HBE_121: APPLIED ECONOMICS

GROUP PERFORMANCE TASK

ECONOMIC ANALYSIS OF CHICKEN

IN THE PHILIPPINES (2018 - 2022)

SUBMITTED TO:

Adrian E. Salazar

GROUP MEMBERS:

Bato, Patricia Mae C.

Carreon, Dianne Nicole, C.
Macaraeg, Sean Kathleen B.
Mendoza, Faith Marielle S.
Ogues, Rafael Sebastian M.
I. INTRODUCTION

The chicken industry in the Philippines plays a critical role in providing protein to
the nation's population. Poultry farming is a major contributor to the country's economic
growth, making up nearly a third of overall agricultural exports. The outlook for the
Philippine chicken industry appears optimistic because the demand for chicken products
is expected to increase, along with population and income growth The Philippines ranks
fourth in the world in poultry production, with a national flock of over 25 million chickens.
FAS Manila forecasts 2023 chicken production to be 1.36 million MT because of the
growing economy, while the 2023 chicken imports forecast is 475,000 MT based on
stable demand. In recent years, the chicken sector generated a gross value added
(GVA) of over 175 billion Philippine pesos, accounting for nearly 10% of the entire GVA
of the Philippine agriculture economy. Livestock and chicken are two important
subsectors in the Philippine agriculture business.
Poultry is a major source of animal protein across the whole Philippines. Chicken
and eggs from indigenous fowl differ from commercial chicken products in look and
taste, and are frequently chosen by people. Poultry farming is an essential component
of the Philippine economy. The Philippines is the world's leading poultry producer. Yet
there are benefits to keeping chickens in the Philippines, such as easy access to land
and water, inexpensive initial investment expenses, and low labor costs. Hogs and
chickens were the most eaten of all the animals raised for human use, accounting for
the majority of the country's livestock and poultry production. It also plays an
instrumental role in the country's economy.
This report will provide an economic analysis of the chicken industry in the
Philippines for the period between 2018 and 2022. It comprises the demand schedule,
demand curve, supply schedule, supply curve, demand elasticity, supply elasticity,
market analysis, and recommendations for solutions to the problem at hand. The
demand schedule illustrates how chicken demand and supply shift quarterly and
annually.
II. DEMAND AND SUPPLY

A. DEMAND AND SUPPLY SCHEDULE

This is a data set on the average annual price, quantity demanded, and quantity
supplied for chicken in the Philippines. The prices are in PHP/kg, while the quantities
are in million kilograms:

Table 1. Quarterly Demand and Supply Schedule for 2018

2018 Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

Jan - Apr 122.95 1500 600

May - Aug 118.27 1300 750

Sep - Dec 110.32 1000 950

Table 2. Quarterly Demand and Supply Schedule for 2019

2019 Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

Jan - Apr 108.91 1000 900

May - Aug 98.90 990 950

Sep - Dec 100.51 980 1000

Table 3. Quarterly Demand and Supply Schedule for 2020

2020 Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

Jan - Apr 64.43 985 1000

May - Aug 73.26 975 1010

Sep - Dec 87.00 970 1020

 Table 4. Quarterly Demand and Supply Schedule for 2021

2021 Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

Jan - Apr 109.52 970 1030

May - Aug 119.50 965 1040

Sep - Dec 137.59 950 1050

Table 5. Quarterly Demand and Supply Schedule for 2022

2022 Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

Jan - Apr 190.75 950 1060

May - Aug 185.09 940 1070

Sep - Dec 184.37 930 1070

Table 6. 2018 - 2022 Demand and Supply Schedule

Year Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

2018 110.32 1000 950

2019 100.51 980 1000

2020 87.00 970 1020

2021 137.59 950 1050

2022 184.37 930 1070

 B. DEMAND AND SUPPLY CURVE

The data showcases two key economic concepts: the demand curve and the
supply curve. The demand curve, which shows the quantity demanded at different
prices, is downward sloping. This indicates the common law of demand; as prices
increase, the quantity demanded decreases, and vice versa.
On the other hand, the supply curve, representing the quantity supplied at
various price points, remains upward-sloping. This means that as the price of chicken
increases, producers are incentivized to supply more, in accordance with the law of
supply.
 C. ELASTICITY

Table 7. 2018 - 2022 Demand and Supply Schedule

Year Price (Php/kg) Quantity Demanded Quantity Supplied

(Million kg) (Million kg)

2018 110.32 1000 950

2019 100.51 980 1000

2020 87.00 970 1020

2021 137.59 950 1050

2022 184.37 930 1070

Price Elasticity of Demand Formula: Price Elasticity of Supply Formula:

𝑄𝑑2− 𝑄𝑑1 𝑄𝑠2− 𝑄𝑠1

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑄𝑑 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑄𝑠
𝐸𝑝 = 𝑃2− 𝑃1 𝐸𝑝 = 𝑃2− 𝑃1
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃

Table 8. Price Elasticity of Demand and Supply for 2018 - 2019

Price Elasticity of Demand Price Elasticity of Supply

Price Elasticity of Demand Price Elasticity of Supply

980−1000 1000−950
990 975
= 100.51− 110.32 = 100.51− 110.32
105.415 105.415
= 0.22, inelastic = /-0.55/ or 0.55, inelastic
 Table 9. Price Elasticity of Demand and Supply for 2019 - 2020

