Agricultural trade deficit narrows to $1.62 billion
THE TRADE DEFICIT in agricultural commodities narrowed in the second quarter to $1.62 billion, driven by increased exports and a decline in imports, the Philippine Statistics Authority (PSA) said.
The PSA said Monday that outbound shipments of agricultural goods totaled $1.74 billion during the period, up 10.48%, year-on-year, while imports amounted to $3.35 billion, down 4.69%.
That made for an agricultural trade deficit in the second quarter of $1.62 billion, down 16.95% from a year earlier.
Overall agricultural trade, which totals imports and exports, was $5.09 billion, down 0.01% year-on-year.
Agriculture accounted for 11.04% or $5.09 billion of total trade, which was $46.119 billion in the second quarter.
Agricultural trade with Japan continued to be in surplus by $272.42 million in the second quarter. However, the Philippines returned a deficit with all other major trading partners, led by the Association of Southeast Asian Nations (ASEAN) with $964 million, the US $423.35 million; Australia $299.03 million; and the European Union $127.65 million.
The top agricultural export was edible fruit and nuts and peel of citrus fruit melons amounting to $693.89 million, which accounted for 40% of the total value of goods exported.
Other top export were animal or vegetable fats and oils and their products, prepared edible fats, and animal or vegetable waxes, which collectively amounted to $300.75 million; preparations of vegetables, fruit, nuts, or other parts of plants $128.88 million; tobacco and manufactured substitutes $114.33 million; and preparations of meat, fish, crustaceans, mollusks, and other aquatic invertebrates $101.77 million.
Cereals topped the list of imported agricultural goods amounting to $703.67 million, or 21% of the total agricultural imports in the second quarter. This was followed by miscellaneous edible preparations at $432.24 million; residues and waste from food industries and prepared animal fodder $411.30 million; meat and edible meat offal $289.08 million; and dairy produce, birds’ eggs, natural honey, edible products of animal origin $286.9 million.
Michael L. Ricafort, head of Rizal Commercial Banking Corp.’s (RCBC) economics research division, said that the contraction in the trade deficit can be attributed to improved diplomatic relations with major export markets, notably in China, Japan, South Korea, and other Asian countries.
“The country has also diversified its export markets to include non-traditional agricultural export destinations in Asia, the Middle East, and Europe,” he said in a text message.
Meanwhile, imports, specifically of rice, could come in for reductions as the government steps up its purchases of palay, or unmilled rice, from domestic farmers.
Data from the Bureau of Plant Industry indicates rice imports of more than 1.6 million metric tons (MT) in the seven months after the implementation of the Rice Tariffication Law.
“Philippine agricultural exports could continue to improve in the coming months with the continued increase and diversification of the country’s export markets around the world, as well as improved diplomatic/business relations with the biggest markets for agricultural exports,” Mr. Ricafort said.
He also noted that the on-going trade war between the US and China could redirect US exports to other countries like the Philippines, particularly pork.
“Pork imports especially from the US and in other countries still free from African Swine Fever (ASF) could potentially increase in the coming months if domestic pork production is adversely affected by the ASF,” he said.
UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said in an e-mail that the US-China trade war could be an opportunity for the country to boost its agricultural exports.
“We expect agriculture exports to continue to grow in the coming quarters, and optimism stemming from the potential progress in US-China trade negotiations is helping this view,” he said. — Vincent Mariel P. Galang