II. Growth and Structural Change in the Livestock Markets in the Philippines

2.1 The Livestock Revolution

The livestock sector provided the strongest source of agricultural growth as the Philippine economy emerged from recession in 1998. The sector sustained this growth performance throughout the last decade. As Table 2.1 shows, only livestock and poultry exhibited consistently robust growth rates relative to the other sectors in agriculture over 1990-2000.

Table 2.1 Growth rates in gross value-added in agriculture, by major sectors, 1990-2000

Source: National Statistics Coordination Board, 2001.

Pork and broiler output have been at the forefront of livestock production growth. Expansion of these two industries, however, has been concentrated in the two regions north and south of the capital city of Manila, which is the largest demand center. These two regions are Central Luzon north of the capital and Southern Tagalog (or Southern Luzon) south of the capital. Not only are these two regions proximate to the highest income and most urbanized demand center-these two regions themselves are relatively high income and dense populations. They are thus veritable demand centers in themselves.

While smallholder livestock production systems remained dominant in the regions farther from the center, the configuration of market shares between the commercial and 'backyard' farms in the two high-growth regions shifted in favor of commercial operations. In broiler production, for instance, these two regions are saturated with contract growing operations organized by large integrators. In the hog sector, large-scale commercial inventories have matched or surpassed aggregate backyard inventories of hogs. Figures 2.1a and 2.1b, respectively, show the comparative development of commercial and backyard inventories over the last decade in Central and Southern Luzon.

Figure 2.1a Growth of commercial and backyard inventories in hog farms in Central Luzon, 1990-2000

Figure 2.1b Growth of commercial and backyard inventories in hog farms in Southern Luzon, 1990 -2000.

The scaling-up and concentration of production in broilers and hogs in the two regions adjacent to the Manila metropolitan area has given rise to problems of animal waste disposal. Traditionally, hog waste disposal involves simply using water to flush waste out of the pens and letting this flow to the nearest creeks or rivers, which carry the waste downstream. With intensification and concentration of production, this method can no longer be continued without adverse consequences for neighboring and downstream residential communities. In contrast, a market for poultry waste as organic fertilizer has developed. This has relieved the broiler producers of a significant part of the burden of disposing of poultry manure without causing spillover problems to neighboring residential communities.

2.2 Internal and External Factors Influencing the Scaling-up of Production

On the domestic front, 'balanced agro-industrialization' was one of the dominant themes of development policy in the 1980s and 1990s, as enunciated in a series of five-year medium-term Philippine development plans (MTPDPs). Key industries were highlighted in the strive to achieve a balance between industry and agriculture. Regional industrial centers (RICs) were identified for development to spread growth beyond the Manila metropolitan area to the regions.

To attract private investors to the identified industries, the government offered investment incentives to 'pioneering' industries. Similar incentives were provided to induce firms to locate or relocated outside the Manila area, in line with the strategy of regional dispersal of industries. The incentive package included tax and duty exemptions for breeding stock and capital equipment as well as tax holidays for a limited period commencing in the year of investment (Omnibus Investment Code of 1987; Investment Incentives Act of 1991).

Access to these investment incentives, however, favored large firms. In terms of dispersion of livestock production and complementary feed-milling activities, the scheme failed to bring about a more balanced distribution of commercial and industrial activity across regions. Rather, the expansion and scaling-up was limited to the two regions at the doorstep of Metro-Manila. With respect to poultry and swine feed milling, the same pattern of concentration emerged. Commercial feed-milling firms concentrated in Central and Southern Luzon, with the third largest group remaining in Metro-Manila. As shown in Figure 2.2, more than two-thirds of all feed mills were located in Metro-Manila and adjacent regions.

Figure 2.2 Regional distribution of feed mills, Philippines, 1998

While there were internal policy initiatives aimed at developing internationally competitive agricultural and industrial sectors, there were also outside pressures for government to open up the industrial and agricultural economy to external competition. These resulted in the design of major trade and tariff reform programs in the 1980s and 1990s. With serious structural imbalances in the economy's external sector, trade policy reforms were implemented in the 1980s under the Import Liberalization Program (ILP) and the First Tariff Reform Program (TRP-I). The twin policy reforms aimed at removing quantitative restrictions on imports and lowering and leveling out the import tariff (Costales and Delgado, Phase I Synthesis Report, 2003). Trade reforms in the 1990s centered around the free trade agreement entered into by the Philippines with its Southeast Asian partners (AFTA) and agreements on agriculture with the World Trade Organization (WTO) in 1994 (Habito, C., Livestock Industrialization Phase I Report, 2002).

The evolution of trade policy in meat and in feed grains since the 1980s has revealed the tensions between developing a competitive monogastric livestock industry and protecting the domestic corn sector. Pressures to protect the national broiler industry have also been strong.

