Agri output in Q3 seen matching Q2; 2017 target within reach

AGRICULTURAL output growth in the third quarter is estimated to have been little changed from the second quarter performance of 6.18%, the Agriculture department said, adding that fourth quarter growth may hit 7%, which will help the government reach its target for 2017.

“The grains [sub]sector will still be the driving sector. It will push the performance of the agri sector, actually. I would assume (the third quarter is) almost the same performance as the second quarter,” Agriculture Secretary Emmanuel F. Piñol told reporters on Monday.

Compared with year-earlier performance, Mr. Piñol’s estimates suggest a pickup from the 2.98% growth recorded in the three months to September 2016.

The Philippine Statistics Authority’s report on farm output during the third quarter is due for release on Nov. 15.

Mr. Piñol said the bird flu outbreak, the first in the Philippines, dragged down farmgate prices for poultry, but “will not really make a dent on the performance of agriculture in the third quarter.”

“It was just a hiccup. And I really believe we have already recovered,” Mr. Piñol said, citing industry reports that farmgate prices have recovered and may rebound to normal levels starting November or December.

As for growth in the three months to December, he cited expectations of a bumper corn harvest during the period, producing growth of as much as 7%, which compares with a 1.11% contraction in the last quarter of 2016.

Should these estimates play out, the agriculture sector will grow 6.16% in 2017, against a contraction of 1.41% in 2016. Such a growth rate would fall within the department’s target band of 6-7% in 2017.

Economists have said agriculture in 2017 is coming off a low base due to a prolonged dry spell that weighed on output well into 2016.

Rolando T. Dy, executive director of the Center for Food and AgriBusiness of the University of Asia & the Pacific, said the Department of Agriculture “will have major challenges” in reaching its targets.

Mr. Dy, also vice-chair of the Management Association of the Philippines’ AgriBusiness and Countryside Development Committee, said in an e-mail on Monday that he expects agriculture output to have grown 4% in the third quarter and forecasts 2.5% for the fourth.

According to the PSA’s latest third quarter grains forecast released last month, corn may rise to 2.634 million metric tons (MT), 0.2% higher than the earlier forecast of 2.63 million MT and 1.1% lower than the previous year’s level of 2.662 million MT.

Palay, or unmilled rice, may hit 3.36 million MT in the three months to September, the PSA said. Although this is a downgrade from the earlier estimate of 3.39 million MT released in August, the new estimate is still 13.3% higher than the 2.97 million MT output of a year earlier.

At end-2017, palay output is expected to hit a record 9.223 million metric tons, according to the August estimates of the PSA which has not released revised projections for full-year output. The forecast exceeds year-earlier output by 9.06%.

Higher palay production could narrow the gap between domestic supply and demand, according to Mr. Piñol.

Citing reports from the International Rice Research Institute, Mr. Piñol said the country’s estimated shortfall in domestic rice supply is between 500,000 MT and 800,000 MT.

“I’m expecting that it will be lower than 500,000 metric tons,” he said. — Janina C. Lim