San Miguel Food and Beverage Inc will transfer its hog inventory and farm facilities to small raisers, which it said can operate the business at a lower cost and make it sustainable.

San Miguel said its Monterey meat business, the country's biggest, has found itself in a challenging situation due to a ban on the transportation of pork and pork products from African swine fever-hit provinces.

San Miguel's food segment posted a 4.3% annual drop in revenue in the first nine months of 2020 to 96.7 billion pesos ($2 billion) as sales were set back partly by the African swine fever outbreaks.

"We want to provide our local piggery businesses a chance to thrive in these trying times, and encourage more smallholder farmers to grow this industry locally and responsibly," San Miguel President Ramon Ang said in a statement.

Philippine pork production was estimated to have dropped 20% last year as the highly infectious disease prompted the culling of more than 300,000 pigs, or about 3% of the hog population, based on government data.

The resulting supply crunch pushed pork prices in the capital region significantly higher, propelling inflation to a two-year high in January, and prompting the government to increase this year's import quota.

(Reporting by Enrico Dela Cruz; Editing by Martin Petty)