The provisions in the WTO agreements for differential tariffs on a minimum access volume (MAV) of imports and on imports above the MAV gave rise to major inequitable consequences. Although not the intention of the policy, access to lower tariffs on MAV imports of corn favored the large-scale feed mills and broiler integrators, as well as the organized large-scale commercial hog and poultry firms (Costales and Delgado, LI Synthesis Report, 2003). Other livestock producers were effectively blocked from accessing preferential tariffs and had to contend with the higher domestic prices of corn and higher priced commercial mixed feeds.

Thus, on both the domestic and external policy front, the smallholders faced a market environment that was far from constituting a level playing field.

2.3 Structural Changes in the Broiler and Hog Industries

2.3.1 Initial Structure

Chicken farms in the Philippines were initially characterized by the use of native breeds. Figure 2.3 shows inventories of native chickens and of modern broiler chickens from 1990 to 2001.

Native chickens are raised in backyard farms using free-range practices. Feed consists mainly of crop residues and grain spillage along with rice and corn brokens^[40]. No substantial improvements in the breeds have been made over the years.

Figure 2.3 Native chicken and broiler chicken inventories, Philippines, 1990-2001

The initial structure of hog farms was similar to that of the native chicken farms. Native pig breeds were raised and crop residues provided the main feed source. Native pigs were mostly raised in backyard farms. As Figure 2.4 shows, on the whole, backyard hog raising still predominates over commercial hog production.

Figure 2.4 Commercial and backyard hog inventories, Philippines, 1990-2001

2.3.2 Technological Change

The replacement of native chicken breeds with modern broiler types has laid the foundation for technological change in the poultry meat sector. Grandparent and parent stock of broiler breeds are imported to produce day-old chicks for broiler raising. Nutrition is calibrated by use of carefully controlled mixed feed rations. Vaccines and antibiotics are used to guard against disease. Broilers are raised to optimal market weight, 41 to 42 days on average. Figure 2.5 shows the rise in the average volume of imports of grandparent and parent stock.

Figure 2.5 Average volume of imports of grandparent and parent stock, Philippines, 1980-2001

In hog raising, technological change has also come in the form of a switch from native to exotic breeds. Even backyard producers have now set aside the native pig in favor of pigs of visibly exotic origin but of unknown or generic lines. Commercial mixed feeds are now used instead of crop residues.

2.3.3 Changes in Industry Structure

In the chicken industry, while native breeds seem to have maintained their position of dominance over imported stock, their importance in the poultry meat market has greatly diminished with significant inroads being made by the broiler industry. The large broiler integrators have focused their attention on the meat-consuming urban population of Metro-Manila and the adjacent regions of Central and Southern Luzon. These producers locate their activities as close as possible to these major demand centers. Figure 2.6 shows that native chicken inventories remain predominant only in the regions outside Central and Southern Luzon. Feed-milling operations, likewise, are located in these same regions and even in Metro-Manila itself.

Figure 2.6 Relative dominance of native chickens and broiler stock across regions, Philippines, 1997

In the hog industry, visible changes in industry structure have been less dramatic than in the chicken industry. Vertical integration and contract growing have not yet become the norm. On the whole, there is as yet no concentration and control of a dominant market share by a particular group. Similar to the broiler phenomenon, however, commercial farm operations have concentrated in the two regions closest to the largest market demand.

As Figure 2.7 shows, both commercial hog and broiler farms are concentrated in Central Luzon and Southern Tagalog, such that the combined shares of the two regions comprise more than half of the total number of commercial farms in hogs and broilers in the entire country.

Figure 2.7 Shares of Central Luzon and Southern Luzon in total commercial farms in hogs and broilers, 1998

Industrial concentration in the broiler industry deserves attention. As a group, the large integrators control some 80 percent of the broiler market. The remainder is in the hands of independent commercial broiler producers, who maintain inventories of 20,000 to 100,000 birds, and a few smallholders, who raise 1,000 to 2,000 birds at a time. The large integrators are banded into a producer's organization, the Philippine Association of Broiler Integrators (PABI), consisting of only six large firms. The integrators are the main source of day-old chicks, even for independent commercial producers whose size of operations is insufficient to maintain breeding operations. The integrators engage in breeding and contract growing, processing, and distribution of branded output. They are also a major player in the live broiler market, in which the daily reference price is set by the group on a gentleman's agreement basis (focus interview with broiler industry participants, 2002). Although no perfect collusion can be determined, price-setting behavior is exercised in as far as it can be maintained.

The structure of the broiler industry has implications for the supply of inputs to other producers and the marketing of outputs. For instance, the large integrators have a major say in the prices of day-old chicks for sale to independent commercial producers and smallholders. With regard to feed supply, while small-sized feed mills have their own brands of mixed feeds, the integrators not only supply their own feeds for internal use but also compete on the commercial market for mixed feeds with their own brands. Indeed, with the integrators' easier access to MAV corn imports at lower tariffs, they are well placed to compete against other popular feed brands based on price.

With regard to the output market, large integrators can influence the types of products supplied by their contract growers by controlling the quality of inputs. By also exercising control over the dressing and processing of output, they can guarantee product quality for distribution to specific formal or institutional markets.

