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Philippines Agribusiness Report Q2 2010
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Philippines |
Published |
3 February 2010 |
Number of Pages |
68 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Moving into 2010, it looked as if the weather worries were far from over for the Philippine agricultural industry. Following the lashings by typhoons in the second half of 2009, the strengthening of El Niño conditions look set to see poor rains in the first half of 2010. This will work against the ability of farmers to make up for the losses caused by the typhoons of last year. We therefore expect production of the Philippines most significant grain crops, rice and corn, to fall in 2009/10.
While the weather was bad news for the country's agribusiness industry, there was some good news from the international scene. By late January, the Philippine government seemed to be coming to an agreement with its partner governments in the ASEAN block over the implementation of the ASEAN Free Trade Area (AFTA). The Philippines was obligated to reduce tariffs on most items to between 0% and 5% at the beginning of the year. However, before the end of the year, the government was desperately trying to agree extensions for key products.
In late January 2010, the Department of Agriculture (DA) announced that it had secured a delay in cuts on the tariff for sugar imports. Tariffs will be kept at their current level of 38% until 2012 when they will be reduced to 28%. In 2013 the tariffs will be reduced further to 18%, then to 10% in 2014 and finally to 5% in 2015. While rice is on the Philippines' Highly Sensitive Products List, allowing tariffs to be retained beyond the deadline, sugar is classed as merely a sensitive product. Under the ASEAN Free Trade Area, the tariff on sugar imports from other ASEAN countries were to fall from 38% to 28% at the start of 2009 and then to no more than 5% by January 2010. The DA had been worried that the Philippines would be swamped with cheap sugar imports from Thailand, a major exporter, if the tariff cuts had gone ahead as planned. Even with the delay, much work needs to be done to improve the competitiveness of the Philippine sugar sector if it is to be able to compete.
Though the government achieved its aims for sugar, at the time of writing it looked like the government was to make some concessions to Thailand over rice imports. As the Philippines placed rice on its Highly Sensitive Products List, it is exempted from the January 1 2010 deadline to reduce tariffs to between 0% and 5%. In the longer term, however, its partners in the Asian Free Trade Area (AFTA) expect tariffs to be reduced from the current 40% for in-quota imports and 50% for imports above the quota. The Philippines offered to reduce the tariff only to 35% by 2015. It now seems likely that the Philippines will offer a substantial quota of around 300,000-400,000 tonnes of duty free imports to Thailand, the regions major rice exporter. This will have played a part in Thailand's acquiescence to the continuation of tariffs on sugar imports.
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