Philippine 2008 Agri Forecast:

[mikey]

Challenges for Philippine Food and Agriculture : A Year-End Food and Agri Business Conference (Part 2)
Challenges and prospects for 2008 Commodity Highlights

Palay. Growth will continue to be moderate with the increased adoption of modern productivity technologies promoted through the GMA Rice Program as area harvested will basically stay the same. The higher budget for rice production will also be a plus factor for the sector’s growth. The PAGASA’s forecast indicates the start of a weak to strong La Nina which will likely last until early April of 2008. This can be good for production depending on its severity. A number of international agencies have indicated that there may be tight supply in 2008 with increased trade due to strong consumption. Rising demand and tight supply will keep world rice prices high.


Corn. The crop will continue to post good growth although not as robust as the past two years. Good prices are expected to continue to prevail which will encourage increased plantings. The availability and expanded adoption of hybrid and GM seeds including Bt corn will enhance productivity. The creation of a national standard for corn quality and good agricultural practices will promote competitiveness in the industry.

Coconut. Some recovery will be seen in coconut production after two years of flat to negative growth. This will likely come in the second half as trees take one and a half to two years to normalize. The extent of recovery may be slightly affected if the Brontispa longgisima infestation will not be eradicated or at least contained within 2007 as assured by government coconut officials. The sustainable funding for rehabilitation and fertilization programs as well as intercropping initiatives will be a good boost to the industry. However, fund commitments remain small.

Sugarcane. Growth is expected to increase by 4.5 - 5.5% in 2008 coming from an output decline in 2007. Growth will come from the continuous crop shifting to sugarcane, use of high yielding varieties and adequate irrigation in some areas.

Banana. The industry is projected to sustain its growth in 2008. Area expansions especially for the Cavendish variety in Mindanao may be stymied by weak farm margins due to the peso appreciation.

Other crops. Growth is seen to slow down to 2% to 3% in 2008 due to a foreseen weather disturbance, the La Nina, in the first half of the year. The La Nina rains are seen to have adverse effects on such crops as mango, rootcrops, among others.

Livestock. Output is projected to increase at 2- 3% in 2008. The biggest contribution will still come from hog. The growth is due to increasing demand brought about by the growing population. By contrast, cattle can still be in a downtrend.

Poultry. The sector will grow by 4% in the first half and further by 5% in the second half due to strong demand during the holidays. However, integrators are conservative on output growth due to high input costs (i.e. corn, vaccines) and entry of imported chicken in the country. A broiler projection model forecasts a 20% increase in 2008 that will likely cause poultry prices to be weak unless there are cutbacks.

Fishery. Production is expected to grow at 6 - 7% in 2008. Aquaculture will remain as the main contributor. Favorable weather conditions will sustain growth in commercial and municipal fishing as well as in aquaculture.

Forestry. The 2008 growth is estimated at 0-10%. The production of natural grown and plantation species will continue to improve the sub-sector’s performance.

CONCLUSIONS
The year 2007 is a relatively good year for Philippine agriculture, with sustained growth of 3.5% to 4.5%. In 2006, the sector managed to grow by 3.8%. The growth boosters in 2007 included corn, banana and fishery.

For 2008, growth is seen to accelerate to 4.0% to 5.0%. The strong performers will include coconut, banana, poultry and fishery. However, there will be key changes and challenges for the sector from the global and local fronts.

Tariffs. In the global arena, pushing forward to 2010, tariffs for most commodities will go down to just about 5% under the ASEAN Free Trade Area. Building or sustaining competitiveness will thus become all the more important, not just in cost, but also in terms of quality and supply reliability. This is true not just for agricultural products intended for the local market, which will have to face increasingly tougher competition from imported ones, but also for the country’s exports.

In addition to tariffs, there are also non-tariff barriers in global markets which are a cause of concern for countries like the Philippines. An example is the stringent requirements of Japan, a major market for many Philippine agricultural products, ranging from food safety, HACCP, maximum residue limits, traceability, among others.

