EMIS Insights - Philippines Agriculture Sector Report 2018 - 2019 PDF

THE PHILIPPINES
AGRICULTURE
SECTOR 2018/2019
An EMIS Insights Industry Report
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ABBREVIATIONS
AFF Agriculture, Forestry and Fishing
AHFF Agriculture, Hunting, Forestry and Fishing
ARB Agrarian-Reform Beneficiary
BSP Bangko Sentral ng Pilipinas
CARP Comprehensive Agrarian Reform Program
CARPER Comprehensive Agrarian Reform Program Extension with Reforms
DA Department of Agriculture
FAO The Food and Agriculture Organization of the United Nations
GARB Genuine Agrarian Reform Bill
GVA Gross Value Added
HFCS High Fructose Corn Syrup
MAV Minimum Access Volume
NCR National Capital Region
NEDA National Economic and Development Authority
NFA The Philippines National Food Authority
PCA Philippine Coconut Authority
PCIC Philippine Crop Insurance Commission
PSA The Philippine Statistics Authority
QR Quantitative Restrictions
SRA Sugar Regulatory Administration
UCAP United Coconut Associations of the Philippines, Inc
USDA The United States Department of Agriculture

CONTENTS 01 EXECUTIVE SUMMARY
Sector in Numbers
Sector Overview
Sector Snapshot
Sector Outlook
p.5
Driving Forces
Restraining Forces
02 SECTOR IN FOCUS p.13

Focus Point
Main Economic Indicators
Main Sector Indicators
Agricultural Production
Agricultural Prices
Global Positioning
External Trade
Imports
Exports
FDI
Employment
Wages
03 COMPETITIVE LANDSCAPE p.32

Timeline Philippines Agriculture
Highlights
Top Listed Companies
M&A Deals
M&A Activity, 2014-2017
04 COMPANIES IN FOCUS p.38

Universal Robina Corporation
San Miguel Pure Foods Co Inc
RFM Corporation
Victorias Milling Co
Vitarich Corporation

CONTENTS 05 REGULATORY ENVIRONMENT
Government Policy
Comprehensive Agrarian Reform Programme
p.49
p.57
06 CROP PRODUCTION
Cereal Production Highlights
Coconut Production Highlights
Sugar Production Highlights
Main Events
Crop Production Volume
Crop Production Value
07 FISHERIES p.64
Highlights
Fish Production
Fisheries by Product
08 POULTRY AND LIVESTOCK p.68

Highlights
Main Events
Production Volume
Production Value

PHILIPPINES AGRICULTURE SECTOR 2018/2019
An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2018 EMIS, all rights reserved. 5
01 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers*
25.4% 9.6% 8th

Largest Rice
Employed in Share Growing Area in
Agriculture in GDP the World
91.5mn 4.3mn
3rd tonnes tonnes
Largest
Rice Importer Crops Fishery
Production Production
41.7% 3rd
105.8mn Agricultural Most Disaster-
Population Land, % of total, Prone Country in
2015 the World
*Data is for 2017.
Source: World Risk Report 2017, PSA, USDA, World Bank
PHILIPPINES AGRICULTURE SECTOR 2018/2019 6

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Sector Overview
The Philippines is an agrarian country, with half of its population engaged in farming. In 2017, the
agriculture and forestry sector alone contributed 8.4% to national GDP – a share which rises to 9.6% if
fisheries are included – according to data from the Philippine Statistics Authority (PSA). Agriculture in
the Philippines has been struggling with fragmentation and low levels of technology adoption and
specialisation. However, the sector enjoys good fundamentals given the country’s farming traditions,
its large farming population, and its good global position as an exporter of coconut, sugar, and fish.
The Philippines’ staple food is rice, which it produces but also imports in significant quantities. The
country does not produce wheat or other small grains and also imports most of the dairy products it
consumes.
Entry Modes
Agriculture is not on the government’s list of activities closed to FDI, but the sector accounts for only
a very small portion of FDI inflows into the country. Various factors explain the lack of interest,
including the country’s heavy reliance on imports for staples such as rice, meat and dairy products; its
uncompleted land reform; the fragmented state of land holdings; and the frequency of natural
disasters in the Philippines. The country’s market can be approached in several ways: by working with
an agent/distributor, partnering with a franchisee, establishing a JV, setting up a local office or selling
to the government. Taxation levels are high compared with those of other ASEAN countries. And,
according to the World Bank, setting up a corporate entity in the Philippines is a long and complex
process.
Segment Opportunities
The agriculture sector of the Philippines mainly produces raw materials that are either consumed
domestically or exported for processing elsewhere. This, coupled with the country’s high climate and
natural disaster risk, has resulted in a substantial incidence of poverty among Filipino farmers. The
government has stepped up efforts to improve the situation by helping farmers diversify into making
higher value-added products from coconuts and sugar – such as coconut water, speciality coconut-
based products, speciality sugars, and fuels derived from sugar. The rapidly expanding hog- and
poultry-processing industries have given rise to opportunities in animal farming as well. Rising
disposable incomes and consumer awareness of food safety are creating more opportunities for
producers of health food products in the country.
Government Policy
The Philippine government has announced plans to lower taxes and combat farmer poverty by
increasing farmers’ ability to produce higher value-added agricultural products. The government
continues to adopt measures to fight smuggling of agricultural goods. The authorities have yet to
complete the land reform allowed by the constitution and lift quota restrictions on some major
agricultural products, which will boost competition and encourage farmers to improve efficiency.
Source: UK Department for International Trade, TMF Group, SGV

Sector Snapshot
The Philippines Agriculture Sector 2017
PRODUCTION
101mn tonnes PHP 1,715bn
Production Production
Volume Value
EXPORTS IMPORTS
USD 4,321* USD 8,273mn*
Export Value Import Value
DOMESTIC MARKET
USD 5,208mn
Export Value, 2016
PHP 1,524bn
USD 12,519mn GVA in Agriculture, Hunting,
Import Value, 2016 Forestry and Fishing
Key Player Revenues,

9.1% 2016
y/y growth
1. Universal Robina
Corporation:
PHP 111.63bn
2. San Miguel Pure Foods
Company: PHP 111.58
3. RFM Corporation:
Subsectors Production Subsectors Production PHP 12.7
Volume, thou tonnes Value, PHP mn 4. Victorias Milling:
PHP 5.3bn
Crops: 91,520 Crops: 965,126 5. Vitarich Corporation:
PHP 5.1bn
Fishery: 4,311 Fishery: 243,526
Livestock: 2,776 Livestock: 291,574
Poultry: 2,315 Poultry: 214,709
* End-October 2017 Data
Source: Philippine Statistics Authority, Company Data

Sector Snapshot
The Philippines agriculture, hunting, forestry and fishing (AHFF) sector saw a significant recovery in
2017, posting a 9.1% y/y growth in its gross value added (GVA), compared to just 2.2% y/y in 2016. The
country’s agricultural sector alone grew by 9.5% y/y in 2017, compared to 3.4% y/y in 2016. The positive
results were achieved thanks to favourable weather conditions and increased use of high-yielding
varieties, as well as the rising prices of most of the agricultural products. The sector mainly produces
crops, which in 2017 had a share of 90.7% in the Philippines’ total agricultural production in volume
terms, according to PSA data. In 2017, the country produced 91.5mn tonnes of crops, 2.8mn tonnes of
livestock and 2.3mn tonnes of poultry, up by 12.1%, 1.1%, and 4.6% respectively compared to the
previous year. The fishery subsector marked a 1.0% y/y decline in production, which totaled 4.3mn
tonnes in 2017. The significant increase in the output of crops was the main reason behind the sector’s
total production volume growth of 10.1% y/y, compared to a 3% y/y decline in 2016. As a result of the
increased output and the higher average farmgate prices of most agricultural products in 2017, the
value of the sector’s output soared by 9.1% y/y to almost PHP 1,715bn in current prices. The crop
subsector contributed 56.3% to total agricultural production in value terms. The production values of
the crop, livestock, fishery, and poultry subsectors were PHP 965.1bn, PHP 291.6bn, PHP 243.5bn and
PHP 214.7bn, respectively, which represented y/y increases of 9.5%, 12.8%, 6.4% and 5.9%.
According to the latest PSA data, the total value of the Philippines’ foreign trade in agricultural
products expanded by 6.7% y/y to USD 12.6bn in the first nine months of 2017. As of end-October 2017,
year-to-date agricultural exports had jumped 19.4% y/y to USD 4.3bn, while imports of agricultural
products had increased just 1.1% y/y to USD 8.3bn. As a result, the trade balance in the sector
registered a deficit of somewhat less than USD 4.0bn – as against USD 4.6bn in the same period of
2016. In the period from January to October 2017, the share of the agricultural exports in the country’s
total exports was 9.1%, while agricultural imports made up 11.9% of the total imports of the
Philippines. The two largest listed companies in the sector – Universal Robina Corporation (URC) and
San Miguel Pure Foods Company (SMFC) -- both performed strongly in the first nine months of 2017 as
a result of the rising sales volumes and selling prices of agricultural products overall, combined with
lower costs of major raw materials. While URC is more oriented to the branded value-added foods
segment, which accounted for 83% of its total revenue in 2016, SMPC is primarily engaged in the agro-
industrial segment, which made up 67% of its total sales in that year. The smaller listed companies in
the sector also showed stable results in 2016, as well as significant y/y improvements in the first three
quarters of 2017. Most companies are expected to report double-digit growth in revenues for 2017 as a
whole, compared to the previous year.
Source: Philippine Statistics Authority, USDA, PwC, Reuters

