the second group. Backyard establishments raise less than a hundred pigs. Despite being dwarfed in operation size, small scale farms still hold the majority of the market share at 75%. Competition within the groups, as well as, between backyard and big firms is intense due to the production of a relatively homogenous product which is sold to an impartial consumer.
There is very little demand growth for the industry, due mainly to economic trends affecting the purchasing power of the Filipino people. Growth in demand is commonly attributed to a growing population rather than an increase in the per capita consumption. This economic trend’s effect is further aggravated by rising pork prices due to supply shortages caused by diseases, as well as, rising feed prices. The latter being the top value input of the industry (70%) and as such has a large effect on market price.
Profit margin for the industry is relatively small due to price caps that allow the product to remain competitive with its substitutes. This is the industries single greatest threat. Rising costs in its production could
Intensive pig farming is an agricultural industry that operates by raising live pigs for slaughtering which will then be turned into pork for human consumption. Piggeries, as the firm is called, serve as a major food source in the Philippines, with the highest grossing per capita consumption among red meats. The industry is fairly attractive to investors as its high capital requirement and risky nature is effectively balanced out by the steady demand of a readily available market.
The competitive structure of the industry consists of two groups. The first being commercial firms, examples of the biggest are Robina, Monterey and Foremost farms. These firms partake in large scale production of pigs; with herds usually numbering in the thousands and with numerous farms spread throughout a wide geographical area. Backyard farms, which are far more numerous, make up the second group. Backyard establishments raise less than a hundred pigs. Despite being dwarfed in operation size, small scale farms still hold the majority of the market share at 75%. Competition within the groups, as well as, between backyard and big firms is intense due to the production of a relatively homogenous product which is sold to an impartial consumer.
There is very little demand growth for the industry, due mainly to economic trends affecting the purchasing power of the Filipino people. Growth in demand is commonly attributed to a growing population rather than an increase in the per capita consumption. This economic trend’s effect is further aggravated by rising pork prices due to supply shortages caused by diseases, as well as, rising feed prices. The latter being the top value input of the industry (70%) and as such has a large effect on market price.
Profit margin for the industry is relatively small due to price caps that allow the product to remain competitive with its substitutes. This is the industries single greatest threat. Rising costs in its production could
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