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Philippines Agribusiness Report Q3 2009Published by: Business Monitor International Published: Jun. 19, 2009 - 54 Pages Table of Contents
AbstractWith the 2009 crop year drawing to a close, it looks like the government's efforts to spur rice productionfollowing the 'crisis' of 2008 have moderately paid off. We forecast production to rise 1.8% year-on-year(y-o-y) to 10.67mn tonnes. The increase could have been higher if it wasn't for the high price of fertiliser.This follows on from a 7.2% y-o-y expansion in 2008. Despite the rising production, self-sufficiency is adistant goal with even the government's pushed-back target of 2013 still looking unlikely.The Philippines' second crop, corn, will not fare so well in 2009. A reduction in the area planted,combined with falling fertiliser use and inclement weather saw production in the first half of crop year2009 fall 8.8% y-o-y. For the full year, we forecast production to fall 5.5% y-o-y to 6.87mn tonnes. Thecontinued high price of corn in the Philippines will likely also see consumption drop sharply in 2009. Inthe first four months of 2009, imports of wheat for animal feed were almost double the amount importedin the whole of 2008 as livestock farmers took advantage of a temporary abolition of import duty onwheat. This will see a concomitant fall in demand for feed corn. The continued high price of feed is hitting livestock producers hard. As the economy slows this year, thesituation is only going to get worse as demand growth for meat flags. While we do not currently expectthe Philippines to see a full-blown recession, the slowdown in GDP growth to a forecast 2.8% will still bepainful. The fall in remittence flows from balikbayans, Filipinos working overseas, will result in manyfamilies having much less disposable income. This will see consumption of more expensive foods, suchas pork and beef, fall. Another threat on the horizon for agriculture in the Philippines is the reduction of tariffs on mostagricultural imports from Association of Southeast Asian Nations (ASEAN) member states under theASEAN Free Trade Agreement (AFTA). From January 2010, tariffs on agricultural goods have to bereduced to between 0% and 5%. While farming bodies in the Philippines are pushing for the tariffreductions to be postponed, we do not think this is likely. The level of concern over the tariff reductions in many ways goes to show how agriculture in thePhilippines has fallen behind its peers. Livestock producers, especially, are worried that local productionmay be unable to compete with imports from other South East Asian neighbours such as Thailand andMalaysia . While some less efficient producers could well struggle in the face of rising imports, theremoval of tariffs should be viewed as a positive development for agriculture in the Philippines. Thecountry will still be protected from imports from developed countries and the added competition fromwithin the region will spur increasing efficiency in production without devastating domestic production. Get Full Details About This Report >> |
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