Sector Outlook
Growth of GVA in AFF Sector, constant

Population Forecast, thou persons 2000 Prices, PHP mn
160,000 160,000 880,000 5%
140,000 142,095 140,000 860,000

137,532
125,338 840,000 4%
120,000 120,000
109,948 3.5%
68,198 70,460 820,000 3.3%
100,000 100,000 3.0% 3.0% 3%
62,135
800,000 2.8%
80,000 54,487 80,000
859,436
780,000
836,027
60,000 60,000 2%
811,677
760,000
40,000 40,000 788,036
762,861
69,334 71,635 740,000 1%

55,461 63,203
20,000 20,000 720,000
0 0 700,000 0%
2020f 2030f 2040f 2045f 2018f 2019f 2020f 2021f 2022f
Male Female Total GVA in the AFF Sector % y/y change
Comments
In 2017, the World Bank ranked the Philippines as the 10th fastest-growing economy in the world, and
projected that the country would continue to grow by 6.7% in each of 2018 and 2019. The Philippines is
home to the fastest-growing population in Asia, which is expected to exceed 142 million by 2045, PSA
figures showed. The Philippine agricultural sector will continue to benefit from the country’s
expanding population and urbanisation, alongside increasing government support. However, farming
backwardness and infrastructure problems, especially transport costs, will continue to restrict the
sector's growth in the coming years. The Philippine Development Plan 2017 to 2022 for Agriculture,
Forestry and Fishing targets an increase in sector GVA growth to 2.5%-3.5% a year (in constant 2000
prices), compared to just 0.1% in 2015. The y/y growth in the labour productivity of farmers and
fisherfolk is targeted to increase from 4.5% in 2015 to 5.6% in 2022. According to BMI Research, the
Philippines’ agribusiness market value (in current price terms) is expected to grow by an average of
5.1% a year between 2017 and 2021. In the coming years, domestic rice production is expected to
improve in efficiency and competiveness, in line with the government’s target of achieving self-
sufficiency in rice.
Source: Philippine Statistics Authority, USDA, BMI, NEDA

Driving Forces
More than half of the Philippine population is rural, and more than a quarter of total employment is
in agriculture. The country boasts strong global positions in coconut and rice farming. The favourable
climate and geographic profile of the Philippines makes it well-positioned for commercial fishing and
growing fresh tropical fruit and vegetables. Additional favourable factors include a rising population,
an expanding food processing industry, and a government focused on reforms. The government aims
to reduce poverty among Filipino farmers via legislation, infrastructure upgrades, and sector-specific
measures intended to increase their capacity and business flexibility.
External
The administration of president Rodrigo Duterte, who took office in June 2016, has pledged to take
steps to improve the domestic infrastructure so as to make the country more attractive for
investment. On the agriculture front, this has resulted in legislation against agricultural smuggling
and efforts to empower coconut farmers to produce higher value-added products to help them
overcome poverty and make their activities more sustainable. As the country is moving towards
higher rice imports and less reliance on the WTO-approved rice import system of quantitative
restrictions, rice farmers will have opportunities to benefit from increased competition to help them
increase their productivity and efficiency. Agriculture and food processing are driven by robust
household expenditure, a growing middle class and an expanding population, alongside an ongoing
urbanisation process that has brought about a shift towards more westernised diet and consumption
patterns. The country is abundant in fish, and the climate is suitable for growing a wide variety of
fresh fruit and vegetables, as well as rice, the national staple food.
Internal
In 2017 the Philippines’ agricultural sector employed 10.4 million people, making it the second-largest
employer in the country after the services sector. Farming is mostly a family-run activity passed on
from one generation to the next. The existence of knowledge handed down in this way is likely to help
the country raise its agricultural profile and diversify into producing higher value-added agricultural
products. This specialisation will also be helped out by the government’s efforts to alleviate farmer
poverty and increase the sector’s sustainability by upgrading infrastructure, providing education,
completing a land reform process that has been underway for several decades, and improving
farmers’ access to credit. The Philippines has traditions of exporting coconut and many varieties of
fruit, as well as fish products, which supports sector growth. The increased health consciousness of
the strengthening middle class, especially in Metro Manila (the National Capital Region), is expected
to result in higher demand not only for locally unavailable imported products, but also for locally-
grown niche products, which will play well together with the sector’s upcoming technological
upgrade.
Source:

Restraining Forces
The Philippines agriculture sector is very fragmented in terms of ownership, suffers from considerable
technological backwardness, and its sustainability is heavily undermined by the Philippines’
significant exposure to drought, floods, typhoons, and earthquakes. Farmers are among the poorest
employed Filipinos. The country is a significant global coconut producer, but it produces mainly dry
coconut meat (copra), leaving the more niche and higher value-added products to other countries. The
government has been adopting measures to increase the level of specialisation of the agriculture
sector of the country. The country is dependent on imports to meet its demand for rice and for
milling- and feed-grade wheat, as well as meat and milk for the food processing industry. Agricultural
smuggling, overfishing and destructive fishing practices, are other factors that impede agriculture
growth in the country.
External
The agriculture sector in the Philippines is characterised by technological backwardness which,
coupled with farm fragmentation, is preventing it from achieving its full potential against the
backdrop of growing demand from a rising population and an expanding food processing industry.
Rural dwellers account for about half of the total Philippine population and are predominantly
farmers. The industry’s low profitability and high risk profile have been making young people migrate
to the cities, leaving farming to the elderly cohort. The ageing of Filipino farmers is a problem that
has even been reported to have caused food crises in some areas of the country. Domestic agriculture
largely depends on the weather, and the Philippines has been consistently ranked among the world’s
top five countries in terms of natural disaster and climate risk, worsened by insufficient capacity to
mitigate this exposure. Although the government sponsors half of the insurance premium, insurance
is still unaffordable for most farmers. Infrastructure in the country, such as roads, warehouses and
cold storage, needs urgent upgrades to help increase industry profitability and reduce food wastage.
Internal
Agricultural GVA declined its growth pace between 2011 and 2015, highlighting the urgent need for
measures to address technological backwardness and the high incidence of poverty among farmers,
who are among the lowest paid employees in the country. Some subsectors fail to meet the volume
and quality requirements of the food processing industry, which increases reliance on imports of both
primary and intermediate agricultural products. The Philippines does not produce wheat and relies on
imports to meet a large portion of its dairy demand. Lifestyle and diet changes have resulted in
growing interest in imported food too. The agricultural supply chain is densely populated with
middlemen, who snatch profits from farmers and contribute to food price inflation. Unlike large
industry associations, the country’s numerous and small-scale farmers have very weak bargaining
power and limited capacity to move away from producing raw materials and on to producing higher
value-added products. Farm land in the Philippines is often converted to more profitable uses such as
real estate or recreation.
Source: The Philippine Star

02
SECTOR
IN FOCUS

02 SECTOR IN FOCUS CONTENTS
FOCUS POINT
Major Agricultural Products Output Share by Region, 2016
LUZON
§ Rice: 60.3%
§ Corn: 43.2%
§ Coconut: 25.9%
§ Sugarcane: 14.6% VISAYAS
§ Banana: 8.5%
§ Pineapple: 10.3% § Rice: 14.6%
§ Mango: 49.5% § Corn: 4.7%
§ Hog: 54.4% § Coconut: 11.9%
§ Chicken: 66.8% § Sugarcane: 69.7%
§ Cattle: 45.9% § Banana: 6.2%
§ Aquaculture: 42.5% § Pineapple: 0.8%
§ Marine Fisheries: 32.5% § Mango: 11.2%
§ Inland Fisheries: 63.0% § Hog: 19.7%
§ Chicken: 13.9%
§ Cattle: 19.2%
§ Aquaculture: 14.4%
§ Marine Fisheries: 19.9%
§ Inland Fisheries: 4.8%
MINDANAO
§ Rice: 22.2%
§ Corn: 49.6%
§ Coconut: 60.3%
§ Sugarcane: 15.7%
§ Banana: 83.6%
§ Pineapple: 88.6%
§ Mango: 36.2%
§ Hog: 25.9%
§ Chicken: 19,3%
§ Cattle: 35.0%
§ Aquaculture: 44.2%
§ Marine Fisheries: 47.6%
§ Inland Fisheries: 32.2%
Source: Philippines Statistics Authority