Similarly strict standards are also enforced in the country’s other big markets like the US and the EU.

Energy costs. Rising energy costs will continue to exert pressure on energy users, e.g. food processing companies, transport companies, and the like. At the same time, the situation will present opportunities for bio-fuels - ethanol and biodiesel. For the Philippines, the fuel vs. food/feed issue will remain especially for biofuel crops like corn and sugar. Another concern is how fast the Philippines will follow suit considering the rising global demand for biofuels. Talk about crops like jatropha, sweet sorghum, cassava, coconut, palm oil for biodiesel. In the long term, this will have implications on land use.

Commodity imports. Global commodity prices are up such as for wheat, rice, fertilizer, corn, among others. The implications for the Philippine agriculture are varied. For instance, for rice and fertilizer, the impact will generally be negative in that the increase in global prices will translate to higher cost of imports.

For wheat, on the other hand, the effects may differ. On one side, the hike in prices will discourage feedmillers from substituting wheat for corn. In effect, it will encourage patronage of local corn. On the other side, wheat use especially for flour milling will be affected negatively. High wheat prices will mean higher costs of such products as noodles, bread, pastries and other bakery products. Meanwhile, high corn prices may have a positive impact in that it will discourage importation.

Peso appreciation. At the local scene, the appreciating peso also poses a challenge. It makes imports cheaper but penalizes exports. For agriculture which is highly dependent on imported inputs like fertilizers, chemicals and to some extent, farm machinery, the peso appreciation may somehow stymie rising global commodity prices.

On the end, it also makes importation all the more attractive to the detriment of the local producers. In terms of exports, the products become less profitable as a result of a stronger peso. In fact, several food processing companies have already scaled down operations due to the peso appreciation.

Climate change. Another concern is global climate change which will have serious implications on agriculture as well as other industries in general, not just for the Philippines. Aside from contributing to increases in commodity prices due to the occurrences of droughts, floods, hurricanes, among others, scientists have warned that it will eventually lead to water scarcity and hunger.

Further, the increasing greenhouse gas emissions into the atmosphere are reportedly beginning to make the world’s oceans more acidic, which disrupt certain life forms necessary to maintain the ecological balance.

Fishing access. Gaining fishing access in foreign waters is also a global challenge. In the case of the Philippines, fish resources mainly tuna, a major export, have substantially gone down in domestic waters. Thus, it has become more and more pressing for the country to forge bilateral fishing agreements with possible source countries. There are on-going negotiations with Palau and Papua New Guinea.

Politics. The political situation in the country is also a major hurdle. For instance, the recent incidents in Makati (e.g. bombing, Manila Pen takeover), the country’s central business district, dampen investor confidence.

Studies have shown that private investment is a major driver of job creation and economic development. In agriculture, this can be seen in the country’s export winners - banana, pineapple, seaweeds, tuna, and coconut oil - which are mainly private-sector led.

Weather. With less than a month remaining, the country has, thus far, skirted the strong typhoons. But after having come from a relatively dry season, it is expected that the coming months will be relatively wet and likely experience higher frequency of typhoons. This may have differing impacts on agricultural crops.

INDEED, THERE ARE MANY challenges for Philippine agriculture in 2008 and beyond. And there will always be. But as the saying goes, “challenges are what make life interesting; overcoming them is what makes life meaningful.” Hopefully, we can make Philippine agriculture rise up to the challenges through our concerted efforts and then, our lives will be more meaningful.

Part 1 –> Challenges for Philippine Food and Agriculture : A Year-End Food and Agri Business Conference (Part 1)

 

[mikey]

PERFORMANCE OF PHILIPPINE AGRICULTURE, JANUARY-JUNE, 2008



B. VOLUME OF PRODUCTION

Total agricultural output grew by 4.70 percent during the first semester of 2008.

