BMI View: We hold a positive view on the Philippines ' agribusiness sector in the long term, given the country's potential for expansion into new sectors , such as palm oil. We particularly like t he outlook for sugar mills and believe the livestock sector will continue to show healthy growth rates. The Philippines' vast consumption market along with some government support , will foster domestic and foreign 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 become increasingly crippling as South East Asia moves towards the ASEAN Economic Community, which is supposed to lead to trade and investment liberali s ation across the region. Although the Philippines' government appears 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 its neighbours over the medium term.
|Sector Recovery In 2017|
|BMI Market Value By Commodity (2005-2020)|
Sugar production growth to 2019/20: 22.7% to 2.7mn tonnes. Sugar production growth will be driven by improvements in yields. The government approved the Sugarcane Industry Development Act, which is aiming at diversifying the sugar sector towards more value-added products and will provide financing to farmers.
Poultry production growth to 2019/20: 16.3% to 1.3mn tonnes. Poultry production will record steady but unspectacular growth. Growth will be driven by investment, both domestic and foreign.
Milk production growth to 2019/20: 23.4% to 25,200 tonnes. Milk and other dairy production will remain very low in the Philippines, although it will record strong growth due to low base effects. The government is committed to increasing the domestic supply of liquid milk, via the National Dairy Development Plan.
Agribusiness market value: 7.8% increase to USD34.36bn in 2017, following two years of declines; forecast to grow 6.0% on average y-o-y between 2017 and 2020.
2017 real GDP growth: 6.3% (down from 6.9% expected in 2016; forecast to average 6.0% over 2017-2020).
2017 consumer price inflation: 3.0% y-o-y (the same as is expected in 2016; forecasts to average 3.0% over 2017-2020).
Structural Trends And Latest Developments
The outlook for agriculture in 2016 is lacklustre as the Philippines has been badly affected by the 2015-2016 El Nino. Production of rice, corn, sugar and coffee declined in 2015/16, while livestock production will slow down. The Philippines will see its imports grow in 2015/16, as the government has no choice but to agree to ease its strict import policy. Meat imports will reach a record high and the Philippines will remain one of the 10 largest poultry importers.
The outlook for the agricultural sector is much more enticing in 2017 as the return to more normal weather will help production recover. We forecast grain and sugar production to recover, while livestock output will reaccelerate.
Investment in the livestock and feed sectors continues to grow strongly, bolstered by the enticing long-term consumption trends in the country. Cargill announced in May 2016 it is linking up with fast food company Jollibee Foods in a joint venture ( Cargill Joy Poultry Meats Production) to build and operate a poultry processing plant south of Manila. Total investment will amount USD17.5mn. Moreover, Vitarich set up a feed mill in Mindanao in June 2016. In October 2016, it was the turn of China's Wellhope Agri-Tech to announce it will invest USD9mn in a pig farming and feed milling project in Tarlac.
Newly elected President Rodrigo Duterte and his administration have made limited announcements regarding their agricultural policy. The new Minister of Agriculture reiterated the country's long-held goal to reach self-sufficiency in a number of commodities, an objective we deem unachievable over the next five years, given current conditions. Duterte has alluded to some potential investment in the country's agricultural infrastructure and said he would fight against illegal smuggling from South East Asia, which is hurting some domestic producers. These two measures would support the Philippines' agribusiness sector, but progress remains to be seen.
The new President has initiated in 2016 a dramatic reversal in the Philippines' foreign policy stance from one that is US-centric, to one that is pivoted towards China. This may lead to a change in the trade policy and trends for the Philippines' sugar sector. At present, the majority of the Philippines - small - sugar export volumes go to the US under a tariff-rate quota scheme. The Philippines is one of the select countries given an annual allocation of sugar exports (136,201 tonnes) to the US market at a premium price and a relatively low tariff.
The Philippines Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.
BMI's Philippines Agribusiness Report includes independent commodity price forecasting and analysis for key agricultural outputs, an overview of the agribusiness competitive landscape and a discussion of the downstream context of agricultural production in relation to country food consumption forecasts and composite food and beverage trade forecasts.
- Use BMI's independent industry forecasts to test other views - a key input for successful planning in dynamic agribusiness markets.
- Apply BMI's medium-term commodity price analysis to assist with budgetary planning and the identification of investment opportunities and potential risks.
- Assess the activities and market position of your competitors, partners and clients.
BMI Industry View
Summary of BMI’s key industry forecasts and views, highlighting recent changes and key risks to the industry outlook.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the wider agricultural industry.
BMI Supply & Demand Forecasts
Divided into sections based on various diverse sectors in the agriculture market, the chapter provides insight into each market’s agricultural industry, centred on sector forecasts to end-2019 for the consumption, production and trade of key commodities.
- Consumption Forecasts: Accompanied by a discussion of the main drivers of consumption growth: macroeconomic factors, food processing trends, price movements and increasingly, demand from the non-food sector.
- Production Forecasts: Examine the trends influencing BMI’s production outlook: global demand, price increases, public and private sector investment and agricultural efficiency improvements.
- Trade Forecasts: Accompanied by a discussion of the factors influencing a country’s trade in agricultural goods, including domestic demand, global prices and government trade policies.
- BMI’s Forecasts: Accompanied by a risks-to-outlook assessment, which examines potential factors that could affect our existing forecast picture and the likelihood of their occurrence.
BMI’s Commodity Price Analysis
Fundamental and technical analysis of the short- and medium-term price outlook for eight agricultural commodities based on globally recognised benchmarks.
Analysis of headline food and drink forecasts, including total food consumption, per capita food consumption and total sector trade, which provide important downstream intelligence for primary agricultural producers.
Includes relevant articles from BMI’s daily analysis service. These can include: long-term projections on agricultural imports and exports; our perceptions of the impacts of economic slowdown on key companies and subsectors within the Agribusiness industry in a given country; our analysis of fertilizer production; as well as other relevant analysis of recent news and events.
The reports contain information on prominent companies operating in each market.
Key Commodities Covered By The Agribusiness Market
Reports Include: Grains, Dairy, Livestock, Rice, Sugar, Palm Oil, Edible Oils, Coffee, Cocoa, Cotton, Soybean
Please note – not all reports cover all commodities.
The Agribusiness reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.