Markets for dressed chicken and processed meat products are more stable than the market for live broilers. Figure 2.8 shows the monthly index of live-weight and dressed broiler prices from January 1998 to December 2000. These dates cover the period in which the broiler market went into crisis due to the unexpected volume of imports of chicken parts from the United States, captured by falling prices from January 1999 through March 2000.

Figure 2.8 Monthly index of live and dressed broiler prices, January 1998 to December 2000

The live broiler market is the main output market for smallholders and large independent commercial producers. The large integrators, on the other hand, have firm hold on the market for dressed broilers. In an era of market uncertainties created by international trade in meat, independent producers have less capacity to cushion their incomes from large fluctuations in live broiler prices.

In the hog sector, which is less concentrated than the broiler industry, small- and large-scale producers have relatively common access to the major market for slaughter hogs-the live market. The intermediaries to the market, however, vary according to scale of operations.

Some large-scale commercial firms in the hog sector employ vertical integration in operations: from breeding and contract production to slaughter and processing of branded meat products. These are a special type of firm. Most are subsidiaries of large integrators making their first inroads into institutional markets for pork. These large firms access a different market than the medium-sized commercial farms. Suffice to state that while medium-scale commercial farms have limited access to markets for pork of certifiable quality, smallholders' access is even less.

2.4 Policy Changes in the Livestock Sector

2.4.1 Widened Coverage of FMD-Free Certification

Mindanao has received certification from the OIE (World Animal Health Organization) as FMD (foot-and-mouth disease)-free. FMD outbreaks, where they occur, have a direct negative impact on Philippine hog markets, with hog prices in such regions falling drastically.

The Bureau of Animal Industry (BAI) of the Department of Agriculture has made FMD eradication on the entire archipelago a major policy thrust. The program started with the island of Mindanao in the south and has been quite successful. It is now focused on the Visayas and its major livestock-producing islands. Measures include prohibition of transport of animals from non-disease-free areas to FMD-free zones. Controlling the movements of animals on the islands of Mindanao and the Visayas has proven relatively manageable, since transport is generally from these areas to the main island of Luzon and not the other way around. Luzon is more difficult to control since interprovincial movements of animals are not easy to monitor. Nevertheless, both local and national-level efforts are being made to control the disease in Luzon itself.

The interest on obtaining FMD-free status for the whole country is linked to the potential for pork exports. Compared to the broiler industry, the hog sector is deemed to have a greater potential for being competitive in exports, given liberalized prices of feed grains and breeding stock. For decades, the hog sector has been the least protected among the major meat products. Nonetheless it has managed robust growth.

Large social gains are to be had by maintaining Mindanao as an FMD-free zone. Breeding stock and slaughter hogs command premium prices as long as the FMD-free status is maintained. Any incidence, isolated as it may be, of outbreaks of FMD in Mindanao would certainly have adverse consequences on the profitability of Mindanao livestock, not only for commercial producers shipping to Metro-Manila and Luzon, but even for smallholders who would face a glut in their own localities if not on the whole island of Mindanao.

2.4.2 Continued Partial Liberalization in Feed Grains, Poultry and Pork

The continued partial liberalization of corn, poultry, and pork imports is viewed as creating distortions in the three markets with adverse consequences to those who have no access to the privileges and advantages of the lower tariffs on imports, which are distributed at the discretion of an agency. While partial trade liberalization confers unequal treatment in favor of large-scale producers, the adverse impacts of trade liberalization also have broader implications for smallholders' continued viability.

2.4.3 Emerging Concerns for Food Quality and Safety

Although domestic hog and broiler producers have not yet reached a competitive level that would enable them to participate in the export market for meat, government policy has now issued explicit statements on the necessity to ensure that food products are safe (Costales and Delgado, Livestock Industrialization Phase I Synthesis Report, 2003). The Department of Agriculture, through the Agriculture and Fisheries Modernization Act (AFMA) of 1997, has created a new Bureau-the Bureau of Agriculture and Fisheries Food Products Standards (BAFFPS)-to centralize monitoring of food products to meet food safety standards.

Food safety regulations compatible with HACCP standards are now being applied to food imports. Application to domestically produced food is set to follow once the BAFFPS becomes fully operational. Table 2.2 outlines the pertinent regulations on food safety on the domestic front.

Table 2.2 Selected policies on food safety affecting swine and poultry producers in the Philippines

Source: Catelo, Ma. A.. 2002. "Differential Issues and Policy Options for Addressing Environmental and Human Health Risks Associated with Growth in Small- and Large-Scale Swine and Poultry Production in the Philippines", LI Phase I Report.

The implementation of HACCP-compatible standards on domestic meat output will have far-reaching implications for smallholders. In effect, it will erect a gateway to market access that requires a guarantee of food quality and safety for entry. At present, facilities for producing and processing meat of certifiable quality and safety are not readily accessible to smallholders. Large integrators, however, have built-in internal processes and procedures by which they guarantee quality and safety of their own output. For this reason, they currently have virtually exclusive access to institutional markets (e.g., food chains, restaurants, and hotels), which have strict requirements of the meat supplied to them.

