BMI View: We hold a positive view on the Philippines's 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 mills and believe the livestock sector will continue to show healthy growth rates. The Philippines'svast consumption market along with some government support, will foster domestic and foreign investmentand favour output expansion. However, backyard farming and infrastructure problems, especially transportcosts, will continue to hamper the sector's growth. These inefficiencies will become increasingly cripplingas South East Asia moves towards the ASEAN Economic Community, which is supposed to lead to tradeand investment liberalisation across the region. Although the Philippines's government appears to havetaken the measure of the challenge and is now supporting rice and sugar production, agriculture in thecountry remains uncompetitive. As such, the sector is at risk of low-cost imports from its neighbours overthe medium term.
Sugar production growth to 2020/21: 28.2% to 2.7mn 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.