Main Economic Indicators
2013 2014 2015 2016 2017
GDP, current prices, PHP mn 11,538,410 12,634,187 13,322,041 14,480,720 15,797,503
Real GDP, % y/y change 7.1% 6.1% 6.1% 6.9% 6.7%
GDP Agriculture & Forestry, PHP mn 1,100,590 1,236,073 1,173,088 1,212,818 1,327,710
GDP Fishing, PHP mn 197,766 195,504 193,778 184,796 196,474
Total GDP of Sector, PHP mn 1,298,356 1,431,578 1,366,866 1,397,615 1,524,184
GVA Agriculture, Hunting, Forestry & Fishing, y/y growth, current prices, % 3.9% 10.2% -4.5% 2.2% 9.1%
GVA Agriculture, Hunting and Forestry, y/y growth, current prices, % 4.1% 12.3% -5.1% 3.4% 9.5%
GVA Agriculture, y/y growth, current prices, % 3.9% 12.3% -5.0% 3.4% 9.5%
GVA Agriculture, Hunting, Forestry & Fishing, y/y growth, constant 2000 prices,
1.1% 1.7% 0.1% -1.3% 3.9%
%
GVA Agriculture, Hunting and Forestry, y/y growth, constant 2000 prices, % 1.2% 2.1% 0.6% -0.6% 5.0%
GVA Agriculture, y/y growth, constant 2000 prices, % 1.0% 2.1% 0.8% -0.6% 5.0%
CPI Inflation, annual average, % 2.9% 4.2% 1.4% 1.8% 3.2%
Inflation Target, upper limit, % 5.0% 5.0% 4.0% 4.0% 4.0%
Policy Rate, year-end, % 3.5% 3.7% 4.0% 3.5% 3.5%
Exchange Rate USD/PHP, year-end 44 45 47 50 50
Exchange Rate USD/PHP, average 42 44 46 47 50
Trade Balance, USD mn -5,713 -3,296 -12,240 -26,702 -21,848*
Agriculture Exports, USD mn 6,400 6,543 5,132 5,208 4,321*
Agriculture Exports as Share of Total Exports, % 11.3% 10.5% 8.7% 9.1% 9.1%*
Agriculture Imports, USD mn 7,931 9,631 10,966 12,519 8,273*
Agriculture Imports as Share of Total Exports, % 12.7% 14.7% 15.4% 14.9% 11.9%*
FDI in Agriculture, Forestry and Fishing, PHP mn 2,679 537 8,508 5,221 n/a
Share of FDI in Agriculture, Forestry and Fishing in Total FDI, % 1.0% 0.3% 3.5% 2.4% n/a
*End-October 2017 Data

Source: PSA, BSP

Main Sector Indicators
2013 2014 2015 2016 2017
Agricultural Production, thou tonnes 85,740 87,008 84,325 81,644 91,520
Cereals Production, thou tonnes 25,817 26,738 25,669 24,846 27,191
Major Crops Production, thou tonnes 52,058 52,208 50,430 48,734 56,060
Other Crops Production, thou tonnes 7,865 8,062 8,226 8,064 8,269
Agricultural Production, PHP mn 814,731 927,314 854,615 881,421 965,126
Cereals Production, PHP mn 404,911 478,848 403,569 389,925 443,860
Major Crops Production, PHP mn 288,082 329,081 329,584 361,331 382,816
Other Crops Production, PHP mn 121,738 119,385 121,462 130,164 138,450
Sugarcane Production, thou tonnes 24,585 25,030 22,926 22,371 29,287
Palay Production, thou tonnes 18,439 18,968 18,150 17,627 19,276
Coconut Production, thou tonnes 15,354 14,696 14,735 13,837 14,016
Banana Production, thou tonnes 8,646 8,885 9,084 8,903 9,166
Corn Production, thou tonnes 7,377 7,771 7,519 7,219 7,915
Cassava Production, thou tonnes 2,362 2,540 2,714 2,755 2,807
Pineapple Production, thou tonnes 2,459 2,507 2,583 2,613 2,672
Mango Production, thou tonnes 816 885 903 814 737
Sugarcane Production, PHP mn 40,073 41,299 43,102 44,517 45,852
Palay Production, PHP mn 314,761 378,219 311,088 304,599 349,182
Coconut Production, PHP mn 82,299 104,932 96,073 108,478 120,903
Banana Production, PHP mn 117,159 130,696 136,350 147,705 147,432
Corn Production, PHP mn 90,151 100,629 92,481 85,326 94,678
Cassava Production, PHP mn 18,066 16,664 14,712 17,385 18,341
Pineapple Production, PHP mn 17,480 19,731 20,946 23,565 25,550
Mango Production, PHP mn 19,201 19,356 20,384 23,209 28,841
Fish Production, thou tonnes 4,705 4,689 4,649 4,354 4,311
Fish Production, PHP mn 244,552 241,944 239,702 228,934 243,526
Source: Philippine Statistics Authority

Agricultural Production
Comments Agricultural Production Volume, 2017,

thou tonnes
The Philippines agricultural sector is dominated
by crop farming. In volume terms, leading crop 120,000 100,921 101,000
96,293
products include sugarcane, cereals, and coconut. 93,783 90,957 2,315 91,000
2,064
Cereals, mostly rice and maize (corn), had a share 100,000 2,182 2,213 2,776 81,000
2,533 2,627
of 29.7% in total crop output in 2017. In the same 2,745 4,311 71,000
80,000 4,689 4,649
year, the Philippines produced 19.3mn tonnes of 4,356
61,000
rice and 7.9mn tonnes of maize, up by 9.4% y/y 60,000 51,000
and 9.6% y/y, respectively. The Philippines’ cereal 41,000
87,008 91,520
yield per ha has been continuously increasing 40,000 84,325 81,644
31,000
over the last few years, reaching 3,600 kg/ha in 21,000
20,000
2014, according to the World Bank. The output of 11,000
sugarcane and coconut totaled 29.3mn tonnes 0 1,000
and 14.0mn tonnes in 2017, respectively. In 2017 2014 2015 2016 2017
sugarcane output saw a significant increase of Crops Fishery Livestock Poultry Total
30.9% y/y, while coconut registered just 1.3% y/y
growth. Among fruits, the top three varieties are
banana, pineapple, and mango, with outputs at Agricultural Production Value, 2017,
9.2mn tonnes, 2.7mn tonnes and 0.7mn tonnes, PHP mn
respectively, in 2017. Among the top three, only 2,000,000 1,714,934
mangoes reported a drop in output, due to rainy 1,800,000 1,608,258 1,620,000
1,541,554 1,571,645
weather in 2017. 1,600,000 214,709 1,420,000
191,532 202,804
195,245
As regards foods consisting of animal flesh, fish 1,400,000
241,944
243,526 1,220,000
239,702 228,934
is the dominant variety, with output totaling 1,200,000
291,574
247,757 1,020,000
4.3mn tonnes in 2017, followed by hog and 1,000,000 251,991 258,487
chicken meat with 2.3mn tonnes and 1.7mn 800,000 820,000

tonnes, respectively. Fish was the only subsector 600,000
620,000
927,025 965,126
which suffered a reduction of output in 2017: this 400,000 854,615 881,421
420,000
was due to frequent rain and wind, as well as 200,000
high inventories of some canned fish varieties. 0 220,000
2014 2015 2016 2017
A solid increase in farmgate prices and higher
Crops Livestock Fishery Poultry Total
output were the major factors behind the sector’s
production value growth in 2017.
Source: USDA, World Bank, Philippine Statistics Authority

Agricultural Production (cont’d)
Agricultural Production Volume, thou tonnes
91,520
85,740 87,008 84,325 81,644
56,060
52,208
52,058
50,430
48,734
27,191
26,738
25,817
25,669
24,846
8,269
8,226
8,062
8,064
7,865
2013 2014 2015 2016 2017
Cereals Major Crops Other Crops Total
Agricultural Production Value, PHP mn
965,126
927,025
854,615 881,421
814,731
478,848
443,860
404,911
403,569
389,925
382,816
361,331
329,584
329,081
288,082
138,450
130,164
121,738
121,462
119,096
2013 2014 2015 2016 2017
Cereals Major Crops Other Crops Total
Source: PSA

Agricultural Prices
Comments Major Crops Average Farmgate Prices,

PHP/kg
In 2017, farm-gate prices of agricultural products
grew by an average of 7.7% y/y. The average price 100
increases registered by crops, livestock, poultry,
90
and fisheries were 13.6%, 7.6%, 4.1%, and 9.3%,
respectively. Rice was priced 4.5% higher y/y in 80
2017, as a result of increased buying prices from
70
traders which in turn were due to low
government rice inventories. The prices of corn, 60
banana, and sugarcane dropped by 6.3% y/y, 3%
50
y/y, and 23.8% y/y, respectively, thanks to higher
production volumes. Coconut saw a significant 40
average price gain of 16.8% y/y, due to high
30
demand. Lower output in 2017 pushed up the
prices of mango, coffee, tobacco, and abaca. The 20
prices of all components of the livestock 10

subsector showed an increase y/y, due to stable
demand from the hotel and restaurant industries. 0
2014 2015 2016 2017
In the poultry and fishery subsectors, all products
saw annual price increases except for chicken Rice Corn Coconut Sugarcane
Banana Pineapple Coffee Mango
and skipjack.
Tobacco Abaca
Livestock and Poultry Average Prices, Fishery Average Farm-Gate Prices,

PHP/kg PHP/kg
110
81
90 61
41
70 21
2014 2015 2016 2017
1
Carabao Cattle Hog 2014 2015 2016 2017
Chicken Duck Chicken eggs
Duck eggs Milkfish Tilapia Seaweed Others
Source: PSA

Global Positioning
Countries by Milled Rice Production, 2017, mn tonnes
Bangladesh
India
China
Thailand
Japan
Burma
Indonesia
Brazil
Philippines
Vietnam
7.6
7.8
11.2 13.0 20.4 28.5 33.0 37.0 107.5 146.0
Largest Rice Importers in the World, 2017, thou tonnes

5,250
2,300
1,900
1,700 1,500 1,450 1,300
1,200 1,100
Cote d’Ivoire
Saudi Arabia
1,050
Bangladesh
Philippines
Senegal
Nigeria
China
Iraq
Iran
EU
Source: USDA