The crops subsector which accounted for 48.42 percent of total agricultural production expanded by 7.72 percent during the reference period. Palay output in the first semester of 2008 reached 7.12 million metric tons representing an increase of 5.84 percent compared to its year ago performance. This was attributed to area expansion as a result of movement of harvests from third quarter to second quarter in Ilocos Region and Cagayan Valley and use of late maturing varieties due to the cold weather in January and February. The expansion in areas was due to rehabilitated irrigation facilities which improved water efficiency in Cagayan Valley, Central Luzon, MIMAROPA and Northern Mindanao. Sufficient water supply coming from the intermittent rains prompted early plantings in Western Visayas, Northern Mindanao and SOCCSKSARGEN. In addition, the availability and increased usage of hybrid and HYVs and fertilizer subsidies from the GMA-Rice program interventions contributed to increased output.

Corn production at 3.29 million metric tons during the reference period went up by 19.62 percent over last year’s record. The increase was largely contributed by the significant gains in production in Northern Mindanao, Western Visayas, SOCCSKSARGEN and Ilocos. Further, the availability of seeds from GMA Corn Program and private seed companies, adequate rainfall, higher corn prices and increasing demand for feeds from the livestock and poultry sectors encouraged more farmers to increase their plantings in the first quarter of 2008. There was expansion in harvest area as a result of the movement of harvests from the third quarter to the second quarter due to early plantings and delayed harvestings brought about by the cold weather that occurred in February in Cagayan Valley.

Coconut production made a turnaround and posted a 6.49 percent increase this year. The recovery from the devastating effects of typhoons Reming and Milenyo in Quezon and the Bicol Region and the high demand for copra in the Visayas and Mindanao regions pushed coconut production upward. Sugarcane recorded a 32.19 percent output growth this period. There were reports of area expansion in all sugarcane producing areas. This was attributed to favorable weather conditions and use of high yielding varieties such as 88345, 8650 and 8452 in Western Visayas, Central Visayas, Northern Mindanao and SOCCSKSARGEN. The timely application of fertilizers in Iloilo and the movement of harvests from the first quarter to the second quarter in Central Visayas added to the dramatic increase in production in the second quarter of 2008.

Banana production posted double-digit increases in the past two quarters and for the first half of 2008, it recorded a 20.85 percent growth. Abundant rainfall and fertilizer application resulted in bigger bunches of fruits and an increase in the number of bearing hills in Central Luzon. In Bicol Region, more bearing hills were reported as farms recovered from the destructive effects of Typhoons Reming and Caloy. Banana farmers in Western Visayas accelerated harvests in the second quarter as Typhoon “Frank” toppled down maturing-fruit trees, specifically, in the provinces of Iloilo, Capiz, Guimaras, Aklan and Antique. Additional harvest areas and bearing hills for Cavendish and other varieties were noted in Bukidnon and all the provinces in Davao Region. Pineapple was another big gainer with its 11.94 percent output expansion this semester. Del Monte Philippines Incorporated (DMPI) continued to expand its contract farm areas in Bukidnon, Misamis Oriental, South Cotabato and Sarangani in order to respond to increasing local and export market demand. Additional areas harvested and early harvests in Laguna in the second quarter were also reported.

From an output decline last year, abaca came up with an output increase of 3.21 percent this year. Recovery from the destructive effects of Typhoons Milenyo and Reming in the Bicol Region was especially observed in the province of Catanduanes. The good price of abaca fibers and favorable weather conditions induced harvesting and drying of fibers in Eastern Visayas, Davao Region, ARMM and Caraga. Garlic posted a 0.53 percent growth in output this semester. Favorable weather conditions improved the yield, particularly, in Nueva Ecija and Mindoro Occidental.