Price Elasticity of Demand Price Elasticity of Supply

Price Elasticity of Demand Price Elasticity of Supply

970−980 1020−1000
975 1010
= 87 − 100.51 = 87 − 100.51
93.755 −93.755
= 0.07, inelastic = 0.13, inelastic

Table 10. Price Elasticity of Demand and Supply for 2020 - 2021

Price Elasticity of Demand Price Elasticity of Supply

Price Elasticity of Demand Price Elasticity of Supply

950−970 1050−1020
960 1035
= 137.59 − 87 = 137.59 − 87
112.295 112.295
= /-0.05/ or 0.05, inelastic = 0.06, inelastic

Table 10. Price Elasticity of Demand and Supply for 2021 - 2022

Price Elasticity of Demand Price Elasticity of Supply

Price Elasticity of Demand Price Elasticity of Supply

930−950 1070−1050
940 1060
= 184.37 − 137.59 = 184.37 − 137.59
160.98 160.98
= /-0.07/ or 0.07, inelastic = 0.06, inelastic
III. ANALYSIS AND INTERPRETATION

The data from 2018 to 2022 reveals a consistent decline in the quantity of
chicken demanded in the Philippines, accompanied by an increase in the quantity
supplied. Notably, there have been significant fluctuations in the price of chicken during
this period. By calculating the price elasticity of both supply and demand, it becomes
evident that the demand for chicken is highly inelastic throughout these years. This
suggests that chicken is considered a staple food and a necessity for consumers, as
they did not significantly adjust their consumption patterns in response to the price
changes induced by the COVID-19 crisis.
On the supply side, there is an observable upward trend over the years. Despite
the fluctuating prices, particularly the notable increase from 2020 to 2022, producers
appear to be motivated to supply more chicken, potentially due to the prospect of
increased profitability.
Consequently, the gap between the quantity demanded and the quantity supplied
has been widening over the years. If this trend continues, it could lead to a potential
oversupply of chicken in the market. This oversupply scenario may cause further price
fluctuations and could result in waste if the excess supply cannot be effectively stored or
exported.
These observed trends and patterns indicate that factors beyond price alone are
influencing the demand and supply dynamics of chicken in the Philippines. Possible
factors contributing to these changes could include shifts in consumer preferences,
variations in income levels, advancements in production technology, or alterations in
government policies.
It is noteworthy to highlight the substantial price fluctuations experienced by
chicken in 2020 as a result of the measures taken to combat the COVID-19 pandemic.
These measures had a profound impact on various industries, including the poultry
sector, leading to a significant decrease in the price of chicken compared to previous
years. Despite these drastic changes in price, the demand and supply of chicken did not
exhibit any significant alterations, indicating a certain level of resilience within the
poultry supply chain during the COVID-19 crisis.
IV. RECOMMENDATION

Given the inelastic demand and increasing supply of chicken in the Philippines,
there are a number of recommendations that the government can apply and adhere to,
in favor of the outcome result.

1. Technology. It is recommended that both the government and industry

stakeholders invest in technologies and practices that enhance poultry farming
efficiency. This will allow producers to meet the steadily high demand for chicken.

2. Animal Feed. It is recommended that suppliers must have excellent nutrition and
feeding to those chickens that they supply. Providing high-quality nourishment to
chickens at all stages of development will supply them with the vital nutrients.
This helps farmers to fulfill the consistently high demand for chicken.

3. Good Farm Management. This needs an emphasis on environmental and water

management. This will also help us to manage the chicken population by better
managing how much food they eat and monitoring their health. Following the
most effective farming methods will increase production efficiency.

4. Rules and Regulations. Efforts should be made to stabilize the prices of chicken
to prevent potential market failures that could arise from price fluctuations. This
could be done by implementing proper regulatory measures and creating buffer
stocks to regulate the market.

5. Awareness Campaigns. Given the crucial role of chicken as a protein source,

the government should invest in awareness campaigns to promote the nutritional
benefits of chicken. This will help sustain demand and support the overall health
and well-being of the population.
V. REFERENCES

Philippine Statistics Authority. (2019). CHICKEN SITUATION REPORT 2018. Philippine

Statistics Authority. Retrieved May 29, 2023, from

https://psa.gov.ph/sites/default/files/CHICKEN%20SR%20March%202019_0.pdf

Philippine Statistics Authority. (2020). CHICKEN SITUATION REPORT 2019. Philippine

Statistics Authority. Retrieved May 29, 2023, from

https://psa.gov.ph/sites/default/files/Chicken%20Situation%20Report_.signed_0.

pdf

Philippine Statistics Authority. (2021). CHICKEN SITUATION REPORT 2020. Philippine

Statistics Authority. Retrieved May 29, 2023, from

https://psa.gov.ph/sites/default/files/3_SR%20Chicken%20Annual%20Situation%

20Report_signed.pdf

Philippine Statistics Authority. (2022, June 9). CHICKEN SITUATION REPORT 2021.

Philippine Statistics Authority. Retrieved May 29, 2023, from

https://psa.gov.ph/sites/default/files/1_Chicken%20Annual%20Situation%20Repo

rt_ONS-signed.pdf

Philippine Statistics Authority. (2023). CHICKEN SITUATION REPORT 2022. Philippine

Statistics Authority. Retrieved May 29, 2023, from

https://psa.gov.ph/sites/default/files/2022_Chicken%20Annual%20Situation%20R

eport_v6_signed.pdf