Global Positioning (cont’d)
Top Coconut Producers in the World, 2016
Coconut Produced,
Rank Country
thou tonnes
1 Indonesia 17,722
2 Philippines 13,825
3 India 11,128
4 Brazil 2,649
5 Sri Lanka 2,520
6 Vietnam 1,470
7 Papua New Guinea 1,191
8 Mexico 1,157
9 Thailand 815
10 Tanzania 556
Source: FAO

Top Producers of Fish, Crustaceans and Molluscs, thou tonnes, 2015
1. China
17,591
6. Russia 7. Japan
4,457 3,460
9. Norway
2,294
3. United States
5,039
5. Peru
4,824
4. India 2. Indonesia
4,843 6,485
8. Vietnam 10. Philippines

2,757 2,152
Source: FAO

Top Producers of Aquatic Plants, thou tonnes, 2015
1. China
13,925
5. North Korea
489
4. South Korea
1,197
6. Japan
399
3. Philippines
8. Zanzibar
1,566
172
10. Solomon
Islands
7. Malaysia
261 12
9. Madagascar
15
2. Indonesia
11,269
Source: FAO

External Trade
Comments
“Other food” and live animals were in the top ten commodity groups among Philippine imports in
value terms in 2016, but neither made it into the top five (which comprised electronic products,
transport equipment, mineral fuels, lubricants & related materials, industrial machinery & equipment,
and iron & steel. No agriculture-related category was part of the country’s top ten export groups by
value in 2016, whose top five comprised electronic products, “other manufactured goods”, machinery
& transport equipment, woodcraft & furniture, and ignition wiring sets & other wiring sets used in
vehicles, aircraft & ships.
The Philippines has been a net importer of agricultural products since the mid-1990s. This trade gap
has widened in recent years, reaching USD 7.3bn in 2016 – compared to USD 5.8bn in 2015, and USD
3.1bn in 2014 – but seems to have narrowed again in 2017, because exports grew sharply, while imports
showed much weaker growth due to higher domestic agricultural production. Though a significant rice
producer, the Philippines is among world’s top rice importers. The country’s growing and consolidating
hog farming sector – the most significant livestock category – is also heavily dependent on soymeal
and corn imports for use in animal feeds. The Philippines does not produce wheat and other grains,
and also imports most of the dairy products it consumes. Only those fish species that are not locally
available are imported, but domestic hog and chicken meat processors rely heavily on meat imports,
as the local livestock sector is often unable to meet the food processing industry’s volume and quality
requirements. The country’s major AFF exports are coconuts, fruit & vegetables, and fishery products.
The country is the world’s largest coconut oil exporter.
External Trade of Agricultural Products, USD mn

10,966
12,519
9,631
7,931
8,273
8,181
6,543
6,400
5,208
5,132
4,321
3,619
-1,531
-3,088 -3,952
-4,562
-5,834
-7,311
2013 2014 2015 Jan-Oct 2016 2016 Jan-Oct 2017
Export Value Import Value Trade Balance
Source: Philippine Statistics Authority, USDA, The Philippine Star

Imports
Wheat and Meslin

The Philippines’ major agricultural import category is that of “wheat & meslin” (meslin being a rye-
wheat mixed grain), since there is no commercial production of wheat or small grains such as barley,
oats, and rye in the country. This makes the Philippines a major milling- and feed-grade wheat
importer, and the US is its major supplier. Milling wheat imports from the US are exempt from Most
Favored Nation (MFN) tariffs, while a 7% duty is levied on feed-wheat imports, according to a USDA
report from March 2017. In 2016 the total value of wheat & meslin imported by the Philippines was
USD 1.2bn, down by 6.8% y/y affected by the weak peso. According to the PSA, the country imported
5.1mn tonnes of unprocessed wheat, up by 11.6% y/y, while in the first nine months of 2017 its imports
rose by 2.0% to 4.5mn tonnes. Imports of wheat are expected to continue to rise in the coming years,
bolstered by growing disposable incomes and food demand, and also as a function of the country’s
expanding population.
Meat
The Philippines’ domestic meat output is unable to meet the requirements of food processors, in
terms both of quality and volume, which makes the country dependent on imports. These imports are
mainly of chicken and bovine meat, and in volume terms came to 235,770 tonnes and 113,050 tonnes,
respectively, in 2016 – y/y increases of 23.7% and 9.3%. The growing purchasing power of consumers
and strong demand from hotels and restaurants are the main drivers of meat imports. According to
the Organisation for Economic Cooperation and Development (OECD), Filipinos’ per capita
consumption of pork is about 14.2 kg – 2 kg more than the world average – while that of chicken is 11.6
kg, compared to a world average of 13.7 kg per capita. India and the US are the Philippines’ major
suppliers of bovine meat and chicken meat, respectively.
Rice
In 2017 the Philippines was the fourth-largest importer of rice in the world. According to the USDA, the
country imported 1.7mn tonnes of rice in 2017, mainly from neighbouring Vietnam and Thailand.
Currently the country is importing rice under a quantitative restriction (QR) granted by the WTO in
1995. In April 2017, the Philippines’ president Duterte issued an executive order for the QR system to
be extended for another three years after its expiration in June 30, 2017. The QR caps annual rice
imports at the minimum access volume (MAV) of 805,200 tonnes, with tariffs at 35% of import value.
Imports outside MAV are subject to a higher tariff of 50%. Removal of the rice QR is currently under
discussion by the Philippines government, which is looking to fulfil its commitment to the WTO to lift
trade barriers on rice. The Philippines’ rice imports are projected to rise in 2018 due to the expected
phase-out of the QR, which might induce some farmers to shift towards corn production in order to
avoid losses.
Source: The Philippine Star, USDA, BusinessMirror, Manila Bulletin

Imports (cont’d)
Agriculture Imports Crops Imports, USD mn

84,108
90,000 25% 1,319

69,592
71,067
1,230
65,398
64,777
80,000
70,000 20% 1,030
60,000 869
14.7% 15.4% 14.9% 15%
50,000
12.6% 11.9%
40,000 616
10%
12,519
30,000
10,966
454
9,631
8,273
8,181
20,000 5% 279
10,000 172
0 0%
2014 2015 Jan-Oct 2016 Jan-Oct
2016 2017
2013 2014 2015 2016
Total Imports, USD mn
Agriculture Imports, USD mn Wheat and Meslin Rice
Share of Agriculture Imports in Total Imports, %
Meat and Dairy Imports, USD mn Other Products Imports, USD mn
751 763 1,054

971
650 641 888
759
336 325 348 483

236 222 298
168 179 246
215
96
2013 2014 2015 2016 2013 2014 2015 2016
Milk and Cream Products Bovine Meat Chicken Meat Coffee, Tea, Cocoa and Spices Soyabean Oil Cake or Meal
Source: Philippine Statistics Authority

Exports
Coconut Exports
The Philippines is the world’s second-largest producer of coconut, after Indonesia, and coconut is the
Philippines’ main export product, accounting for 37.4% of the agricultural sector’s total exports in
value terms in the first ten months of 2017. Coconut exports contracted in 2016, due to production cuts
caused by the dry weather resulting from that year’s El Nino. In 2017, coconut trees began to recover
and coconut exports soared 38.6% y/y to 1.3mn tonnes during the first three quarters of the year. The
Philippines is the world’s largest coconut oil producer and exporter. In 2016 its top export markets for
coconut oil were the Netherlands and the US. In 2016, the country’s exports of coconut oil totaled
755,610 tonnes, with a value of USD 1.2bn. Coconut oil, as well as coconut water and sugar, offer better
margins and are more popular with consumers than traditional dry coconut meat (copra), which is
why the Philippine government encourages production and sales in these categories.
Fruit and Vegetable Exports

Fruits and vegetables are the second-largest category in the total Philippine exports of agricultural
products. In the first nine months of 2017, the Philippines exported USD 1.2bn worth of fruits and
vegetables, accounting for 28.5% of total sector exports. The export value of fruits and vegetables
dropped 3.6% y/y in this period, mainly because export volume declined 1.4% y/y to a little under
2.3mn tonnes. The volume drop was partly due to the Philippines’ failure to meet sanitary and
phytosanitary requirements in key markets. In 2017 the Philippines signed a USD 1bn agreement with
China for exports of agricultural products, mainly fresh fruits. Their exports had been banned in 2012
because fresh mangoes, bananas, pineapples and papaya had not been compliant with China’s SPS
requirements – though also due to political tension. Exports were restored in October 2016 after
president Duterte’s visit to Beijing, during which the two countries signed a USD 100mn farm produce
import agreement.
Sugar Exports
The United States accounts for the greater part of Philippine sugar exports, importing under a tariff-
rate quota system which can be revised according to the state of US sugar stocks. The quota for the
2016/2017 crop year (from September to August) was 136,827 tonnes of sugar at a premium price and a
relatively low tariff. In August 2017 the Philippines Sugar Regulatory Administration (SRA) received an
additional sugar quota allocation of 63,830 tonnes from the US. In the first nine months of 2017, the
Philippines registered a y/y increase of 62.3% in its total sugar export volume, which climbed to
315,523 tonnes. Exports’ value grew by 43% y/y to USD 149.0mn, which can be explained by lower
farmgate sugar prices. Sugar exports are expected to decline in the 2017/2018 crop year, as the SRA
reduced the country’s sugar allocation for export due to an expected decline in domestic production.
Source: The Philippine Star, Financial Times, Philippine Daily Inquirer