Cabbage production posted another 6.93 percent increase this period. Expansion coming from the newly-opened areas in Benguet and Ifugao was cited in the first quarter. The improvement of irrigation facilities in Benguet in the second quarter boosted production in the first half of 2008. Mongo, meanwhile, posted a 1.57 percent output increment this semester due to favorable weather conditions and availability of good quality seeds that encouraged area expansion in Tarlac and Isabela. Cassava put up another 4.61 percent increase in output. Cited as major reasons were the expansion of area of the B-Meg contract farms in Cebu and the high demand for cassava chips. In addition, there were reports of extension of technical and financial support from Dimaporo’s Agricultural Enterprise in Lanao del Norte and Misamis provinces. In Lanao Sur, the improvement of farming technology was also cited as contributing factor to higher production this year. Tomato farms produced 0.07 percent more output this period. This was explained by the sustained usage of high yielding varieties like Maquilla, Ilocos Red and Apollo in Ilocos Sur and La Union.

Calamansi growers enjoyed a 1.33 percent increase in production as sufficient rainfall increased the number of bearing trees and enhanced the development of fruits in Cagayan Valley. Likewise, proper spacing and fertilizer application were reported in the provinces of Batangas, Bulacan and Pampanga. Zamboanga Sibugay recorded increased area harvested during the period. Rubber production grew by 5.85 percent during the period due to favorable weather conditions. Good market prices also led to increased number of tappings in North Cotabato, Zamboanga Sibugay and Zamboanga del Sur.

Coffee growers, meanwhile, suffered another setback in the second quarter which resulted in the 0.22 percent drop in production this semester. The deterioration of coffee trees arising from neglect and high cost of fertilizer were the reasons cited in Cavite. Crop shifting to banana and rubber was observed in some coffee producing areas in Mindanao. Reduced number of bearing trees in North Cotabato and Agusan provinces was reported. Tobacco came down with a 5.77 percent output reduction this period. There were reports of crop shifting to watermelon and other vegetables and occurrence of bacterial wilt that adversely affected native tobacco production in La Union in the first quarter of 2008.

Mango production was down by 14.47 percent during the first half of 2008. Some trees in La Union and Pangasinan were toppled down by Typhoon Cosme. In Ilocos Norte, smaller fruits were produced because of rainshowers and infestation of leaf hoppers and anthracnose. A production cut of 4.04 percent was reported by peanut farmers. The continued crop shifting to yellow corn, watermelon, mongo and stringbeans in Pangasinan and La Union throughout the first two quarters were the main reasons for the low output performance. The continuous rains in Tarlac affected the plant’s pod development. Camote production dropped by 1.36 percent this semester because of the rotting of tubers resulting from excessive soil moisture brought about by continuous rains in Catanduanes, Sorsogon, Albay, Leyte, Samar and Surigao provinces in the first three months of the year. Onion production suffered a 12.24 percent decline this semester. This was caused mainly by the early onset of rainfall in Nueva Ecija which pulled down onion production in the second quarter. The same situation led to the 8.68 percent decrease in eggplant production this period. The heavy rains from Typhoon Cosme had a negative effect on production in Pangasinan, Iloilo and Negros Oriental. In Laguna, crop shifting to okra and stringbeans was reported in anticipation of good market price for these types of vegetables.

The aggregate production of “other” crops went down by 0.43 percent during the first semester of 2008.

The livestock subsector with its 11.67 percent contribution to total agriculture came down with an output decrease of 3.33 percent during the period. Carabao production grew by 4.01 percent. The continuous increases in the number of animals slaughtered in abattoirs throughout the two quarters specifically in Ilocos Region, Central Luzon, Central Visayas and Eastern Visayas contributed to this increase. Dairy farms maintained the uptrend in production and this semester, they had a 4.55 percent increase from last year’s level. A sustained increase in milk production from dairy cattle cooperative farms throughout the first two quarters of the year was recorded. Cattle production recorded a 0.45 percent output increment. An increase in the number of animals slaughtered was reported in CALABARZON and SOCCSKSARGEN. Goat production posted a 1.09 percent increase this semester. In particular, higher levels of goat production were reported in Northern Mindanao and SOCCSKSARGEN during the first quarter. There were increases in the number of animals slaughtered in abattoirs in Ilocos Region and Central Visayas.

