BMI View: We forecast Philippines domestic consumption to improve in 2011 as the country recovers from 2010's weather issues and food price inflation remains low by historical standards. However, government programmes to increase self-sufficiency in items like rice and grains should see the country's involvement in global imports (aside from expected imports of all livestock products) remain relatively subdued. Over the long term, we expect production to increase across the livestock sector. However, infrastructure concerns and low yields will impact the country's ability to increase self-sufficiency. This is mainly due to excessive fragmentation of farms, for example in the dairy sector, which is mainly composed of fragmented smallholder farmers and co-operative smallholders.
Key Trends
?? Corn production growth to 2014/15: 34.8% to 8.4mn tonnes. This is due to improving domestic demand and government support programmes. Production will also be aided by higher tariffs on all US-based corn imports, the origin of most Philippine corn imports.
?? Poultry consumption growth to 2014/15: 26.6% to 1.1mn tonnes. This will be driven by population growth and rising incomes allowing consumers to spend more on high-sugar products, such as soft drinks and confectionery.
?? Poultry production growth to 2014/15: 13% to 847,000 tonnes. Consumption will be aided by the spread of fast food outlets (which carry a high volume of chicken products) and the increasing popularity of processed meats sold through modern retail outlets as opposed to wet markets where the majority of chicken is currently sold.
?? 2011 Real GDP Growth: 5.0% (down from 7.6% in 2010; predicted to average 5.1% from 2010 until 2015).
?? Food And Beverage Price Inflation: 4.1% year-on-year in July 2011 (up from 3.2% y-o-y in July 2010).
Industry Developments
Pacita Juan, co-chair of the Philippine Coffee Board (PCB), said that the PCB is seeking a budget of PHP80mn from the National Agribusiness Corporation to construct 32 coffee mills around the country to improve post-harvest processing. The aim is to augment the value of coffee being produced in the country and encourage higher production from farmers. The mills will have pulping machines and warehouses to improve the quality of coffee produced. Dry mills will enable farmers to process their own coffee. This will allow farmers to sell their coffee as green coffee beans rather than the cheaper dried coffee cherries.
Meanwhile, in areas of the country with plenty of water, wet mills will be built to allow farmers to wetprocess their coffee, improving the quality and price.
Multinational biotechnology company, Syngenta invested US$8mn to build a corn seeds processing plant in Philippines in February. This is because the country has strong production growth potential as well as increasing domestic demand. The plant will have capacity to process 2,000 tonnes of corn, 27.8% of the country's total expected production for 2010/11. Also, it is using high-tech, computerised equipment for drying, shelling and conditioning, which could improve quality, energy efficiency and cost effectiveness for the country's corn production. We believe such investments in technology could significantly improve the country's production capacity and therefore help it become self-sufficient in the long term.
The head of the National Hog and Poultry Raisers Association stated the government should re-allocate the money spent on importing goods to help mitigate rising input costs for domestic farmers. It appears the government listened. By February 8 2011, the Department of Agriculture (DA) decided to dedicate more subsidies to domestic hog farmers in order to ensure greater food security amid price increases of imported meat. The DA stated that it would help big commercial hog farmers through their local associations to represent themselves in front of congress now that it is drafting legislation to control livestock smuggling into the country.

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Executive Summary 5
SWOT Analysis 7
Philippines Agricultural SWOT 7
Philippines Political SWOT 8
Philippines Economic SWOT 9
Philippines Business Environment SWOT 9
Supply Demand Analysis 10
Philippines Coffee Outlook 10
Table: Philippines Coffee Production & Consumption, 2010-2015 10
Table: Philippines Coffee Production & Consumption, 2006-2011 12
Philippines Dairy Outlook 14
Table: Philippines Milk Production & Consumption,2010-2015 15
Table: Philippines Butter Production, Consumption & Trade, 2010-2015 15
Table: Philippines Cheese Production, Consumption & Trade, 2010-2015 15
Table: Philippines Whole Milk Powder Consumption & Trade, 2010-2015 15
Table: Philippines Milk Production & Consumption, 2006-2011 18
Table: Philippines Butter Production, Consumption & Trade, 2006-2011 18
Table: Philippines Cheese Production, Consumption & Trade, 2006-2011 18
Table: Philippines Whole Milk Powder Consumption & Trade, 2006-2011 18
Philippines Livestock Outlook 20
Table :Philippines Poultry Production, Consumption & Trade, 2010-2015 21
Table :Philippines Pork Production, Consumption & Trade, 2010-2015 21
Table :Philippines Beef & Veal Production, Consumption & Trade, 2010-2015 21
Table :Philippines Poultry Production, Consumption & Trade, 2006-2011 23
Table :Philippines Pork Production, Consumption & Trade, 2006-2011 23
Table :Philippines Beef & Veal Production, Consumption & Trade, 2006-2011 23
Philippines Rice Outlook 25
Table: Philippines Rice Production, Consumption & Trade, 2010-2015 26
Table: Philippines Rice Production, Consumption & Trade, 2006-2011 28
Philippines Grains Outlook 29
Table: Philippines Wheat Consumption, 2010-2015 30
Table: Philippines Corn Production, Consumption & Trade, 2010-2015 30
Table: Philippines Wheat Consumption, 2006-2011 32
Table: Philippines Corn Production, Consumption & Trade, 2006-2011 32
Philippines Sugar Outlook 33
Table: Philippines Sugar Production, Consumption & Trade, 2010-2015 33
Table: Philippines Sugar Production, Consumption & Trade, 2006-2011 35
Commodity Price Analysis 37
Monthly Grains Update 37
Corn 37
Rice 38
Soybean 39
Wheat 40
Monthly Softs Update 41
Cocoa 41
Coffee 42
Palm Oil 43
Sugar 44
Macroeconomic Outlook 45
Downward Growth Revision On Weakening Outlook 45
Table: Philippines - Economic Activity, 2008-2015 49
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