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Dairy Consumption in the Philippines Growing

26 March 2012
BordBia

PHILIPPINES - Dairy consumption in the Philippines is growing, writes Michael Hussey, Food and Beverage Division, Bord Bia – Irish Food Board.

The Philippines is one of the fastest growing economies in Asia and has a population of over 93 million. The country is almost completely dependent on imports of all dairy commodities. Domestic milk is used only for ready-to-drink milk. Traditional Philippine cuisine does not have any place for dairy products. Despite this, dairy consumption has grown, encouraged by Government policies. Milk powders are largely used for reconstitution as ready-to-drink milk (either fresh or UHT). The major players in the market are Fonterra Philippines, Alaska Milk Corporation (USA), Nestle and Snow Mountain Corporation.

The country has an import requirement of around 180,000 tonnes of milk powders. SMP accounts for around 110,000 tonnes while WMP imports and whey combined make up around 70,000 tonnes. Milk Powders (SMP, WMP, Whey and Buttermilk powder) constitute about 79 per cent of total imports.

New Zealand is the largest supplier to the market, accounting for 36 per cent of imports. This is followed by the United States at 25 per cent, Australia at 11 per cent and Malaysia at six per cent.

Australia and New Zealand have tariff free access due to a free trade agreement. The most recent Philippine trade agreement entered into by the country is the AANZFTA (ASEAN-Australia-New Zealand Free Trade Agreement), which was signed in February 2009.

Parties to the AANZFTA are Australia, New Zealand and the ten ASEAN members. As of 2010, milk powder, cheese, whey and buttermilk from Australia and NZ enter the Philippines duty free, while milk powder and whey from the United States have an MFN duty of one per cent; cheese three to seven per cent and buttermilk three per cent.

Imports of milk powders have been growing at around one per cent per year while butter and cheese have been growing at 18 per cent annually. While these sectors are dominated by New Zealand and US suppliers there may be opportunities for Irish dairy producers as the demand grows further.

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