Philippines Agribusiness Report Q2 2016
BMI View: We hold a positive view on the Philippines' agribusiness sector in the long term, given thecountry's potential for expansion into new sectors, such as palm oil. We particularly like the outlook forsugar production and believe the livestock sector will continue to show healthy growth rates. ThePhilippines' vast consumption market, along with strong government support, will foster domestic andforeign investment and favour output expansion. However, backyard farming and infrastructure problems,especially transport costs, will continue to hamper the sector's growth. These inefficiencies will becomeincreasingly crippling as South East Asia moves towards the ASEAN Economic Community, which issupposed to lead to trade and investment liberalisation in the region. Although the Philippines' governmentappears to have taken the measure of the challenge and is now supporting rice and sugar production,agriculture in the country remains uncompetitive. As such, the sector is at risk of low cost imports from itsneighbours over the medium term.
Sugar production growth to 2019/20: 19.5% to 3.0mn tonnes. Sugar production growth will be drivenby improvements in yields. The government approved the Sugarcane Industry Development Act, which isaiming at diversifying the sugar sector towards more value-added products and will provide financing tofarmers.
Poultry production growth to 2019/20: 16.3% to 1.0mn tonnes. Poultry production will record steadybut unspectacular growth. Growth will be driven by investment, both domestic and foreign.
Rice production growth to 2019/20: 13.8% to 13.5mn tonnes. Production growth will be fuelled bycontinued improvements in infrastructure and yields as the government looks to attain self-sufficiencyand support output.
Agribusiness market value: 2.6% increase to USD35.172bn in 2016, forecast to grow on average4.6% annually between 2016 and 2020.
2016 real GDP growth: 6.0% (up from 5.7% expected in 2015; predicted to average 5.9% over2016-2020).
2016 consumer price inflation: 2.3% y-o-y (up from 1.4% expected in 2015; predicted to average 3.7%over 2016-2020).
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