Meat quality standards in the Philippines are implemented through abattoirs or dressing plants where traded meat is prepared for market, as certified by the National Meat Inspection Commission (NMIC). Table 2.3 shows the distribution of slaughterhouses and dressing plants meeting the various standards of sanitation. There are three major categories: Class AAA for exportable quality, Class AA for domestic trade quality, and Class A for local (municipal) trade only.

Output from smallholder operations undergoes processing at slaughterhouses and dressing plants that are classified at best Class AA: qualified for domestic trade but not for export. A large number of the slaughterhouses and dressing plants that process smallholders' output are classified as Class A: only for trade within the locality (municipality).

Because the processing facilities that smallholders can access cannot pass HACCP-compatible standards, the implementation of food product standards by the BAFFPS in the near future can be expected to have adverse consequences for the participation of smallholders in markets that demand certifiable quality and safety.

Table 2.3 Numbers of accredited meat establishments, by class type, 2000-01

Source: Catelo, Ma. A.. 2002. "Differential Issues and Policy Options for Addressing Environmental and Human Health Risks Associated with Growth in Small- and Large-Scale Swine and Poultry Production in the Philippines", LI Phase I Report. (From: NMIC Regulatory Division Accomplishment Report 2001).

2.4.4 Animal Welfare Regulations

Animal welfare guidelines are still rather new in the Philippines. The first animal welfare regulation passed into a law was the Animal Welfare Act of 1998, or R.A. No. 8485 (a copy of the Act is provided as Exhibit A at the end of this chapter). The regulation prohibits acts constituting cruelty to animals, whether the animals are pets or for trade and consumption purposes. The implementing rules and regulations (IRR) of the Law, however, have not been put into place so enforcement cannot yet begin.

Future regulations are likely to establish requirements for raising, transport, and slaughter of animals. For traded livestock, the provisions on animal welfare pertain more to the treatment of animals in large-scale production systems and to mass transport to markets or slaughterhouses. Small-scale production systems do not yet fall within the purview of these regulations. As production is scaled-up, however, the provisions of the Law may come into effect for smallholders as well.

2.5 Environmental Impacts of Scaling Up

The main environmental concern related to livestock is the polluting of water systems arising from indiscriminate or improper disposal of animal wastes. Concerns about the adverse effects of hog waste are greater than for poultry manure. This is because while there is a functioning market for poultry manure as an organic fertilizer, the same cannot be said of pig waste.

Environmental regulations against pollution are quite stringent in the Philippines, patterned as they are after the U.S. Environmental Impact Statement (EIS) system. Table 2.4 lists environmental regulations pertinent to the operations of livestock farms.

The environmental laws originally targeted the regulation of pollution from heavy and light industrial processes. These standards were initially applied only to commercial livestock farms with 1,000 heads or more of inventory (Catelo, 2002). However, since smallholders constitute close to 80 percent of hog inventories, and since backyard production in the major producing towns, provinces, and regions are also densely configured, the issue of pollution from these operations has been raised. The rationale is that these farms must create as much potential pollution per animal as commercial farms. If so, they too must be regulated. The question of whether large-scale farms pollute more than small-scale farms is a relevant one. It is something, however, that has yet to be empirically established.

Table 2.4 Selected environmental policies pertaining to hog and poultry producers, the Philippines

Source: Catelo, Ma. A.. 2002. "Differential Issues and Policy Options for Addressing Environmental and Human Health Risks Associated with Growth in Small- and Large-Scale Swine and Poultry Production in the Philippines", LI Phase I Report. (From: Corresponding Legislative Acts)

Notwithstanding the relative position of smallholder hog farms in relation to large-scale farms in the matter of environmental pollution, some regulatory agencies have begun contemplating issuing regulations on pig waste disposal by small farms. One such agency is the Laguna Lake Development Authority (LLDA) in Southern Luzon. In addition to spearheading the management of lake water resources of the Laguna de Bay (Laguna Lake), the largest freshwater lake in the country, the LLDA also functions as a special environmental authority. As such, it has regulatory and juridical functions in the enforcement of environmental laws and the issuing of penalties on firms violating environmental standards for the lake.

Very recently the LLDA issued Resolution No. 169 approving policy guidelines governing the operation of backyard/small-scale hog farms in the Laguna Lake region.

With a more even-handed enforcement of environmental regulations, the question arises of whether small-scale farms will be able to carry the costs of internalizing all, or a part, of the environmental externalities that they generate. What impact will the costs of environmental abatement have on their profitability and efficiency? The answer depends on whether enough profit per unit output, and total profit at the farm level, remain after covering for environmental costs. If such is the case, then the smallholders will have a chance of continuing to participate intensively in the livestock revolution. If not, avenues could be explored for ways to address the environmental problem efficiently while still allowing smallholders to engage in their productive activities.

