Boston, MA -- (SBWIRE) -- 03/21/2014 -- 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. Our outlook is especially positive for sugar production, and we also 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 restrict the development of the island.

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Key Forecasts

- Sugar production growth to 2017/18: 17.0% to 2.9mn tonnes. Sugar production expansion will be mainly driven by improvements in yields.
- Pork production growth to 2017/18: 16.4% to 1.6mn tonnes. Growth will be driven by an increase in commercial farming, as well as rising domestic consumption.
- Rice consumption growth to 2018: 3.8% 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.
- Agribusiness market value: 1.1% decrease to US$16.9bn in 2014, forecast to grow on average 3.3% annually between 2014 and 2018.
- 2014 real GDP growth: 6.3% (down from 6.9% in 2013; predicted to average 5.5% over 2014-2018).
- 2014 consumer price inflation: 4.0% y-o-y (up from 2.9% y-o-y in 2013; predicted to average 4.0% over 2014-2018).
- 2014 central bank policy rate: 4.00% (up from 3.50% in 2013 predicted to average 4.00% over 2014-2018).

Key Revisions To Forecasts

- 2013/14 rice production revised down, to 11.6mn tonnes (compared with 11.7previously). Typhoon Haiyan impacted the rice sector the worst. The loss of infrastructure and the effect of the typhoon on farmland conditions jeopardised sowings of the secondary rice crop in the region, whose planting usually starts in December.

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