Exports (cont’d)
Agriculture Exports Coconut and Sugar Exports, USD mn
1,613 1,616
62,102
58,827
57,406
56,698
70,000 16% 1,437

1,404
47,744
14%
47,518
60,000
12% 1,122
50,000 11.3% 11.5%
10%
40,000 9.1% 9.1% 9.1%
7.6% 8%
30,000
6%
20,000
6,400
4%
6,543
5,208
5,132
4,321
3,619
141 104 105 149

10,000 2% 32
0 0%
2013 2014 2015 Jan-Oct 2016 Jan-Oct 2014 2015 Jan-Oct 2016 Jan-Oct
2016 2017 2016 2017
Total Exports, USD mn
Agriculture Exports, USD mn Coconut Sugar
Share of Agriculture Exports in Total, %
Fruit and Vegetable Exports, USD mn Other Products Exports, USD mn
1,781 583
1,581
478
1,406
1,130 1,276 406 401
1,230 375
730
658 602
576
391 389 331
316 122 101
222 79 66 75 88 86
62
24 37
2014 2015 Jan-Oct 2016 2016 Jan-Oct 2017 2014 2015 Jan-Oct 2016 2016 Jan-Oct 2017
Bananas Fish, Shrimps and Prawns Unmanufactured Tobacco

Canned Pineapple and Pineapple Concentrates
Natural Rubber
Fruits and Vegetables (total)
Source: PSA

FDI
Total FDI in the Philippines and FDI in Agriculture

274,014
245,216
300,000 5%
219,039
250,000
4%
186,960
3.5%
200,000
3%
150,000 2.4%
2%
100,000
1.0% 1%
8,508
50,000
5,221
2,679
537
0.3%
0 0%
2013 2014 2015 2016
Total FDI, PHP mn FDI in Agriculture, Forestry and Fishing, PHP mn Share in Total FDI, %
Comments
Despite not being on the Philippine government’s “negative investment list” (of sectors banned to
foreign investment), agriculture accounts for only a minuscule share of the total FDI in the country. A
possible reason is that farm land is extremely fragmented. The World Bank’s Ease of Doing Business
Report 2018, (released in 2017) placed the Philippines in the 113th position, down from 99th in the
previous year. The administration of president Rodrigo Duterte has announced plans to make the
country one of the top three destinations for FDI inflows in Southeast Asia by the end of 2022. The
government also plans to upgrade national infrastructure, empower farmers to produce higher value-
added products, and reform taxation so as to attract higher foreign investment. The Philippines is
projected to become one of the top 15 FDI destinations over the next three years, according to the
2016 World Investment Report of the UN Conference on Trade and Development (UNCTAD). This report
points to several sectors -- such as agriculture, utilities, and foods & beverages – as likely to attract
more FDI in the coming years. The Philippine government, however, needs to provide a long-term
political commitment to deep structural reforms, addressing protectionist policies, input subsidies,
and value-chain bottlenecks.
Source: Philippine Statistics Authority, Oxford Economics, UNCTAD

Employment
Comments Employment in Agriculture, thou persons

The agriculture sector is the second-largest
employer in the Philippines after the services 14,000 12,500
sector, providing jobs to 25.4% of all those 11,947 11,761 11,801
employed in the country. Most farmers are self- 12,000 10,500
10,373
employed and operate small-scale agricultural 1,431 1,359 1,196
units that face efficiency issues. The average age
10,000 1,159 8,500
of Filipino farmers is 57 years, which – along with
low educational levels – affects sector
8,000 6,500
productivity. The PSA data for 2017 shows that a
total of 10.4mn employees were engaged in the
6,000 4,500
AHFF sector at year-end, a decline of 12.2% y/y.
10,516 10,402 10,605
Job losses can be attributed to the typhoons that 9,214
hit the country at the end of 2016. A survey 4,000 2,500
conducted on a quarterly basis by the central

bank – Bangko Sentral ng Pilipinas (BSP) – showed 2,000 500
that the average share of companies with
expansion plans in the AFF sector was 40.4% in 0 -1,500
2017, compared with 33.1% in 2016. The highest 2014 2015 2016 2017
share was recorded in the third quarter, when the

Agriculture, Hunting and Forestry Fishing Total
crop year starts.
Value Added per Worker in Agriculture, Rural Population as % of Total Population

2010 Price, USD
1,949
1,942
1,960 5% 55.7
1,914
55.6
1,926
1,940 3% 55.5
2.3%
1,909
55.4
1,920 1.2% 1%
0.6%
-0.3% 55.2
1,900 -1%
-1.7%
1,880 -3%
2012 2013 2014 2015 2016
Value Added per Worker % y/y change 2012 2013 2014 2015 2016
Source: World Bank, PSA, Bangko Sentral ng Pilipinas

Wages
Nominal Minimum Daily Wage, Real Minimum Wage, Average, 2006

Average PHP Prices, PHP
365.0
496.3 362.2
486.8 357.1 357.7
477.3
466.0
459.3
449.8
440.3 337.3
334.1
429.0 331.0
328.8
2014 2015 2016 2017 2014 2015 2016 2017
Non-Agriculture Plantation and Non-Plantation Non-Agriculture Plantation and Non-Plantation
Comments
In the Philippines, farmers and fisherfolk are among the lowest-paid workers, with nominal and real wages
consistently below those paid in non-agricultural sectors. This has a significant effect on the overall incidence of
poverty and on household income and expenditure, since agriculture is a significant employer in the country. In
the PSA’s 2015 Poverty Statistics for Basic Sectors report for 2015 (released in June 2017), farming and fisheries
were identified as the sectors with the highest incidence of poverty, which affects 34.3% of those engaged in
farming, and 34.0% of those engaged in fisheries. These were also the sectors with the highest incidence of
poverty in 2006, 2009, and 2012 – the other years for which figures were given in this report – with rates of poverty
incidence far above the national average of 21.6% in each year. According to local daily The Philippine Star, among
the poorest farmers in the country are those involved in coconut cultivation, which accounts for a substantial
portion of the Philippines’ farming output and exports. The government has been making efforts to improve the
financial situation of farmers through better access to credit financing on the one hand, and through
empowerment measures (such as providing facilities allowing farmers to produce and market value-added
products), on the other. Additional factors eating into the profits of the country’s farmers are the existence of
numerous middlemen and high transportation costs for agricultural produce.
Source: National Wages and Productivity Commission, The Philippine Star, Business World Online

03
COMPETITIVE
LANDSCAPE

CONTENTS
Timeline 1898 Development Milestones
The forerunner of the Department of Agriculture (DA), the

Philippines Department of Agriculture and Manufacturing, is established by
the President Emilio Aguinaldo eleven days after the
proclamation of the Philippines Independence on June 12, 1898.
Agriculture
1926 Market Players
The US company Del Monte establishes

the first pineapple plantation in Asia.
1956 Market Players
The country’s largest agricultural group San

Miguel Corporation is set up to primarily
engage in the manufacturing and marketing
of processed meat products.
1971 Development Milestones
The Coconut Investment Act is enacted authorising

the creation of a Coconut Investment Fund. Coconut
taxes are imposed on the produce of coconut
farmers.
The National Food Authority (NFA) is

created under the name National Grains
Authority (NGA) with the mission of
1973 Development Milestones promoting the integrated growth and
development of the grains industry.
The agricultural programme Masagana 99 is launched,
promoting the planting of high-yielding rice varieties
developed by the International Rice Research Institute.
The Philippines becomes self-sufficient in rice and for
the first time exports rice to Asian countries.
The Philippine Coconut Authority is created as the sole The Key Production Approach (KPA) is
government agency tasked to develop the coconut introduced, becoming the basis in the
industry. formulation of the Medium-Term
Agricultural Development Plan (MTADP).
The Agriculture and Fisheries Modernization

Act of 1998 (AFMA) is implemented to
transform and modernise the country’s The Philippines becomes the first country
agriculture and fisheries sector. in Asia to approve the GM corn planting
for commercial use.
2008 Development Milestones 2017 Development Milestones
The agricultural programme FIELDS (Infrastructure, The Philippine government issues the
Extension, Education and Training, Loans, Dryers and Philippine Development Plan 2017-2022 (PDP),
Seeds) is implemented to boost the rice and corn which is the first medium term development
productivity. plan to be aligned with a national long-term
vision, or Ambisyon Natin 2040.
Source: Sources: DA, Philippine Institute of Development Studies, The Philippine Star, Company Data

