REVIEW OF RELATED LITERATURE

The progress of today's many businesses and economic sectors affects how competitive
agricultural products are. The broiler is one source of animal protein that meets both domestic
and international needs. From the beginning of the process to the end, the broiler agribusiness
has many separate operations and facilities that can employ a lot of people. But, just like with
goods in general, the people in the supply chain have nothing to do with each other. As a result,
every actor can only act based on what they know about their area. It changes information along
the supply chain. This distortion diminishes the efficacy of satisfying demand and causes
significant price fluctuations. So, to improve the performance of the broiler supply chain, the
companies that make broilers need to come up with something new based on the value chain
approach (chain of value) and the supply chain management methodology. Market composition,
or the degree of business concentration, is one of the indicators of market structure.

Fair market competition is important in every industry in every economy because it makes
markets work better and protects consumers. Competition fosters innovation, production, and
growth, hence increasing wealth and decreasing poverty (Godfrey 2008). For companies to take
advantage of these benefits, the market should be as competitive as possible. However, this is not
always the case, especially when enterprises engage in anticompetitive activities. To deal with
this problem, laws have been put in place to encourage strong market competition.

The way buyers and sellers interact with each other is set by the market structure of an industry.
It is defined by how many buyers and sellers there are, how hard it is to get into the market, how
different the products are, how much vertical integration there is, and how many different
products there are (Matyjas, 2014). It is either completely competitive, monopolistically
competitive, oligopolistic, or monopolistic. When there are a lot of firms in a market, it tends to
become a monopoly, while markets with fewer firms tend to be more competitive. The way the
market is set up could show if one company dominates the market in a certain industry and could
be used as the main basis for figuring out if there is a possible abuse of a dominant position.
Assessing the market's makeup is also a good way to find out if large companies could work
together on a large scale. When a market is very crowded, companies are more likely to work
together, which cuts down on competition (Shaik, 2009). Performance is a measurable outcome
of an organization's actions. Matyjas (2014) says that performance can be judged by price,
product and allocative efficiency, product quality, technical progress, profitability, and other
things. Because they have little or no control over the market, firms in a competitive market
accept the price set by the market and have lower returns than firms in markets with less
competition (Lelissa and Kuhil, 2018). Firms with a large share of the market have market
power, which they can use to charge more than the normal price set by competitive markets.
Performance can also show how well a company can make its products for the least amount of
money, which is reflected in the price it charges customers.

The Global Market For Broilers

The structure of the global broiler market is mostly determined by three things: the number of
resources available (as shown by agro climatic conditions and the cost and availability of land,
capital, labor, feed, and technology), consumer preferences, and government policy. In terms of
resources, broilers are sensitive to changes in temperature and humidity, so to make sure they are
as productive as possible, these conditions would need to be naturally good. This would lower
the cost of keeping diseases and the environment under control. Also, since feed costs make up
about 70% of the total cost of intensive poultry production systems, the fact that cheap feed is
available is one of the most important factors in the growth of the industry. Access to advanced
technology, which is also needed for high efficiency, is another factor that has a big effect on
how well an industry does. As was to be expected, the broiler industries of the top exporting
countries have advanced technologies and a lot of vertical integration (World Poultry, 2004).

Government policies, both domestic and trade-related, also have a big effect on how industries
grow and how trade tends to flow. Even though there is the World Trade Organization (WTO)
and other regional trade agreements, there is still some trade and government interference, such
as tariffs, quotas, import taxes, and subsidies. In some Western and Asian countries, these
barriers have a big effect on how well chicken businesses do. In some cases, government
intervention is the only reason why domestic industries have been able to keep going. The
difference between countries that are self-sufficient, net exporters, and net importers of broiler
meat is due to differences in their resources and how their governments run.

Philippines-Based Poultry Farm

The broiler business in the Philippines consists of 20% household farms (with fewer than 1,000
chickens) and 80% commercial farms. There are 588 registered poultry farms and around 175
meat processing plants in the United States. The market for fresh processed meat was projected
at 420 thousand metric tons. This excludes food service quantities and small-scale or backyard
producers of hotdogs and longaniza. In the same year, canned meat production was projected at
126,000 MT. Chicken is used as a raw material in both industries, especially chicken that has
been separated or deboned by machines.
Regional Market Analysis
According to the most recent data from 2015 from the PSA Family Income and Expenditure
Survey, overall Filipino family spending on fresh chicken consumed at home increased from
43.1 billion Philippine pesos (PHP) in 2006 to 79.9 billion PHP in 2015. In terms of regions,
South Luzon, the principal "bedroom community" of the National Capital Region (NCR), had
the highest growth in fresh chicken consumption. Its expenditures more than quadrupled from
9.3 billion PHP in 2006 to 20.2 billion PHP in 2015, at an average annual growth rate of nine
percent. Other regions, however, expanded at slower rates: Mindanao by 7.1%, North Luzon by
6.8%, Visayas by 6.6%, and NCR by 5.7%. In the past decade, food service expenditures have
also climbed, and restaurants have created new chicken dishes to suit rising demand. In the last
10 years, family spending has gone up by 12%, which has continued to make more people want
to buy chicken.

