Focus on the Philippines
February 5, 2016
The Philippines doesn’t produce wheat, making it reliant on imports, particularly of milling quality wheat from the United States.
Its large pork production industry is a big user of imported soymeal. It’s a big rice producer, but still needs to import. It faces challenges from a high propensity to natural disasters and the effects of armed conflict.
“The Philippines is one of the most disaster-prone countries in the world, experiencing around 20 typhoons a year, five of which are expected to cause major damage and trigger floods and landslides,” according to the World Food Progamme (WFP). “In addition, the country is also vulnerable to the occurrences of earthquakes, volcanic eruptions and climate-related issues, such as drought.”
WFP points out that it’s ranked second out of 171 countries on the 2014 World Risk Index and second out of 181 countries on the 2014 Global Climate Risk Index.
“Though a low middle-income country, the Philippines has a food deficit, which is exacerbated by the combined effects of natural and man-made disasters that include earthquakes, typhoons and armed conflict,” WFP said, referring to Mindanao which has suffered from over four decades of armed conflict, resulting in internal displacements and overall deterioration of living standards. “The people of the Central Mindanao region are the country’s poorest,” it said.
The Philippines’ total grains production (all maize) in 2015-16 is 8 million tonnes, according to the International Grains Council (IGC), unchanged from the year before.
Its total grains imports in 2015-16 are put at 5.2 million tonnes, down from 5.6 million the year before, with imports of wheat at 4.7 million tonnes, down from 5 million.
“There continues to be no commercial production of wheat or ‘small grains’ (barley, oats, etc.) in the Philippines,” the USDA attaché said in an annual report on the country’s grains sector. “As a result, the country is a major importer of milling-quality wheat and the United States is its largest supplier.
“The Philippines was the fourth largest U.S. wheat market globally in CY2014 with sales up 11% from the previous year, reaching $698 million. Wheat was the top U.S. agricultural export to the Philippines in CY2014.”
The attaché’s most recent annual report notes the commissioning of two new flour mills in 2013. The fact that two more were under construction, bringing the total in the Philippines to 17 with a total capacity of more than 4 million tonnes, reflects the industry’s growth expectations.
It also notes “that the continued consolidation of the hog sector, where small raisers are in the decline and large, technically sophisticated operations are expanding, supports increasing feed-wheat demand (provided it remains price competitive with corn).”
The IGC also forecasts imports of 300,000 tonnes of wheat flour in 2015-16.
Oils and Meals
The IGC puts Philippines soymeal imports in 2015-16 at 2.4 million tonnes, up from 2.1 million the year before.
“The Philippines is the second largest market for U.S. soybean meal and the world’s largest coconut oil exporter,” the attaché said in a report on the sector.
Growth in soymeal imports was driven by continued consolidation and growing sophistication of the domestic feed-consuming industries, and significant industry investment in feed grain distribution infrastructure, it said.
“Philippine soybean production is minimal and the negligible imports are purchased by one crusher,” it said.
However, it is the world’s largest exporter of coconut oil, despite 2014-15 trade being affected by typhoon damage and an anticipated cyclical decline in copra yields, bringing the forecast down 8% to 800,000 tonnes. Coconut oil is the country’s top export and the United States is its top market.
“The local hog industry is the dominant Philippine feed consuming sector, accounting for an estimated 55% to 65% share of the country’s feed requirements,” the attaché explained. “Poultry production accounts for 25% to 35% and aquaculture covers roughly 10%.
“The hog industry continues to undergo a period of consolidation. While large farms (that enjoy greater economies of scale) continue to grow and are coping with increased production costs, small backyard raisers (which still account for the majority of the hog industry) are struggling to remain salient.”
The overall hog population is likely to remain relatively flat during this consolidation phase, it said. “However, because the larger farms are increasingly employing more sophisticated and scientific raising methods (e.g., modern animal health and nutrition technology), the demand for high quality feed ingredients is likely to remain strong and increase, according to trade contacts,” it said.
Rice production down
The IGC projects 2015-16 rice production at 11.5 million tonnes on a milled basis, down from 11.9 million the year before. It puts rice imports at 1.8 million tonnes, compared with 1.7 million in 2014-15.
“The Socio-Economic Planning Secretary stated on Nov. 5, 2015, that a government panel will recommend an additional 1.3 million tonnes of rice imports following crop losses from recent typhoons and dry weather linked to El Niño,” the IGC said. “The plans still require approval from the National Food Authority (NFA) council.”
