Boston, MA -- (SBWire) -- 09/27/2013 --BMI View: We hold a positive view on the Philippines agribusiness sector in the long term given the potential for expansion of new sectors, such as palm oil. We particularly like the outlook for sugar production and believe the livestock sector will continue to post healthy growth rates. The Philippines' vast consumption market, along with strong 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. This paradox is well illustrated in the island of Mindanao: a recent peace deal between the government and a rebel group could inspire investor confidence, which would help to develop the region's strong agricultural potential. However, lingering issues regarding business environment and security issues in Mindanao will still hinder the development of the island.
Key Forecasts
- Sugar production growth to 2016/17: 29.2% to 2.9mn tonnes. Sugar production expansion will be mainly driven by improvements in yields.
- Pork production growth to 2016/17: 13.4% to 1.5mn tonnes. Growth will be driven by an increase in commercial farming, as well as rising domestic consumption.
- Rice consumption growth to 2017: 3.3% to 13.3mn tonnes. Per capita consumption growth is expected to slow as the government encourages the consumption of other goods (such as corn and cassava) to limit demand as part of the country's self-sufficiency strategy. However, the combination of strong population growth and only moderate production growth means that the country will remain one of the world's largest net importers of rice.
- BMI universe agribusiness market value: 1.9% year-on-year (y-o-y) decrease to US$17.35bn in 2013, forecast to grow on average 2.0% annually between 2013 and 2017.
- 2013 real GDP growth: 5.9% (down from 6.8% in 2012; predicted to average 5.2% over 2013-2017).
- 2013 consumer price inflation: 3.2% y-o-y (up from 3.1% y-o-y in 2012; predicted to average 3.8% over 2013-2017).
- 2013 central bank policy rate: 3.50% (same as in 2012; predicted to average 3.90% over 2013-2017).
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Key Revisions To Forecasts
- 2012/13 and 2013/14 rice production revised up, to 11.3mn tonnes and 11.6mn tonnes respectively (compared with 11.0mn and 11.3mn tonnes previously). Good growing conditions supported better-thanexpected output in 2012/13. We revised up the 2013/14 forecast following 2012/13's good year.
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Just Released: "Philippines Agribusiness Report Q4 2013"
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