MANILA, Philippines (UPDATE 2:10 p.m., May 10) — Last year’s only growth source for the Philippine economy has reversed to become yet another drag to a planned recovery this year which is now at risk of not materializing.
A double whammy of epidemics is hitting the country’s farm sector, which contracted 3.3% year-on-year in the first 3 months of 2021, nearly double the 1.3% rate in the same period a year ago but slightly slower than the 3.7% drop the previous quarter, the Philippine Statistics Authority reported on Monday.
Apart from the coronavirus pandemic, a lingering African swine fever have depleted pork supplies, while shifting protein demand to chicken which is likewise facing a supply crunch due to delays in raising chicks. The full impact more than offset respectable gains in crops, particularly palay and corn, as well as a recovery in fisheries sector.
The initial downturn puts the agriculture department farther from its ambitious goal of growing agriculture by 2.5% this year. But more immediately, a slump in the farm segment adds to a string of bad data that only diminish optimism the first quarter gross domestic product would return to growth. Official GDP data will be reported Tuesday.
From January to March, the livestock subsector plummeted 23.2% year-on-year, under which production of pigs contracted a larger 25.8%. Supply of cattle also went down 10.2%, while that of carabao, goat and dairy were also in negative territory.
The pig shortage is so severe that the Duterte administration scrambled to lower tariffs and raise pork import limits to bridge the deficit and stop a surge in pork inflation. After securing a compromise deal on the matter with senators who feared a hefty four-fold increase in imports will kill the local sector, the industry is now saying domestic assistance for the group remains lacking.
“DA (is) not sending strong support for the local agriculture but more on import liberalization espoused by some economic managers which run counter for local investment and repopulation,” Edwin Chen, president of Pork Producers Federation of the Philippines, an industry group, said in a text message.
In reality, the government is actually spending P600 million for feeds to fatten piglets and ensure they reach the ideal weight for consumption. However, Rolando Dy, executive director at Center for Food and Agribusiness at the University of Asia and the Pacific, said the entire process will “take time”— at least 6 month per government estimate—and its impact on supply longer to manifest. “One (would also) need capital,” he said.
When sought for comment, Agriculture Secretary William Dar's statement was scant on details, and only said the government is "aggressively taking steps" to help the swine sector recover while reiterating the availability of P42 billion worth of state loans for that purpose, but which pig raisers have repeatedly resisted on taking over falling profits and fear of indebtedness.
Meanwhile, as pork prices soared, people began shifting to chicken, which in turn drove up poultry prices. With it, Dy said came “lower demand” for chicken, giving raisers less incentive to produce. Poultry production shrank 7.4% year-on-year in the first quarter.
On the flip side, crops went up 3.3% year-on-year, while fisheries bounced back 0.6%-- both were a victim of typhoon damage at the latter part of 2020. Before storms hit however, the two subsectors helped agriculture grow the height of lockdowns in second and third quarters.
Palay output expanded 3.3%, while corn rose a larger 8.6% during the period. For fish, galunggong still sank 4.5%, although bangus inched up 0.6%.
For all of 2020, the local agriculture shrank 1.2%, albeit the smallest among key economic sectors.
Editor's note: Added William Dar's statement