It also reported that typhoon Koppu has led to estimated paddy (rice) crop losses of about 360,000 tonnes in the Luzon and neighboring regions. Accordingly, the government is planning to support farmers by providing drought-resistant paddy varieties and establishing price-support mechanisms.
Biotech crops grown
Philippine rules governing biotechnology crop regulations are widely recognized as science-based, thorough, and transparent, according to the USDA.
“To ensure human, food, feed, and environmental safety, the regulatory regime requires that risk assessments be conducted in accordance with internationally accepted bodies such as the Cartagena Protocol on Biosafety, the Codex Alimentarius Commission, the Organization for Economic Co-operation and Development, and the UN Food and Agriculture Organization,” USDA said.
“GE corn has been on sale in the country since 2003 and in 2014 comprised 26% of total corn area,” the attaché said. “The Philippines was the first to cultivate GE crops commercially in the region (2003).”
The country also has golden rice in the testing stage. However, the attaché also points out that its prominence in biotechnology has made the Philippines a target for domestic and international anti-biotech groups.
“This opposition in early 2012 culminated in a lawsuit challenging the safety of Bt eggplant,” it said. “The resulting court decision ordered a halt to GE field tests and has slowed the final approval process. Respondents to the case have all filed petitions to the Philippine Supreme Court seeking a reversal of the lower court’s decision.”
The Philippines is the first country in Southeast Asia to have biofuels legislation in place, passing its Biofuels Act or Republic Act (RA) 9367 in January 2007.
“Meeting the current 10% ethanol blend in gasoline has been problematic using local ethanol, while there have been no issues complying with the mandated 2% blend for biodiesel,” the attaché said. “RA 9367 raises the current 10% ethanol blend to 20% by 2020, and the 2% biodiesel blend to 5% by 2015, 10% by 2020, and to 20% by 2030.”
Shortfalls mean that the country has had to import to get the supplies required.
“Despite being disadvantaged by higher tariffs compared to regional sources, U.S. ethanol accounted for 73% of total imports in 2014, with sales reaching a record 246 million liters,” the attaché said. “The Philippines was the fourth largest market for U.S. ethanol in 2014.”
Imports are likely to fall as local production is ramped up.
Population: 100,998,376 (July 2015 est.)
Religions: Catholic 82.9% (Roman Catholic 80.9%, Aglipayan 2%), Muslim 5%, Evangelical 2.8%, Iglesia ni Kristo 2.3%, other Christian 4.5%, other 1.8%, unspecified 0.6%, none 0.1% (2000 census).
Location: Southeastern Asia, archipelago between the Philippine Sea and the South China Sea, east of Vietnam.
Government: Republic. Chief of state and head of government: President Benigno Aquino (since June 30, 2010).
Economy: The economy has weathered global economic shocks better than its regional peers due to less exposure to troubled international securities, lower dependence on exports, relatively resilient domestic consumption, large remittances from 4 to 5 million overseas Filipino workers, and a rapidly expanding outsourcing industry. The current account balance has recorded consecutive surpluses since 2003, international reserves remain at comfortable levels, and the banking system is stable. The stock market resumed an upward trajectory in 2014, climbing to new record highs during the first four months of 2015. Efforts to improve tax administration and management of expenditures have helped ease the Philippines’ tight fiscal situation and reduce debt levels. Nevertheless, government taxation and spending remain weak. The Philippines has received investment-grade credit ratings on its sovereign debt under the Aquino administration and has had little difficulty financing its deficits. Economic growth has accelerated, averaging 6% per year from 2011-2014, compared with 4.5% under the Macapagal-Arroyo government. Competitiveness has improved and foreign direct investment hit a historic high in 2014, although it continues to lag compared with the rest of the region. Unemployment has remained high, hovering at around 7% of the population, and underemployment is nearly 20%.
GDP per capita: $7,000 (2014 est.); inflation: 4.2% (2014 est.); unemployment: 6.8% (2014 est.).
Currency: Philippine pesos (PHP): 47.81 pesos equal 1 U.S. dollar (Jan. 21, 2016).
Exports: $47.76 billion (2014 est.): semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits.
Imports: $63.61 billion (2014 est.): electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic.
Major crops/agricultural products: Sugarcane, coconuts, rice, corn, bananas, cassava (manioc, tapioca), pineapples, mangoes; pork, eggs, beef; fish.
Agriculture: 11.3% of GDP and 30% of the labor force.
Internet: Code: .ph; 39.2 million users.