EXHIBIT A

Republic of the Philippines
Congress of the Philippines
Metro Manila

Tenth Congress

Third Regular Session

Begun and held in Metro Manila on Monday the twenty-eight day of July, nineteen hundred and ninety-seven.

[REPUBLIC ACT NO. 8485]

· AN ACT TO PROMOTE ANIMAL WELFARE IN THE PHILIPPINES OTHERWISE KNOWN AS "THE ANIMAL WELFARE ACT OF 1998"

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. It is the purpose of this Act to protect and promote the welfare of all animals in the Philippines by supervising and regulating the establishment and operations of all facilities utilized for breeding, maintaining, keeping, treating or training of all animals either as objects of trade or as household pets. For purposes of this Act, pet animal shall include birds.

SEC. 2. No person, association, partnership, corporation, cooperative or any government agency or instrumentality including slaughter houses shall establish, maintain and operate any pet shop, kennel, veterinary clinic, veterinary hospital, stockyard, corral, stud farm or stock farm or zoo for the breeding, treatment, sale or trading, or training of animals without first securing from the Bureau of Animal Industry a certificate of registration therefore.

The certificate shall be issued upon proof that the facilities of such establishment for animals and adequate, clean and sanitary and will not be used for, nor cause pain and/or suffering to the animals. The certificate shall be valid for a period of one (1) year unless earlier cancelled for just cause before the expiration of its term by the Director of the Bureau of Animal Industry and may be renewed from year to year upon compliance with the conditions imposed hereunder. The Bureau shall charge reasonable fees for the issuance or renewal of such certificate.

The condition that such facilities be adequate, clean and sanitary, and that they will not be used for nor cause pain and/or suffering to the animals is a continuing requirement for the operation of these establishments. The Bureau may revoke or cancel such certificate of registration for failure to observe these conditions and other just causes.

SEC. 3. The Director of the Bureau of Animal Industry shall supervise and regulate the establishment, operation and maintenance of pet shops, kennels, veterinary clinics, veterinary hospitals, stockyards, corrals, stud farms and zoos in any other form or structure for the confinement of animals where they are bred, treated, maintained, or kept either for sale or trade or for training purposes as well as the transport of such animals in any form of public or private transportation facility in order to provide maximum comfort while in transit and minimize, if not totally eradicate, incidence of sickness and death and prevent any cruelty from being inflicted upon the animals.

The Director may call upon any government agency for assistance consistent with its powers, duties, and responsibilities for the purpose of ensuring the effective and efficient implementation of this Act and the rules and regulations promulgated there under.

It shall be the duty of such government agency to assist said Director when called upon for assistance using any available fund in its budget for the purpose.

SEC. 4. It shall be the duty of any owner or operator at any land, air or water public utility transporting pet, wildlife and all other animals to provide in all cases adequate, clean and sanitary facilities for the safe conveyance and delivery thereof to their consignee at the place of consignment. They shall provide sufficient food and water for such animals while in transit for more than twelve (12) hours or whenever necessary.

No public utility shall transport any such animal without a written permit from the Director of the Bureau of Animal Industry or his/her authorized representative. No cruel confinement or restraint shall be made on such animals while being transported.

Any form of cruelty shall be penalized even if the transporter has obtained a permit from the Bureau of Animal Industry. Cruelty in transporting includes overcrowding, placing of animals in the trunks or under the hood trunks of the vehicles.

SEC. 5. There is hereby created a Committee on Animal Welfare attached to the Department of Agriculture which shall, subject to the approval of the Secretary of the Department of Agriculture, issue the necessary rules and regulations for the strict implementation of the provisions of this Act, including the setting of safety and sanitary standards, within thirty (30) calendar days following its approval. Such guidelines shall be reviewed by the Committee every three (3) years from its implementation or whenever necessary.

The Committee shall be composed of the official representatives of the following:

(1) The Department of Interior and Local Government (DILG);

(2) Department of Education, Culture and Sports (DECS);

(3) Bureau of Animal Industry (BAI) of the Department of Agriculture (DA);

(4) Protected Areas and Wildlife Bureau (PAWB) of the Department of Environment and Natural Resources (DENR);

(5) National Meat Inspection Commission (NMIC) of the DA;

(6) Agriculture Training Institute (ATI of the DA;

(7) Philippine Veterinary Medical Association (PVMA);

(8) Veterinary Practitioners Association of the Philippines (VPAP);

(9) Philippine Animal Hospital Association of the Philippines (PAHA);

(10) Philippine Animal Welfare Society (PAWS);

(11) Philippine Society for the Prevention of Cruelty to Animals (PSPCA);

(12) Philippine Society of Swine Practitioners (PSSP);

(13) Philippine College of Canine Practitioners (PCCP); and

(14) Philippine Society of Animals Science (PSAS).