Hog production, on the other hand, suffered a decline of 4.33 percent during the period. There was a decrease in the number of animals slaughtered in abattoirs. The “cholera” scare in Central Luzon negatively affected hog production in the region.

The poultry subsector which accounted for 13.22 percent of total agricultural production grew by 5.65 percent in the first six (6) months of the year. The main source of the subsector’s growth was chicken which registered a 7.10 percent output gain in the first half of 2008. Broiler production from commercial farms went up. The reported number of dressed chickens in the dressing plants increased in the two quarters of 2008. Production of chicken eggs expanded by 5.73 percent. Higher inventory of layers and better egg-laying efficiency ratio, particularly, in Central Luzon contributed to its production uptrend.

Duck meat suffered a 10.73 percent production cut this semester. The consistently lower volume of cullings of duck layers was noted during the first and second quarters of the year. Similarly, duck egg production went down by 11.42 percent this period. There were fewer duck layers and this was coupled with non-replacement of stocks in the Visayas and Mindanao regions. The significant decreases in duck egg production were noted in Cagayan Valley, Western Visayas, Eastern Visayas and Caraga.

The fisheries subsector with its 26.68 percent share in total agriculture slowed down as production increment stood at 2.74 percent during the first semester of 2008. The deceleration in the growth of fisheries production was the result of high fuel costs and the typhoons and natural calamities that occurred during the period. Commercial fisheries managed to post an output increase of 1.28 percent. There were increases in number of unloadings in Private Fish Landing Centers in Negros Occidental and Negros Oriental in the first quarter. During the same period, an increased number of foreign vessels unloading at Makar Port intended for tuna canneries in General Santos City was noted. Municipal fisheries, meanwhile, grew by 1.18 percent in the first six months of the year. The strict implementation of fishery laws increased opportunities for small fishing boats to extend their fishing activities. The distribution of fishing paraphernalia in Camarines Norte and Samar province also enhanced production. There were reported increased appearances of big-eyed scad, roundscad, skipjack and yellowfin tuna in Surigao provinces. In aquaculture, production expansion was maintained and this semester, recorded a 4.11 percent growth. This was largely explained by increased stocking of milkfish, tilapia and vannamei and the high survival rate and high demand for prawn and mudcrab in Pampanga and Batangas. There were reports of good market demand for brackishwater species and increased stocking and availability of fingerlings in Leyte. In the case of seaweeds, good planting materials and better farm management and newly opened areas in Palawan were cited as reasons for the output increase. In Zamboanga Sibugay and Tawi-tawi, there was seedling dispersal by BFAR and more seaweed areas were utilized. In Sulu, farmers were encouraged to culture due to better demand.
 

 

[mikey]

[23 October 2008] Philippine Agriculture Secretary Arthur Yap predicts that farm output during the 3rd quarter of the year would be less than 5% because of higher costs, particularly of fertilizers and fuel. This means a lowering in productivity in both the crops and fisheries sector. The high cost of fertilizers has been blamed for the decision of some corn farmers to shift to other higher value crops. Meanwhile, the fisheries sector has been suffering from high cost of fuel, which accounts for 60-70% of fishing costs. Also the hog industry, which leads the livestock sector, is still recovering from the losses it suffered from diseases last year.

[mikey]

16 October 2008] The Philippine hog industry may find 2009 a bit bleaker as farm prices are expected to decrease by 4-5% due to improved supply and weak consumer spending. Dr Dante Palabrica, head of Universal Robina Corp's Piggery Business Unit, said that while farm prices went to as high as PHP 115 (USD 2.44)/kg in the early part of 2008, this has now dropped to PHP 85 (USD 1.80)/kg. Although prices could pick up again producers should not expect to attain the high prices it enjoyed in the first part of 2008. He said that while production will improve by about 18-20% in 2009,cost could go up to about PHP 90 (USD 1.91)/kg.

