THE year 2021 will go down in history as one of the most challenging years for the agriculture sector. While it displayed resiliency at the start of the pandemic, the local farm sector eventually wobbled due to the economic impact of the pandemic and supply chain problems.
Official government data would attest to this. The value of agricultural production at constant 2018 prices declined by 2.6 percent in the third quarter to P406.674 billion from last year’s P417.727 billion. This caused agricultural output in January to November to contract by 2.5 percent year-on-year.
This was in stark contrast to the sector’s performance last year, when it posted an increment of 0.7 percent in the third quarter. Output in the January to November last year fell by only 0.2 percent.
The 2.5-percent contraction in agricultural output this year was largely due to the poor performance of the livestock sector, which continues to grapple with African swine fever (ASF). Filipinos welcomed the new year with “golden pork” as prices skyrocketed to beyond P400 per kilogram, from the usual average of P240-P250 per kg. The fatal hog disease created a pork supply deficit of about 400,000 metric tons (MT), which was later on raised to 651,000 MT.
The supply shortfall forced the government to lower tariff rates on pork imports and expand the minimum access volume (MAV) program for the meat product. The supply problem was not only observed in the pork sector but also in other food industries, such as meat processing and even broiler chicken.
Importing meat products to plug the shortfall in pork was not exactly a walk in the park due to the global shipping and logistics problems which hampered the flow of goods to the Philippines. Food manufacturers who depend on imported raw materials, such as meat processors, were left scrambling for raw material supply abroad as they faced a confluence of problems: lack of containers and vessels which resulted in record freight costs as well as limited raw material supply due to border closures.
The broiler sector was not spared from supply problems as frozen inventories consisting of imports and locally produced chicken went through to the roof. It did not help that demand for restaurant food was tepid as major Philippine cities were placed under lockdown twice this year.
Crops subsector
While the crops subsector fared better than the livestock and poultry subsectors, it also had its fair share of challenges this year. For one, rice production is on track to again hit a new record. However, industry players said the record harvest and the increase in imports resulted in a supply glut which pulled down farm-gate prices.
Worse, farmers are now being burdened by higher farm inputs, such as fertilizers. Fertilizer prices have doubled to P2,000 per 50-kilogram bag today.
“We are experiencing failure today due to lack of reliable data. The importation tack of the government is destroying the prices of the producers who cannot recover now from high input costs,” Philippine Chamber of Agriculture and Food Inc. President Danilo V. Fausto told the BusinessMirror in an interview.
“It’s about time for 2022 to change that mindset and the government must try to help the farmers recover their expenses by allowing them more leeway in pricing,” he added.
Elias Jose Inciong, chief of the United Broiler Raisers Association (Ubra), had this to say about the status of the poultry sector this year and its future prospects: it’s a mess and will even get messier.
This “mess,” Inciong pointed out, stemmed from the current policies of the government that are “skewed towards importation,” making it more difficult for them to compete.
“There would be a major configuration of the industry because the producers would in all likelihood move towards a hybrid type of operations. They will produce and import at the same time—as what is happening now with major corporations,” he told the BusinessMirror in an interview.
“Importers [say] some of their colleagues have already ventured into local production since we do not know what will happen abroad given the threats of climate change and problems in the movement of goods,” he added.
Inciong explained that food producers like broiler raisers are facing an unprecedented confluence of events today: unpredictable market demand amid the Covid-19 pandemic and record-high production costs due to the tightness in the supply of raw materials.
“Normally, a farm-gate price of P85 per kilogram to P90 per kilogram will not be a major headache for producers, but this is no longer true because of the high costs of production,” he said.
“If you have a full-scale commercial operation wherein you buy everything from raw materials to day-old chicks, your break-even cost would be at P95 per kilogram,” he added.
Despite the easing of mobility and quarantine restrictions by the government, Inciong pointed out that producers have taken a conservative stance when it comes to their production plans. Recent price movements indicate that chicken supply may still outpace demand, an indication of the low purchasing power of consumers and weak food demand, according to Inciong.
“Demand is a major problem really. People are being cautious and conservative. But apparently, consumers right now are more conservative than producers and importers,” he added.
Fishers face woes
AS the world deliberates on curbing illegal, unreported and unregulated fishing (IUUF), Filipino fishermen continue to face the struggle of competing with uninvited visitors in the country’s territorial waters.
The government has repeatedly called out the presence of foreign vessels, such as Chinese maritime militia vessels, fishing in the West Philippine Sea (WPS) this year. The Bureau of Fisheries and Aquatic Resources (BFAR) has been emphasizing that these activities are considered IUUF, which the World Trade Organization (WTO) member-countries have vowed to fight through a ministerial decision.
“These foreign vessels have no clearance from the Philippine government or any existing fisheries cooperation agreements with the country that allow them to conduct any fishing operations,” the BFAR, an attached agency, said earlier this year.
The threat of IUUF to the Philippine fisheries sector has been more drastic than ever, with experts pointing out that these activities are fast depleting the country’s rich food supply from the WPS.
“The Department of Agriculture through the Bureau of Fisheries and Aquatic Resources [DA-BFAR] looks at the ‘West Philippine Sea issue’ in general terms, that is, in the area of illegal, unregulated, unreported fishing activities by poachers—be they from China, Taiwan and Vietnam—and their ‘illegal presence’ wherever in the Philippine exclusive economic zone [EEZ], or simply within our country’s territorial waters,” Agriculture Secretary William D. Dar earlier declared.
“Meanwhile, we will continue to exert efforts to achieve food security through marine or capture fisheries, and sustained support to small, artisanal fisherfolk and their families,” Dar added.
The Philippines has been one of the front-runners in pushing for the immediate conclusion of the negotiations on fisheries subsidies deal at the WTO amid threats of IUUF and declining global fish stocks.
“The Philippines stands together with other WTO member-countries who are committed to deliver an outcome in the fisheries subsidy negotiations ahead of the 12th WTO Ministerial Conference (MC12) in December this year,” Trade Secretary Ramon M. Lopez said. “This will only be possible if there is solid political will and diplomatic flexibility in the negotiations.”
Meanwhile, the Philippines also opened its annual round of galunggong importation this year to address supply shortfall as the government implements a three-month moratorium on key fishing grounds to allow restocking of fishes. As always, the importation tack amounting to 60,000 metric tons (MT) was opposed by industry stakeholders who noted that the allowed volume by the DA is more than the estimated shortfall of the country.
Fisheries output in the third quarter alone declined by 0.4 percent, while January-to-September production contracted 0.5 percent year-on-year. Industry sources are noting that the decline may continue in the fourth-quarter performance as the fisheries sector posted a P2.5-billion loss due to Typhoon Odette.