The Committee shall be chaired by a representative coming from the private sector and shall have two (2) vice-chairpersons composed of the representative of the BAI and another from the private sector.

The Committee shall meet quarterly or as often as the need arises. The Committee members shall not receive any compensation but may receive reasonable honoraria from time to time.

SEC. 6. It shall be unlawful for any person to torture any animal, to neglect to provide adequate care, sustenance or shelter, or maltreat any animal or to subject any dog or horse to dogfights or horsefights, kill or cause or procure to be tortured or deprived of adequate care, sustenance or shelter, or maltreat or use the same in research or experiments not expressly authorized by the Committee on Animal Welfare.

The killing of any animal other than cattle, pigs, goats, sheep, poultry, rabbits, carabaos, horses, deer and crocodiles is likewise hereby declared unlawful except in the following instances:

(1) When it s done as part of the religious rituals of an established religion or sect or a ritual required by tribal or ethnic custom of indigenous cultural communities; however, leaders shall keep records in cooperation with the Committee on Animal Welfare;

(2) When the pet animal is afflicted with an incurable communicable disease as determined and certified by a duly licensed veterinarian;

(3) When the killing is deemed necessary to put an end to the misery suffered by the animal as determined and certified by a duly licensed veterinarian;

(4) When it is done to prevent an imminent danger to the life or limb of a human being; and

(5) When done for the purpose of animal population control;

(6) When the animal is killed after it has been used in authorized research or experiments; and

(7) Any other ground analogous to the foregoing as determined and certified by a licensed veterinarian.

In all the above mentioned cases, including those of cattle, pigs, goats, sheep, poultry, rabbits, carabaos, horse, deer and crocodiles the killing of the animals shall be done through humane procedures at all times.

For this purpose, humane procedures shall mean the use of the most scientific methods available as may be determined and approved by the committee.

Only those procedures approved by the Committee shall be used in the killing of the animals.

SEC. 7. It shall be the duty of every person to protect the natural habitat of the wildlife. The destruction of said habitat shall be considered as a form of cruelty to animals and its preservation is a way of protecting the animals.

SEC. 8. Any person who violates any of the provisions of this Act shall upon conviction by final judgment be punished by imprisonment of not less than six (6) months nor more than two (2) years or a fine or not less One thousand pesos (P1,000) nor more than Five thousand pesos (P5,000) or both at the discretion of the Court. If the violation is committed by a juridical person, the officer responsible therefore shall serve the imprisonment when imposed. If the violation is committed by an alien, he or she shall be immediately deported after service of sentence without any further proceedings.

SEC. 9. All laws, acts, decrees, executive orders, rules and regulations inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 10. This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.

Approved,
JOSE DE VENECIA, JR.

Speaker of the House
NEPTALI A. GONZALES

President of the Senate

of Representatives

This Act, which is a consolidation of Senate Bill No. 2120 and House Bill No. 9274 was finally passed by the Senate and the House of Representatives on February 3, 1998 and February 2, 1998, respectively.

ROBERTO P. NAZARENO

Secretary General
House of Representatives

HEZEL P. GACUTAN

Secretary of the Senate

Approved:
February 11, 1998

FIDEL V. RAMOS

President of the Philippines

EXHIBIT B

LAGUNA LAKE DEVELOPMENT AUTHORITY

Satellite Office, 2^nd Floor, Rizal Sports Club,

Rizal Provincial Capitol Compound, Pasig City

RESOLUTION NO. 169

Series of 2001

APPROVING THE POLICY GUIDELINES GOVERNING THE OPERATION OF BACKYARD/SMALL-SCALE HOG FARMS IN THE LAGUNA DE BAY REGION

Whereas, Republic Act No. 4850, as amended by Presidential Decree No. 813 and Executive Order 927, empowers the Laguna Lake Development Authority to issue regulations when necessary to effectively carry out its mandate particularly with regard to the regulation of pollution within the Laguna de Bay Region;

Whereas, LLDA Board Resolution No., 41, Series of 1997 exempts backyard hog farms with a population of not more than 100 heads or a sow level of not more than 20 heads from securing an LLDA clearance;

Whereas, the responsibility of regulating small-scale backyard hog farms if routinely passed on to the various local government units which however lack the necessary expertise or the technical capacity to undertake effective pollution control program as evidenced by the absence of clear policies governing backyard hog raising particularly the proper disposal and management of hog farm wastes;

Whereas, collectively, small hog farms contribute an even larger volume of pollution into the waste load of Laguna de Bay compared to large commercial hog farms; and

Whereas, considering the large volume of wastes emanating from small-scale piggeries, there is a need to regulate the activities of all backyard hog farms within the Laguna de Bay Region to effectively and efficiently implement the "Pollution Control Law of the Philippines" otherwise known as Presidential Decree No. 984;

NOW THEREFORE, foregoing premises considered, BE IT RESOLVED, as it hereby RESOLVED to adopt the following Policy Guidelines Governing the operation of Backyard or Small-Scale Hog Farms in the Laguna de Bay Region.