[mikey]

Prices to remain stable for the holidays
[22 October 2008] Filipino consumers have been assured that prices of key commodities, including processed meat products, are likely to remain stable through the Christmas holidays. Trade and Industry Secretary Peter Favila met with representatives of different industries and retailers, who assured him that there will be no price increases for the remainder of the year except for canned sardines, which may increase because the cold season results in lower catch and the high cost of ingredients. Meanwhile, Philippine Association of Meat Processors Inc Executive Director Francisco Buencamino said that prices of canned meats have remained stable, but there would be a 4-7% adjustment in distribution cost during the holiday season as big trucks are not allowed to ply the busy streets of the metropolis between now and December.

[mikey]

Agri Sector Posts 4.19% Growth
Philippine agriculture expanded by 4.19% in the first three quarters of 2008, with the crops subsector, consisting primarily of palay and corn, emerging as the top growth driver for this period, Secretary Arthur Yap said yesterday.

In terms of value, the agriculture sector grew 22.23% higher than its 2007 performance for the same period, grossing P836.3 billion at current prices, Yap said in citing the official report of Director Romeo Recide of the Bureau of Agricultural Statistics (BAS). Yap said the crops subsector, which accounted for 47.73% of the total agricultural output for the January-September period, grew 6.1%, with palay production rising by 7.22% and corn production by 4.86%. The subsector grossed P458.5 billion at current prices or 30.38% higher than the 2007 record for the same period.

With a 13.82% share in agriculture production for the first nine months of 2008, the poultry subsector posted a 4.8% hike in output, mainly due to the increase in chicken yields. In terms of value, poultry registered a 12.03% increase compared to last year’s level, with its output priced at P90.1 billion, Yap said.

The fisheries subsector, on the other hand, recorded a 3.55 % increase in production, accounting for 26.14 % of the total agricultural output.

Aquaculture gained 5.31%, while commercial and municipal fisheries posted production increments of 1.54% and 1.91%, respectively.

Only the livestock subsector posted a decrease in production at 1.97% due to the decline in hog output by 2.7% for the January-September period. The subsector, which contributed 12-31 % in the total output of Philippine agriculture for the first nine months of 2008, grossed P132.1 billion at current prices, up by 12.76% this year.

The growth of Philippine agriculture for the first nine months of 2008 was slightly lower than its performance of 4.32% in the same period in 2007, as a result of various woes plaguing world agriculture such as climate change and sky-high petroleum prices that have jacked up the cost of everything from petroleum fertilizers to transporting goods from farms to markets.

Even so, palay production reached 10.59 million metric tons in the January-September months, which is 7.22% higher than the 2007 output for the same period, owing to aggressive planting in the third quarter brought about by better palay prices especially in the areas of the Cagayan Valley, Central Luzon, MIMAROPA (Mindoro-Marinduque-Romblon-Palawan), Western Visayas and Caraga.

“Despite possible weakening of fourth quarter figures which will affect year end agriculture growth statistics, I still believe that the sector will post positive growth rates that will range from just below 4% to about 4.5%. These reflect resilient numbers considering that the agriculture sector suffered global shocks this year due to the volatility of input and oil prices, and the global destabilizing effects of recession in the United States .”

Corn output reached 3.55 million MT for the first nine months of the year, pointing to a slowdown in production gains for the third quarter due to the adverse effects of typhoons “Frank,” “Karen” and “Nina,” the high costs of fertilizers and the shift by corn farmers to other crops.

He said the DA will continue with its aggressive planting programs for rice and corn and set up additional postharvest facilities, water supply and irrigation systems next year to sustain the high growth path of the crops subsector.

The DA chief said the Department will focus on investing in hard infrastructure to sustain and possibly increase significantly, the growth of the fisheries subsector, particularly its aquaculture component, next year.

Yap also bared plans by the DA to focus on the growth of the domestic root crops industry in 2009, as part of its food security initiatives to ensure food security.

Yap noted the projected fertilizer price drop this November is “welcome news” for agriculture stakeholders, especially palay farmers who will need this vital production input beginning this month up to January next year for the 2009 dry or summer crop.