Strategy for the Broiler Industry

The Philippines' production system is comprised of smallholder, semi-intensive, and large-scale

livestock and poultry operations located near urban centers (Escandor et al., OIE Scientific
Technical Review, 2020). More people will move toward urban centers as these are areas of
business activity. This implies that food demand and consumer preferences will increase. To
accommodate such food demands, the poultry industry, particularly broiler production, is
expanding. However, the relocation of broiler farms outside of urban centers is a consequence of
urbanization. As noted in earlier sections, production areas are shrinking, and there is a multitude
of concerns now influencing the broiler business. Indeed, it is essential to steer the direction of
the broiler business if it is to remain a viable commercial venture that can continue to deliver
vital protein to the human population.

Structure Of Governance Along The Chains.

Governance was defined by Gereffi et al. (2005) as the authority and power relationships that
determine the allocation and movement of financial, material, and human resources along a
chain. Governance analysis shows how a chain is controlled and coordinated when some actors
in the chain have more power than others. The exercise that Kaplinsky and Morris (2000) used to
rate the "importance" and "influence" of the actors was used. Influence refers to the ability to
exert control over other actors or situations along the chain. "Importance" refers to the actor's
ability to significantly impact the chain's operations. Actors in the broiler value chain (producers,
processors, and distributors) were needed to respond to indications on profit, bargaining power,
protection from competition, and information concentration to determine power relations (Pervan
et al., 2018).

For most of the poultry that is raised in the country, there are no current value chain strategies for
the supply and marketing of chicken and its products. Despite increased production, vertical
integration is limited. There isn't enough coordination when it comes to making decisions about
how to produce, price, and sell chicken meat and eggs. This is because broiler and layer
production is split up and institutions aren't as strong as they could be. The lack of science and
hygiene skills needed to process poultry meat and eggs at the retail level, as well as a lack of
bioscience and technology skills in poultry meat, makes these differences even bigger. This could
slow the growth of the industry in the future. Mapping production systems can help you see and
understand the many stages of production, harvesting, and distribution, as well as the types of
actors and goods involved, and where they stand in the hierarchy of value chains.
Commercial vs. Backyard Production

The Philippines' poultry inventory is categorized as "commercial" and "backyard." When a

chicken farm has more than 100 birds, it is considered "commercial" (BAS 1987). Otherwise, the
term "backyard" applies. Based on this criteria, backyard production of (native) chickens in the
Philippines comprised more than fifty percent of the entire chicken inventory in 2005. (BAS
2006a). This definition of the backyard sector is related to the description of "Sector 4" in the
Food and Agriculture Organization's (FAO) classification system" (BAS 1987). Otherwise, the
term "backyard" applies. Based on this criteria, backyard production of (native) chickens in the
Philippines comprised more than fifty percent of the entire chicken inventory in 2005. (BAS
2006a). This definition of the backyard sector is similar to how the Food and Agriculture
Organization (FAO) describes "Sector 4" in its classification system. FAO (2004) divides
chicken farms into four groups based on how well they can protect against disease, especially
avian influenza (AI), through biosecurity measures. The four sectors are as follows: Sector 1:
Industrial integrated production system; Sector 2: commercial poultry production system; Sector
3: semi-commercial poultry production system; and Sector 4: village or backyard production.
Those that fall under Sector 4 are backyard farmers who keep, on average, between 10 and 20
birds and typically fewer than 50. It is the category with the greatest number of farmers and share
of total production, particularly in emerging nations (Agrifood Consulting International 2006). In
the case of chickens, backyard poultry is frequently referred to as family poultry (Branckaert and
Gueye 1999; Conroy 2004) or scavenging village birds (Alders and Spradbrow 2001; Lambio
2005). The most important thing about backyard chicken farming is that it is a low-input,
low-output system that uses almost only native birds and breeds (FAO, 2000). Most of the time,
chickens raised this way are eaten at home, but they can also be sold to make extra money when
needed (Conroy et al., 2005; Lambio, 2005). FAO Sectors 1 and 2 talk about large-scale,
integrated production and marketing systems in the commercial sector (SEARCA 1999;
SIKAP/STRIVE Foundation 2001; Costales et al. 2003).

Swift Foods, San Miguel Foods, Tysons Agro-Ventures, and Universal Robina Corporation
control the Philippine broiler business, accounting for 65% of the total broiler supply in the
country (Abuel-Ang 2005). These integrators produce and market broiler chickens, import
parent, and grandparent stock, and sell commercially mixed feeds and breeder stocks to
independent raisers. The Philippine Association of Broiler Integrators is the organization that
unites the integrators. On the other hand, the United Broilers' Association is comprised of small-
and medium-scale commercial broiler farms and independent poultry producers from Rizal,
Bulacan, Nueva Ecija, Cavite, Laguna, Pampanga, and Tarlac (DA-AMAS 2001).