03 COMPETITIVE LANDSCAPE CONTENTS
Highlights
Overview
The agriculture sector in the Philippines is market-oriented, but a few regulated pricing mechanisms
are in place to protect segments of strategic importance for the country. Several categories such as
wheat, meat, and dairy rely heavily on imports, while a significant portion of the domestic coconut
and fruit production gets exported. The Philippines agriculture has been suffering from
underinvestment, due to policy distortions, low sector efficiency, and a proneness to natural
disasters. Agriculture and food processing are driven by robust household expenditure, a growing
middle class and an expanding population. The administration of president Rodrigo Duterte, who took
office in June 2016, has pledged to step up efforts to upgrade the Philippines’ infrastructure, reform
taxation, eliminate agricultural smuggling and support farmers to produce higher value-added
products.
Market Structure
The Philippines agriculture sector is characterised by low levels of consolidation, industrialisation,
and efficiency. Farm ownership in the Philippines is very fragmented and the majority of farms are
family-owned. Smallholder farmers are easily taken advantage of by large traders, who often dictate
farmgate prices. The national agrarian land reform, a work-in-progress for decades, involves
redistribution of land to landless farmers and regular farm workers, alongside providing beneficiaries
with support services to improve their economic status and increase land productivity, according to
PwC. Each of the country’s 17 regions has its own development plan which envisages agricultural
incentives related to the activities typical for the region. In addition, Philippine governments have
traditionally sought to develop more effective linkages between the agricultural and industrial
sectors, so that both improve their international competitiveness and expand their capacity to
respond to growing demand from the local market.
Main Players
The Philippines’ agricultural sector is dominated by domestic companies, while foreign players focus
more on the food processing sector. However, there are some large foreign agribusiness corporations
operating in the Philippines agriculture sector. The US giant Del Monte set up the first pineapple
plantation in the Philippines in 1926, while US Dole Food Company stepped into the Philippines in 1963
by establishing pineapple and banana plantations. The US giant Cargill has owned and operated
copra-buying stations and crushing plants in the Philippines since 1947. US seed producer Pioneer Hi-
Bred International entered the Philippines hybrid corn seed market in 1976. Thailand’s CP Group has
engaged in feeds and livestock production in the Philippines since 2011. Another large multinational
corporation, the Hong Kong-based First Pacific Co Ltd, became majority shareholder in Roxas Holdings
Inc, one of the country’s largest sugar milling companies, in 2015.
Source: USDA, PwC, The Manila Times, Company Data

Top Listed Companies

Top 10 Agribusiness Companies by Revenue, fiscal year end 12/2016
1. JG Summit Holdings
(food)
USD 4,851.6mn
2. Universal Robina 3. San Miguel Pure Foods
(food) (feed, livestock)
USD 2,378.8 mn* USD 2,350.7mn
4. RFM
(livestock, wheat, pasta)
USD 263.3mn
5. Vitarich Corporation
(poultry products)
USD 107.5mn
6. Alliance Select Foods
(food)
USD 59.9mn
7. Central Azucareta
De Tarlac (sugar & by products)
USD 26.6mn**
8. Liberty Flour Mills
(flour) 9. AgriNurture (mangoes)
USD 21.5mn USD 12.0mn
10. Roxas and Co
(sugar & by products)
USD 4.1mn*
*fiscal year end 9/2016
**fiscal year end 6/2017
Source: BMI Research, EMIS Company Database

M&A Deals
M&A Deals in the Philippine Agriculture Sector, January 2014 – December 2017
Deal Value
Date Target Company Deal Type Buyer Country of Buyer Stake %
USD mn
22-Aug-17 Tobacco business of Mighty Corp Acquisition Japan Tobacco Inc Japan 936.00 100.00
17-Aug-17 Calata Corp Acquisition Millennium Global Holdings Inc Philippines 99.40 81.42
17-Aug-17 Millennium Ocean Star Corp (MOSC) Acquisition Calata Corp Philippines n/a 100.00
14-Dec-15 Freshness First Pty Ltd Acquisition Organic Path Ltd Australia 2.50 n/a
25-Nov-15 Agrikulto Inc Acquisition Central Azucarera De Tarlac,Inc Philippines 1.40 100.00
Solveigh Philippines Agri Investments

31-Jul-15 Agrinurture Inc Minority Stake Netherlands 7.25 25.00
2 BV
26-Jan-15 San Miguel Hormel (Vn) Co., Ltd. Acquisition San Miguel Pure Foods Company Inc Philippines n/a 49.00
29-May-14 Vinh Hoan 1 Feed JSC Acquisition Aboitiz Equity Ventures Inc Philippines 19.60 70.00
15-Apr-14 Victorias Milling Co. Inc. Block Trade First Pacific Co Ltd Hong Kong 13.42 5.80
10-Apr-14 Victorias Milling Co. Inc. Minority Stake LT Group Inc. Philippines 25.66 10.10
14-Feb-14 Bodegas Las Copas Acquisition Emperador Inc Philippines 82.32 50.00
Source: EMIS DealWatch

M&A Activity, 2014 – 2017
Number and Value of Deals, USD mn Number and Value of Deals by Deal
Value, USD, %
4 4
50.1-100mn
3
22.2%
1,035
0
141
100.1-
11
0-50mn 66.7%
0
1,000mn
2014 2015 2016 2017 11.1%
Value of Deals (USD mn) Number of Deals
Number of Deals by Deal Type, % Number of Deals by Country of Investors,

%
Australia
9.1%
Minority
Japan 9.1%
Stake
Purchase
18.2%
Hong Kong
9.1%
Acquisition Block Trade

72.7% 9.1% Philippines
63.6%
Netherlands
9.1%
Source: EMIS DealWatch

04
COMPANIES
IN FOCUS

04 COMPANIES IN FOCUS CONTENTS
Universal Robina
Corporation
Highlights Income Statement, Consolidated, PHP mn

Universal Robina Corporation (URC) is a food
20.3%
manufacturing company which is 55.1% owned by 20.0%
Philippine conglomerate JG Summit Holdings Inc. 19.5%
URC originates from Universal Corn Products Inc,
a cornstarch manufacturing plant incorporated in
111,632
1954. URC's operations are classified into three
109,051
92,376
segments, namely branded consumer foods, agro-
22,280
22,083
17.2%
18,004
industrial products and commodity food products.
15,356
12,505
11,655
10,117
13,901
80,995
Branded consumer foods contribute 83% to total

revenues. These include snack foods, instant
coffee and noodles, pasta, and others. The agro- 2013 2014 2015 2016
industrial segment, which has a share of about
8% of net sales, consists of three sub-segments, Total Sales EBITDA
namely hog and poultry farming, animal feeds, Net Profit EBITDA Margin
and animal health. The commodity food product

segment makes up 9% of net sales, and includes
sugar and flour milling. Balance Sheet, Consolidated, PHP mn
URC owns one flour mill and one distillery plant,

1.17
as well as a number of hog and poultry farms,
sugar mills, and branded consumer food plants
across the country. It also has branded consumer
food plants in seven locations abroad, namely 0.39
141,444
Thailand, Malaysia, China, Indonesia, Vietnam,

110,747
26,148
Myanmar, and New Zealand. -0.10

75,272
66,545
65,360
50,830
8,595
56,027
77,921
As of end-September 2016, the number of

permanent full-time employees engaged in the -0.73
company was 13,001. Of these, 10,045 were
-1,834
-10,088
engaged in branded consumer foods, 1,180 in 2013 2014 2015 2016
sugar refining, and 870 in the agro-industrial

business. At the same time, the company had Total Assets Shareholders Equity
Net Debt Net Debt / EBITDA
about 16,800 contractual and agency employees.
Source: Company Data

Universal Robina
Corporation (cont’d)
Highlights Revenue by Segment, 2016, %

URC’s consolidated sales revenue for the 2016
fiscal year amounted to PHP 111.6bn – a rise of
2.4% y/y. (FY2016 ended on September 30, 2016.)
The revenue of URC’s branded consumer foods

Agro-
segment – excluding the packaging division – Industrial
marked a slight increase of 0.7% y/y in fiscal 2016, 8.1%
reaching PHP 91.4bn. Branded

Consumer
Foods
The agro-industrial segment’s revenue totaled 82.9% Commodity
PHP 9.1bn in FY2016, representing an increase of Foods 9.0%
2.0% y/y. Revenue from the feed business rose
21.3% y/y due to an increase in sales volume
achieved by aggressive sales and marketing
strategies. However, its farms business dropped
14.8% y/y thanks to lower average selling prices
of live hogs.
Revenue by Region, 2016, %
The company’s commodity foods segment
revenue amounted to PHP 10.0bn in 2016, up 21.1%
y/y. Its sugar business grew by 20.0% y/y due to
incremental sales from the recently acquired
Balayan sugar mill, and higher raw and refined
sugar prices. The flour business, however, Overseas
28.2%
declined by 2.3% y/y due to lower average selling
prices. In 2016, the share of domestic sales in the
company’s total revenue was 71.8%, while 28.2%
of its revenue was generated overseas. Domestic
71.8%
In August 2016, URC acquired the snack producer
Snack Brands Australia (SBA) for USD 460mn, thus
continuing its expansion in the Oceania region. In
2014 the company had acquired New Zealand's
Griffin's Foods for USD 700mn.

