Pork import lobby grows
A GraceKennedy division has joined the voices calling for a relaxation of import rules for pork, while another company, Arosa, has chopped its workforce amid indications that the shortage of pigs and the meat as raw material is worsening.
Local pork producer, Caribbean Broilers Group, which has said claims of a shortage might be exaggerated, has itself now come under criticism for the price it is charging food processors for its supplies.
The Ministry of Agriculture has so far not relented to the lobby to allow more imports. It said it would need to assess conditions in the markets before speaking definitively to the matter.
Food and meat processors have been calling for an import window to ease the shortage of raw material to processors, a shortage they say has not yet hit consumers.
St Ann-based smokehouse, Arosa, says it has already cut eight production staff due to a decrease in pigs supplied to its plant. Managing Director Robert Hoehener said Arosa has also taken a financial hit on investment made in farms that supplied the company.
While noting that the pig shortage dates as far back as a year, Hoehener said Arosa has had to gradually scale down production over that time.
"I used to slaughter at least 100 pigs a week, however, since the end of December I haven't seen one single pig in my plant," he told Sunday Business. He noted that he has had to turn to other processors for supplies, for which he pays "premium prices". He did not name his supplier, saying only that it was a competitor.
Food services giant, GraceKennedy has also added its call for an import window amid its own declines in raw material.
"GK is currently getting less than 50 per cent of its monthly requirements for pork," said general manager of Grace Food Processors Division, Carl Barnett.
Grace Food Processors utilises approximately one million pounds of local pork annually, Barnett said, and that the company supports the "limited importation of specific pork cuts - shoulders, legs, trimmings - until the Jamaican pig industry is stabilised, hopefully later this year."
Hoehener said the industry is being further eroded by the shortage as farmers have taken to slaughtering their pigs before maturity in order to meet demand - a point also noted by Henry Graham, a large pig farmer based in Westmoreland and chairman of Sweet River Abattoir and Supplies.
Sweet River, which is a publicly listed company, reported a 63 per cent drop in revenues last year linked to a "severe shortage of pigs in 2014".
The slaughter house further complained of the high prices it had to pay to farmers to secure the few pigs it received.
Pork imports are not banned, but the Ministry of Agriculture is known to maintain a tight policy on permits as a means of protecting the local market.
On Wednesday, Permanent Secretary Donovan Stanberry told Sunday Business that the ministry only denies import permits "if there are phytosanitary concerns."
Pressed for a comment on what action it was contemplating to deal with the shortage, Stanberry said the agriculture ministry would meet with players this week to assess market conditions.
"I still don't understand what the issue is," said the agriculture official. "If the permits are not being granted that means we have phytosanitary concerns," he said.
Meanwhile, processor Pioneer Meats Products Limited said the company has been hit hard by the shortage, especially since December at the start of the winter tourist season.
"We lost money - I don't want to talk about the figure because just looking at it is grief," said General Manager Pauline Wilson.
"I have major contracts to supply pork to major hotels and one clause in the contract is that if I can't supply them at the prices I agreed to, and they can get it from anybody else, I have to pay the difference," Wilson said.
"Let's say I am to selling it for $900 per kilo, and because I am unable to get it and somebody offers it to them at $1,500 per kilo, I have to pay the difference between the $900 and $1,500 - that is happening to me now," she said.
She said using CB Group as an alternative supplier was not a viable option, due to its price adjustments.
"I can't afford CB's price," said Wilson. "I got an order of trimmings from them and when I tried ordering again in two weeks time the price had moved .. and I am now told it's going to be moved again," she said.
CB has defended its prices to competitors, saying it's just business and that the policy structured to take its replacement costs into consideration.
"The cost of producing high quality pork is what determines the cost at which we can sell it and the margins which are currently claiming for it are minimal. There is no point producing something at a loss so that you will be out of business next time," said CB Group's corporate affairs manager Dr Keith Amiel.
He did not deny that CB now charges premium prices for pork supplies to rivals, saying that in previous periods when the market faced a glut in supply, CB would sell "below the cost of production so as not to have excessive inventories."
"Now we can adjust the price more to what makes business sense - that is what is happening," he said.
Pork consumption in 2013 amounted to 10.5 million kgs, according to the Ministry of Agriculture. That figure represented a fall from 11.1 million kg in 2012, but the ministry has said the consumption was high then because of a glut on the market. Pork consumption data for 2014 is not yet available but the ministry has said it expects it to outperform 2013.
Pig producers have said they expect the current shortage of animals reared for slaughter would ease by September and that supplies should stabilise in early 2016.