Commercial chicken farms in the Philippines are geographically concentrated. Central Luzon
(33.2%) and Calabarzon (28.1%) accounted for 61.4% of the country's total broiler stocks in
2005. (BAS 2006a). These two regions also accounted for more than fifty percent of the
Philippines' entire layer stocks. The fact that only a few leading producing regions are in charge
shows that they all have an advantage in terms of access to major inputs and markets (Costales et
al. 2003). Although such a high degree of geographical concentration is beneficial for marketing
and procurement of inputs, it poses substantial issues for disease control and waste management
on farms. A disease outbreak, such as the bird flu that has affected several poultry-producing
countries throughout the world in recent years, has the potential to wipe out an entire industry in
a very short period.

Supply and Demand

According to the Philippine Statistics Authority, the number of dressed chickens produced in the
Philippines expanded by 40% in ten years, from 1 million MT in 2009 to 1.4 million MT in
2018. The establishment of new commercial farms and processing plants, the conversion of some
commercial farms to tunnel-ventilated housing, the expansion of farms' stocking capacities, an
adequate supply of day-old chicks, the increasing use of contract farming, and an ever-increasing
demand for chicken meat are the primary causes of this growth.

Chicken's popularity has grown faster than that of other meats because it is cheaper, has less fat,
and doesn't have any cultural or religious restrictions. Also, chicken is the most popular meat at
fast food restaurants, which are growing quickly all over the country. In the past 10 years,
restaurants have come up with new chicken dishes to meet the growing demand. From 2009 to
2018, the supply increased by five percent annually, from 1.1 MMT to 1.7 MMT. The 2019
supply is projected to be 1.93 MMT, which is 4.9 percent greater than the 2018 supply (PSA,
2020). Using PSA's net food disposable data for dressed chicken as an example of the amount of
food available for human consumption, total consumption went from 1.1 MMT in 2009 to 1.7
MMT in 2018. This is a four percent increase per year.

Major Issues in Broiler Farming

As we've already talked about, technological advances in raising and selling broilers have made a
big difference in the success of the poultry industry. But both government rules and consumer
dissatisfaction with industrialized poultry production systems have been steadily going up
(McMullin, 2003). Concerns include the use of antimicrobial growth promoters, animal protein,
and genetically modified ingredients in animal feed, as well as their effects on the environment,
animal welfare, and disease control.

Meeting these new customer and government requirements will have big effects on the future
production and marketing of broilers, as well as on the costs of production and the competition in
the market. Figure 1 shows these concerns, which Ellendorff (2003) labels a "conflict field in
broiler production."

Figure 1. Field of Conflict in Broiler Production.

PHILIPPINE BROILER IMPLICATIONS

Based on an overview of the world's broiler industry, it's clear that the world's broiler market is
very competitive, with more and more efficient producers fighting for market share. They
achieve success through competitive pricing, aggressive marketing, the development of new
products, and the expansion of new markets. In the future, new factors such as food safety,
quality assurance, biosecurity, and environmental and animal welfare concerns will play a greater
role in determining overall competitiveness than they did in the past when the cost was the
primary determinant of competitiveness. This means that a well-managed and integrated supply
chain, encompassing production, processing, and distribution, will be essential to meet changing
customer demands and regulatory requirements. The fact that the Philippine broiler sector is less
competitive suggests that it would be increasingly threatened by global competition and
inexpensive imports. How to manage the need to build the country's industry with the need to
deliver inexpensive, high-quality items to the domestic market is an essential dilemma for
policymakers. Historically, the Philippine government protected native industry using tariffs and
quotas. However, as a result of ongoing trade liberalization, these protectionist policies have
been steadily diminished or eliminated, and the focus has shifted to being more competitive. This
will necessitate an increase in farm productivity through the adoption of cutting-edge technology
and more effective management techniques. Also, the broiler business needs to be fully vertically
integrated so that it can take advantage of economies of scale and scope. This will include
backward integration to improve its breeding stock and forward integration to do more
processing and sell it.

Innovative processing and marketing are needed to get people away from the live trade and wet
markets and change their preference for small, fresh or chilled carcasses. To keep this business
advantage, the sector needs to improve biosecurity measures and cut costs. Implementing
biosecurity measures against bird flu will be very hard because there are a lot of ducks and native
chickens in backyard farms, a lot of live poultry traded in wet markets, and a lot of reliance on
imported breeding stock. To help the poultry industry in the Philippines do better, the
government is expected to make sure that the supply chain is set up in a way that encourages
productivity growth. The government could make important contributions to the gathering and
sharing of market information, the improvement of marketing infrastructure, and the reform of
the input market. Last but not least, possible disagreements between the commercial and
backyard poultry sectors, as well as their effects on disease control and the future
competitiveness of the poultry industry, need more research in order to come up with good policy
directions.
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