San Miguel Pure Foods

Company Inc

San Miguel Pure Foods Company Inc (SMPC) was
incorporated in 2001 after the acquisition of Pure 10.5%
Foods Corporation (PFC) by the San Miguel 9.5%
9.0%
Corporation (SMC). San Miguel Corporation was 8.2%
established in 1956, primarily to engage in the
manufacturing and marketing of processed meat
111,586
106,860
102,999
99,773
products. Later, through its subsidiaries, the

company diversified into poultry and livestock
11,752
10,110
operations, feeds and flour milling, and dairy and 9,307
8,149
5,976
4,752
4,084
coffee operations. In 1962 Nestle S.A. opened its 3,843
first factory in the Philippines in partnership with

2013 2014 2015 2016
San Miguel. In 1998, Nestle S.A. acquired the
entire equity of San Miguel in the JV. Pure Foods
Total Sales EBITDA
was founded back in 1956 to produce quality Net Profit EBITDA Margin
meat. Several years later, Hormel Foods
International acquired a substantial interest in it,
giving PFC exclusive rights to market Hormel Balance Sheet, Consolidated, PHP mn
products in the Philippines.
0.75
SMFC employs nearly 3,000 people. The
company’s shares are listed on the Philippine
Stock Exchange (PSE).
72,742
67,015
66,655
43,187
At the beginning of 2017, SMC indicated that it

61,038
would be investing up to PHP 75bn in SMPC, to -0.10

42,360
39,016
-0.21
6,100
35,963
create new processed meat production facilities.
In November 2017 SMC announced plans to -0.56
consolidate its beer and other beverage core

-971
-2,414
-5,643
2013 2014 2015 2016

businesses into SMPF through a PHP 336.4bn
swap of its shares. As a result, San Miguel Pure
Total Assets Shareholders Equity
Foods will be renamed San Miguel Food and
Beverage Inc. Net Debt Net Debt / EBITDA
Source: Company Data, Manila Bulletin, Philippine Daily Inquirer

San Miguel Pure Foods

Company Inc (cont’d)
Highlights Revenue by Business, 2016, PHP mn

In 2016, the consolidated revenues of SMPF rose
76,495
72,559
by 4.4% y/y to PHP 111.6bn. The company showed
a positive performance in its two major
businesses, agro-industrial and branded value-
added products. Their revenues increased by 5.4%
y/y and 7.4% y/y, respectively. The recovery of
chicken and meat prices had a positive effect on
27,634
25,725
the company’s agro-industrial business, while the
branded value-added business benefitted from 10,256
9,794
higher volumes and selling prices of processed
meats, spreads, cheese, biscuits, and ice cream.
The company’s milling business suffered in 2016 2015 2016
from low wheat prices, due to abundant global
Agro-Industrial Branded Value-Added Milling
supply. At the same time, its feeds business
gained from the low prices of major raw
materials, such as wheat and soybean meal, as
well as from high yields in cassava production. Revenue by Segment, 2016, %
In 2016, SMPF continued to upgrade its poultry

Stable-Priced
and hog farms to climate control systems (CCS) 31%
to optimise broiler and hog costs. During the
Value-Added
year, the company invested more than PHP 6bn to 26%
build bigger and more advanced processed meat
plants, flour milling capacities and feed mills.
The company continued to market its leading

brands Magnolia and Monterey, expanding its
branding outlets to some 1,800 Magnolia Chicken
Stations and Monterey Meatshops in 2016. Its
marketing campaign for products “grown without
Commodity
antibiotics” drove up the sales of Magnolia free- 43%
range chicken by more than 50% and Magnolia
cage-free brown eggs by 73% y/y.

RFM Corporation

RFM Corporation (RFM) was incorporated in 1957
as Republic Flour Mill Inc, to produce flour in the 14.2%
Philippines. Later the company diversified into 13.1%
poultry and livestock production and
manufacturing of cooking oil and margarine. In 9.9%
9.3%
1973, the company signed an exclusive licensing
12,699
11,982
11,010
agreement with the US firm Swift and Company
10,240
of Illinois, stepping into the business of chilled
1,809
1,571
and canned meat processing. It opened the first 1,019
1,016
1,000
905
834
786
continuous meat processing plant in the

Philippines. RFM divested its hog operations in
2013 2014 2015 2016
1994, and its poultry business in 2003.
As of 2017, RFM is one of the largest food and Total Sales EBITDA
Net Profit EBITDA Margin
beverage companies in the Philippines. Its major
products include flour- and rice-based products,
milk, juices, and ice cream. RFM also operates
Balance Sheet, Consolidated, PHP mn
non-food businesses which include barging
services and leasing of commercial spaces. 0.84
RFM is best known for its local brands Pop Cola

and Sarsi, and for Selecta ice cream, which it
manufactures in a JV with Unilever. Other major
14,739
13,959
13,923
13,482
brands include White King, Selecta Milk, Sunkist,

10,149
9,627
8,967
8,424
and Swift. -0.57

854
In 2016, RFM retained its position as the largest -0.91

domestic manufacturer of pasta with a 33% -1.14
volume share and a 35% value share. Its two
-1,037
-1,154
-1,422
major pasta brands are Fiesta and Royal. 2013 2014 2015 2016
Total Assets Shareholders Equity


RFM Corporation
(cont’d)
Highlights Revenue by Segment, 2016, %

RFM operates in two major divisions or “groups” –
“institutional” and “consumer”. These accounted,
respectively, for 28% and 72% of revenues in 2016.
The institutional business segment primarily
manufactures flour and bread products, as well
as pasta and rice-based mixes, but only sells flour
and bread products to business consumers. The Institutional
Group 28%
consumer business segment manufactures milk
and juices, and sells them together with pasta
and rice-based mixes to retail consumers. Consumer
Group 72%
The company closed 2016 with a total income of
PHP 12.7bn, which represented a 6.0% increase
over the previous year. Its net profit rose by 10.5%
y/y to PHP 1.0bn. RFM’s profitability was driven by
its branded consumer products and its focus on
higher-margin core businesses.
Revenue by Region, 2016, %
Domestic sales make up 98% of the company’s
total revenue, while overseas sales account just
for 2%.
RFM sources raw materials both from the

Philippines and from abroad. The company
imports wheat from the US, skimmed milk powder Domestic
98.0%
from New Zealand, Australia, India, and the US,
and anhydrous milk fat from New Zealand.
Overseas
2.0%

Victorias Milling
Company Inc.

Victorias Milling Company Inc (VMC) was
established in 1919 and is primarily engaged in 35.5%
36.8%
sugar manufacturing. The company’s shares were

listed on the Philippine Stock Exchange (PSE) in 29.0%
1993.
8,713
Over the years, VMC has diversified into other
16.2%
activities and currently operates subsidiaries
1,840
1,778
active in fish production, real estate property
5,314
1,540
5,010
4,998
1,409
sales, golf club operations, agricultural land 1,009
901
760
654
acquisition, and power generation.
The company generates most of its cash from raw 2014 2015 2016 2017
sugar sales, refinery operations, and sale of by-
Tiotal Sales EBITDA
products such as molasses. Sugar traders are the Net Profit EBITDA Margin
major buyers of VMC’s sugar products.
As of August 31, 2017 – the end of the company’s Balance Sheet, Consolidated, PHP mn
financial year 2017 -- VMC reported 657 regular
employees and 1,799 outsourced workers. VMC
0.64
reported total landholdings of 6,885,075 m2. The
0.42
company’s main plant covers 2.34mn m2 of land in
Victorias City.
8,988
8,106
8,085
7,297
The construction of the company’s Biomass

5,717
5,440
4,758
4,705
Cogeneration Project was expected to be

899
652
completed by the end of 2017, and the estimated -0.58

start of operations is scheduled for 2018. The
plant will generate 64 MW of electricity, of which
-1,040
-0.96
-1,758
about 25 MW will go to the grid, while the rest

will be used for the company’s own milling 2014 2015 2016 2017
operations. The plant will run mainly on bagasse,
a by-product of sugarcane, left after processing Total Assets Shareholders Equity
to extract sugar.
Source: Company Data, The Visayan Daily Star

Victoria’s Milling
Company Inc. (cont’d)
Highlights Revenue by Product, 2017, %

According to the company, the volume of
sugarcane milled in the 2016/2017 crop year (CY) Raw Sugar
reached 3,218,330 tonnes – 3% more than in the 17.2%
previous year.
Alchohol
Despite the challenging situation on the sugar 5.2%
Molasses
market, VMC managed to achieve a significant y/y 2.1%
growth of 64% y/y in its revenue, which had
reached PHP 8.7bn by the end of the financial Power
Generation
year (end-August 2017). The company focused its 0.3%
Refined
efforts on strategic optimisation of its refinery Sugar 70.7% Other
Products
operations. 0.7%
Service
In 2017 the net profit of VMC dropped 14.0% y/y to Rendering
3.9%
PHP 654.2mn, due to low sugar prices. Expanding
imports of high fructose corn syrup (HFCS) were
the main reason for the sugar price decline on
the Philippine market. In 2017 70.7% of the Output by Product
company’s revenue came from refined sugar,
compared to just 10.0% in 2016. The company
9.6
switched to refined sugar production, which
8.6
offered higher margins than raw sugar, which
was why the share of raw sugar sales in total 6.2 6.0
revenue dropped sharply to 17.2% (compared to 5.2
62.7% in 2016). VMC’s revenue from molasses and 4.1
alcohol rose by 14% y/y to PHP 632.5mn in 2017,
since both sales volumes and selling prices of
alcohol were higher.
The food-processing segment also generated 2016 2017

higher revenues in 2017, of PHP 56.4mn compared
to PHP 48.6mn in 2016, the majority of sales being Raw Sugar, mn Lkg* Refined Sugar, mn Lkg* Alcohol, mn l
attributable to canned fish and processed meat.
*A unit of measurement equivalent to 50 kg



Vitarich Corporation (VITA) is engaged in
4.7%
production and distribution of various poultry 4.3%
products, as well as animal and aqua feeds. Its
predecessor was Philippine American Milling Co
Inc, which was founded in 1950. Vitarich
5,101
Corporation was registered in 1962 and was listed
3,445
on the Philippine Stock Exchange in 1995. It
2,785
2,366
-3.1%
operates a number of production facilities
238
148
throughout the country, including feed mills,
18
7
-6.6%
hatcheries and dressing plants. VITA has
-74
-184
operating offices in Luzon, Iloilo and Davao, and