ARTICLE I

GENERAL PROVISIONS

SECTION 1. Title. These guidelines shall be known and cited as the "Policy Guidelines Governing the Operation of Backyard Piggeries or Small-Scale Hog Farms in the Laguna de Bay Region".

SECTION 2. Statement of Policy. The Laguna Lake Development Authority in accordance with its mandate which seeks to maintain the ecological integrity of the Laguna de Bay Region is cognizant of the collective contribution of backyard small-scale hog farms to the pollution load of the Laguna Lake. It is the policy of the LLDA to actively promote proven waste minimization and reduction technologies as well as waste recycling and reuse practices among small piggery or backyard hog farm owners in order to more effectively regulate pollution emanating from such farms.

SECTION 3. Scope and Coverage. These guidelines shall apply to all backyard piggeries or small scale hog farms with an animal population of not more than 100 heads or a sow level of not more than 10 sows and operating within the Laguna de Bay Region.

SECTION 4. Definition of Terms. The following terms, abbreviations and phrases, as used in these guidelines, shall have the following meaning:

• Authority or LLDA means the Laguna Lake Development Authority

• Waste Recycling/Reuse refers to the utilization of hog waste for other purposes e.g. fertilizer (solid), watering of plants (liquid), etc.

• Waste Treatment refers to management techniques applied to reduce the pollution load coming from the backyard piggeries e.g. biogas technology, pelleting, etc.

• Waste disposal refers to the final disposition of solid and liquid hog farm wastes. A common form of waste disposal is direct discharge of wastes into the rivers or creeks.

• LGU refers to the Local Government Unit

• One (1) sow level is equivalent to ten (10) adult hogs

• Small Scale or Backyard Hog Farms or Piggeries refer to hog farms or piggeries with an animal population of not more than 100 heads or a sow level of not more than 10 sows.

• Waste Reduction/Minimization refers to activities/techniques employed to minimize the generation of both liquid and solid wastes in a particular piggery or hog farm (e.g. installation of mechanical drinkers, etc).

• Biogas Digester System refers to the anaerobic breakdown of organic materials which produces methane or biogas as a by-product.

• Lagoon System is a simple method of treating wastes using a series of dig-out ponds which function as settling ponds.

• TPED or Tubular Polyethylene Digester a low cost type of biogas system using polyethylene plastics as the digester chamber

SECTION 5. Waste Management Hierarchy (WMH). For the purpose of this Resolution, the LLDA hereby adopts a Waste Management Hierarchy stipulating preferred or desirable options for managing hog farm wastes. The WMH advocates an expressed preference for the adoption by hog farm owners of waste minimization or waste reduction technology and waste reuse and recycling practices over end of the pipe waste treatment and disposal measures (Fig. 1).

SECTION 6. Creation of Composite Team. A Composite Team will be created specifically to oversee the implementation of these policy guidelines. The team shall be composed of representatives from the Community Development Division - Laguna Lake Development Authority, River Councils/Foundations, Local Government Units concerned and backyard hog raisers or Associations of Backyard Hog Raisers in the particular river basin with the following duties and responsibilities:

Community Development Division - Laguna Lake Development Authority

• Lead in the organization and development of a Training Module and undertake the envisioned Training/Seminar as part of the Information Education Campaign.

• Raise environmental awareness and promote greater involvement and support from various sectors for the various environmental management and protection efforts.

• Initiate the organization of Backyard Piggery Owners or Small Scale Hog Raisers into associations which will serve as for a for the contemplated awareness raising activities.

Local Government Units

Pursuant to the Sanitation Code of the Philippines, it shall be incumbent upon all Local Government Units within the Laguna de Bay Region to:

• Process and issue Sanitary Permits to all Hog Farms (Commercial or Backyard) within their area of jurisdiction.

• Maintain an inventory of all hog farm operators in their respective areas of jurisdiction and monitor the status of each hog farm/piggery to determine compliance with all Pollution Control Laws and Regulation.

• In close coordination with the LLDA and the River Councils or Foundations working in their specific areas, the LGU's shall require all hog farm owners and their representatives to undergo training on waste reduction and minimization technologies.

River Councils/Foundations

• Conduct physical survey of the river in the river basin concerned and pinpoint sources of pollution emanating from backyard hog farms.

• Act as a network of river guards and environmental stewards and report to the LGU and the LLDA all cases of violation of environmental laws and outright disregard for anti-pollution laws and standards committed by backyard hog raisers.

• Undertake Information, Education and Motivation Campaigns to raise the level of environmental and health awareness of backyard hog raisers.

Backyard Hog Raisers or Association of Hog Raisers

• File complaints against member or non-member of the Association who violates the provisions stated herein.

