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No GDP boost from flat second-quarter agriculture output

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rice farmer
AFP

FARM OUTPUT barely grew last quarter as a drop in crops and fisheries offset increases in livestock and poultry, the Philippine Statistics Authority (PSA) reported on Wednesday, prompting economists to say that overall economic expansion in the same three months — to be reported hours ahead of today’s monetary policy meeting that is expected to yield the year’s third consecutive interest rate hike after the PSA reported a fresh five-year-high 5.7% inflation rate on Tuesday — could not look to the sector for any boost.

The PSA reported that agricultural output grew in value terms by a nearly flat 0.07% annually last quarter, compared to the upward-revised year-ago 6.22% and the first quarter’s 1.47%.

The latest data brought first-half growth of farm output — which contributes nearly a tenth to gross domestic product (GDP) — to just 0.58% against a 2.5-3.5% annual target for the sector under the 2017-2022 Philippine Development Plan.

“Overall, the outlook for recovery is a major challenge,” Rolando T. Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agribusiness, said in an e-mail when sought for comment.




“Given 0.6% growth in the first half, to grow by two percent in 2018, the second half must post three percent growth.”

Saying that the second quarter’s “modest growth” that was “almost flat” due “to the higher base/denominator a year ago… would have a small contribution to 2Q 2018 GDP growth rate,” Michael L. Ricafort, head of Rizal Commercial Banking Corp.’s Economic and Industry Research Division, said in a separate e-mail that “growth of agriculture production for 3Q 2018 and for the rest of 2018 would start to pick up due to lower base/denominator in 2H 2018.”

At the same time, he said damage from floods “since the early part of 3Q 2018 could somewhat… slow down agriculture production growth”, while “higher inflation that raised the cost of fuel/petroleum, transportation and other inputs could also be a drag to further growth in agriculture production.”

Noting that “weather disturbances, pest attacks and advance harvesting” weighed on crop production last quarter, Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said in a mobile phone message that “[n]ext quarter, we might still be seeing weak data from the crops subsector due to the recent typhoons that hit the country.”

“This drop in crop output may contribute to a decline in agricultural production in the third quarter.”

SUBSECTORS
Production of the crops subsector — which accounted for 49.65% of total value of agricultural output — fell by 2.08%, causing a 0.44% reduction last semester.

Palay production, which accounted for 17.27% of overall farm production value, dropped 1.44% as volume fell to 4.09 million metric tons (MMT) from 4.15 MMT due to a decrease in area harvested in Cagayan Valley as farmers opted to harvest in the latter part of the preceding three months “to avail of the good price offered by traders”, a shift to cassava and sugarcane, as well as early harvest in the South Cotabato-Cotabato-Sultan Kudarat-Sarangani-General Santos City (SOCCSKSARGEN) region in Minanao “because of hot weather conditions”.

Production of this staple edged up 1.68% to 8,713 MMT last semester from 8.569 MMT in 2017’s first half, which saw a 12.06% growth.

Production of corn — another staple that made up 17.27% of total output value — fell by 3.42% in volume terms to 1.284 MMT from 1.33 MMT also due to a decrease in area harvested in Cagayan Valley due to early harvesting and in SOCCSKSARGEN “due to insufficient rains” the preceding three months.

Production of this grain edged up by 1.75% to 3.761 MMT last semester from 3.696 MMT in 2017’s first half, which recorded a 30.7% surge.

Fisheries, which contributed 16.85% to total farm output value, slipped by 0.05% on smaller production of milkfish, tiger prawn, round scad and yellowfin tuna while tilapia, skipjack and seaweed increased, making first-half production drop 2.14%.

On the other hand, poultry — which accounted for 16.83% of total farm output — grew by 5.14% last quarter as most of the subsector’s segments, except duck, increased, fueling a 5.19% expansion last semester.

Similarly, livestock — which made up 16.67% — grew 1.88%, partly as hog production increased by 2.81, driving first-half production to increase by 1.95%.

Farmers got a better deal for their products overall, as farmgate prices rose by 5.48% — driven by increases of 6.27%, 7.83% and 6.75% for crops, livestock and fisheries, respectively, that offset a 0.25% decline for poultry — fueling a 6.39% hike last semester. — with inputs from C. A. V. Olano and A. G. A. Mogato

Philippine agriculture performance (Q2 2018)