• Promote compliance with environmental standards

• Pursue livelihood project that will enhance the condition of the environment for the benefit of the Association

ARTICLE 2

ISSUANCE OF PERMIT

SECTION 7. Requisite for the issuance and renewal of Permit/s. Existing and still to be established commercial-backyard scale piggeries/hog farms shall be covered by the requisite/s for the renewal and issuance of permits identified herein:

• All commercial-backyard scale hog farms to be established within the Laguna de Bay Region are required to submit mitigating measures or waste treatment options before Sanitary and Business Permits can be issued by the Municipal Health Office and the Office of the Mayor, respectively. Following are some of the recommended options (Fig.2).

• Waste Water Reduction/Minimization

· This involves the modification of standard mechanisms applied in existing hog farms or piggeries to reduce or minimize water usage.

- Use of drums or storage water tanks during cleaning operation;

- Installment of mechanical drinkers to minimize consumption and wastage of water;

- Feed and water trough modification;

- Use of mechanical/automatic feeder to reduce food wastage

· Waste Treatment Options

- Installation of Biogas Digester

Commercial-backyard scale hog farms with population of at least 10 heads but not more than 100 heads are compelled to adopt this option.

For hog farms of less than 10 heads, installation of a TPED (Tubular Polyethylene Digester) as a treatment option is also recommended.

- Lagoon System

The use of ponds or lagoon system is recommended for hog farms with at most five (5) heads.

For the marginalized hog raisers less than 10 heads, the requirement of lagoon system as well as the tubular polyethylene digester shall not be compulsory until after a period of one year from the effectivity of the rules.

- Drying of Manure

This involves the removal of solid hog wastes (manure), drying and applying to farms/gardens as fertilizer. Hog raisers who will adopt this option shall construct a lagoon or pond as the main repository of the waste water during cleaning operations.

- Establishment of a Pelleting Plant (Organic Fertilizer) and/or common Treatment Facilities.

This can be achieved through the formation of a Cooperative composed of backyard hog raisers in the locality.

· For existing commercial backyard hog farms with at least one (1) but not more than 100 heads, a lead time of at least three (3) but not more than five (5) months shall be given to build/install or apply waste treatment mechanisms and facilities. Hog farms, especially those having a population of at least ten heads, without enough space for the installation of biogas digesters are required to institute waste reduction measures, at source and consequently adopt appropriate options.

· For Contract Growers, contracting firms will likewise be required to institute treatment options befitting the number of heads to be raised. Failure to set-up treatment mechanisms will mean non-issuance and/or cancellation of permit.

SECTION 8. Revocation/Cancellation of Permit/s. The Sanitary Business permits issued by responsible offices can be revoked or cancelled based on the following grounds and as recommended by the composite team: for newly established hog farms - the mitigating measures or waste treatment options which the proponent submitted as requisite for securing permits did not materialize; for existing hog farms - the lead time given to build/install and apply waste treatment mechanisms and facilities has lapsed.

ARTICLE 3

IMPLEMENTATION

SECTION 9. Strategies for Implementation. To successfully execute this policy the LLDA will make use of the following approaches/methods:

• IEC - Make intensive Information Education Campaign through series of consultations, dialogues, discussions with commercial backyard scale hog farm owners in the different localities within the Laguna de Bay Region.

• Provision of Technical Assistance - The LLDA shall provide Training and Seminars on the different technologies that can be adopted by Hog Farm Owners.

• Community Organizing - the LLDA to lead the organizing of all commercial backyard hog raisers into Cooperatives or Associations.

• Involvement of private investors in financing costly undertakings such as building a common waste treatment facilities and procuring and installing pelleting machine/s.

• Coordinate with multi-national and local companies, who are subsidizing contract growers, to cooperate, support and adopt the policy.

• To assist LGUs in drafting appropriate resolution and ordinances geared toward minimizing pollution emanating from Backyard Hog.

ARTICLE 4

MONITORING/REPORTING

The composite team shall conduct joint regular monthly monitoring/ocular inspection of all newly established and existing commercial-backyard scale hog farms in a particular town. The Sanitary Officers and representative/s from the LLDA shall conduct water sampling and analysis on a quarterly basis to ensure compliance and that the treatment facilities are being put to good use. Report of the visits, inspections and or water analyses shall be prepared and made available anytime. Copies of such reports shall be distributed to the members of the composite team including the Legal Division of the LLDA for the appropriate legal action if and when warranted.

ARTICLE 5

PROVISION OF INCENTIVES

· Using the Monitoring and Compliance Report, the Composite Team shall identify all complying hog raisers. The Local Government Unit shall in turn give incentives based on the recommendation of the Composite Team. Following are the possible incentives to be given:

- A reduction of thirty percent (30%) of the fee for renewal of Business and Sanitary Permits.

- A certain percentage of the fines collected from non-complying hog raisers shall be reallocated for the benefit of the identified complying hog raisers.

ARTICLE 6

EFFECTIVITY

This policy guidelines shall take effect immediately upon the approval of the LLDA Board of Directors and will remain enforced unless otherwise revoked.

APPROVED on September 27, 2001:

GREGORIO V. CABANTAC

Acting Chairman