-401
-578
2013 2014 2015 2016

maintains satellite offices in the Southern
Philippines.
Total Sales EBITDA
Net Profit EBITDA Margin
VITA is active in three major business segments,
namely feed products, farm products, and food. It
sells its feed products to various distributors,
Balance Sheet, Consolidated, PHP mn
dealers and end users. The company’s major farm
products are day-old chicks, while its food
3.05
products include chicken meat and dory fish sold
to hotels, restaurants, institutional clients,
supermarkets, and wet markets.
2,860
In September 2016, Vitarich received a

3,647
2,373
-0.32
Rehabilitation Court approval for an exit from its
2,375
corporate rehabilitation program about six years -1.12

614
1,332
ahead of schedule. As a result, the company has

870
764
754
to pay down its remaining unsecured obligations

to Petron Corp. within a year. Vitarich had applied -3.34
-77
for corporate rehabilitation in 2006, its finances

-165
-226
2013 2014 2015 2016

having been weakened successively by the Asian
financial crisis of 1997 and the avian flu outbreak Total Assets Shareholders Equity
of 2003.
Source: Company Data, Business World Online

(cont’d)
Highlights Revenue by Segment, PHP mn

In 2016 the company’s revenue soared 48.1% y/y
2,926
to PHP 5.1bn, as a result of expanding operations,
intensive marketing activities, and improved
customer service. Its net profit jumped to PHP
2,059
1,874
17.5bn, compared to PHP 7.2bn in 2015.
1,445
In an interview with Manila Bulletin, Vitarich
1,222
President Ricardo Manuel Sarmiento said that the
794
company was targeting an increase of 30% y/y in

both sales and profit in 2018, in line with the
301
164
127
expansion of its operations. The company plans

to spend PHP 130mn on capital expenditures in
2014 2015 2016
2018, primarily to build warehouse facilities,
upgrade information technology and improve its Food Feeds Farms
sales network. The company also intends to
expand its distributor network to help it reach
more areas in the country.
EBITDA Margin by Segment, %
In August 2017, the company’s poultry business
was affected by the bird flu outbreak in the 15.2%
country. Vitarich decided to shut one of its 13.6%
poultry farms. This was a relatively small unit, in 11.5% 11.9%

the town of Candaba, which handles 38,000 9.7%
9.6%
chickens per year – compared to 3mn birds at the
7.8%
company's Luzon unit. In this period, market 7.4%
prices of chicken dropped from PHP 125-150/kg to

PHP 100-100/kg.
2.4%
2014 2015 2016
Food Feeds Farms
Source: Company Data, Manila Bulletin, ABS-CBN News

05
REGULATORY
ENVIRONMENT

05 REGULATORY ENVIRONMENT CONTENTS
Government Policy
Main Bodies
The Department of Agriculture (DA) is an executive department under the Philippine government in
charge of implementing agriculture and fisheries policies in the country. The Department of Agrarian
Reform (DAR) is the lead agency implementing the Philippines’ decades-long land reform. The
Department of Environment and Natural Resources (DENR) is an executive department governing and
supervising the exploration and development of the country’s natural resources. DENR works in close
cooperation with DAR on implementing the national land reform. The Philippine Coconut Authority
(PCA) is a government agency responsible for the development of the coconut industry and other
palm oil industry in the country. The Sugar Regulatory Administration (SRA) acts as regulator for the
Philippine sugar sector. It is responsible for promoting sector development by encouraging greater
participation of the private sector, while improving the working conditions of farmers.
Supra-National Law
The Philippines makes use of high tariff rates of between 20% and 65% on strategic agricultural
products such as grains, livestock and meat products, sugar, certain vegetables, coffee, and other
commodities produced domestically. The country is also well-known for imposing anti-dumping duties
and safeguard measures when it feels it has to fight trade practices considered injurious to domestic
producers. The Philippines is a member of ASEAN and the WTO, and has free trade agreements with
Australia, China, India, Japan, New Zealand, and South Korea. Enterprises undertaking activities under
the government’s Investment Priorities Plan are eligible for income-tax holidays of various durations.
Tax incentives are available to export-oriented companies located in special economic zones as well.
Land Ownership
Features of Philippine law regarding land singled out by PwC include the following: private ownership
of land is reserved for Philippine citizens and corporations owned at least 60% by Filipinos; however,
foreigners may own buildings on leased land; and private corporations with at least 60% Filipino
ownership are allowed to hold alienable public lands, but only through lease. Leased land ownership
is regulated under the Investors’ Lease Act of 1993. Under this act, foreign investors may lease land
for certain industrial and agricultural projects for a period of 50 years, renewable for another 25 years.
Agricultural land in the country is very fragmented, as the decades-long land reform has contributed
to dismantling the former plantations and distributing the land among small farmers. Another
problem is the conversion of farm land to non-farm uses, because these offer quicker investment
returns.
Source: PwC, Reuters, ABS-CBN News

Government Policy (cont’d)
Lifting of Rice Import Tariffs

The Philippines is one of the world’s largest rice importers. The country joined the WTO in 1995 and
has kept QR on rice imports since that year. The regulations have been extended twice since 2005 and,
under the current set – which had been due to remain in force until June 30, 2017, but still applies –
annual rice imports by the private sector are capped at 805,200 tonnes with an import tariff rate of
35%. In April 2017, president Duterte issued an executive order extending QR for another three years,
but the removal of the QR system is currently under discussion in the government. In November 2017,
the Committee on Agriculture and Food approved, at its first meeting, a substitute bill under which
the Philippines will impose a tariff rate of 35% for rice originating from the ASEAN region, and a 40%
tariff most-favored nation (MFN) rate for in-quota rice imports from other countries. A proposed 400%
tariff rate for rice imports outside the MAV sourced from non-ASEAN countries was later reduced to
180%. Once the substitute bill is enacted into law, the country’s MAV for rice will revert to its 2012
level of 350,000 tonnes.
State Grain Procurement Agency
The National Food Authority (NFA) Council of the Philippines is the national grain procurement
agency. The NFA buys rice from farmers at a government support price. The administration of
president Duterte has vowed to make the country self-sufficient in rice production by 2022. The overall
rice stocks of the Philippines had been adequate in 2015 and 2016, following purchases from Vietnam
and Thailand made by the previous administration to make up for the crop losses the country suffered
during the 2016 El Nino dry weather phenomenon. The Philippines maintains 12,000 tonnes of rice at
any given time to provide to other ASEAN members in times of emergencies under an ASEAN regional
rice reserve plan, the USDA reported in March 2016.
GM Crops
In 2016, the Philippines ranked as the top grower of genetically modified (GM) crops in Southeast Asia
and the 12th biggest producer globally, according to the International Service for the Acquisition of
Agri-biotech Applications (ISAAA). According to data from an ISAAA report, 2016 saw a total of 812,000
hectares of GM corn planted in the Philippines, a 16% increase compared to 2015. In 2002, the
Philippines became the first country in Asia to allow commercial GM corn planting for animal feed
and human food. Some 70% of the country’s corn output is GM. In March 2016, the Philippines
government approved a more stringent set of regulations to manage the sale of GM crops, after the
issuance of fresh permits for planting or importing of GM crops was halted by the Supreme Court in
December 2015. Under the new guidelines, Biosafety Committees from five government departments
will review applications for field-testing and cultivation of GM crops in the country.
Source: Reuters, ABS-CBN News, USDA, Business Mirror, Sunstar, Manila Times

Coconut Hubs
At the Philippines’ first-ever coconut sector investor summit, held in February 2015, the government
pledged to start establishing agro-industrial hubs in villages in coconut-producing provinces, to help
farmers process the coconuts they harvest into higher value-added products that will help them
maximise their profits. The hubs, expected to number 200 by 2025, are to be equipped with facilities
for processing copra into coconut water, coconut sugar and virgin coconut oil. Under this plan, whose
stated aim is to help farmers move from subsistence farming to agribusiness entrepreneurship, high-
value crops such as coffee, cacao, bananas, corn, pineapple, and vegetables will be planted in the
spaces between coconut trees, in order to maximise revenue per unit of land and diversify the
farmers’ crop portfolio. In 2017 the Philippine Coconut Authority (PCA) announced that it planned to
assist micro, small and medium producers of oil and fibres by establishing more coconut hubs. It had
allocated PHP 27mn for upgrading equipment, infrastructure and entrepreneurial environment in the
Western Visayas region through the Kaanib Coco Agro-industrial Hub (KCAHP), a PCA regional official
said in March 2017.
Sugar Regulatory Environment

The Sugar Regulatory Administration (SRA), a government Agency under the Department of
Agriculture, is the main regulatory body for the sugar industry. The SRA liaises between influential
industry stakeholders and is also in charge of setting export and domestic sugar prices. At the start of
each crop year – which runs from September to August – the SRA issues a document allocating the
quantities of sugar to be used for domestic consumption, exports, and reserves. In March 2015 the
government adopted a Sugarcane Industry Development Act, which allocated PHP 2bn to
infrastructure upgrades, R&D and crзedit to farmers, with the aim of boosting sector competitiveness.
Under the WTO Uruguay Round (1986-1994), the Philippines committed itself to importing a certain
MAV of raw sugar with a tariff rate of 50%, against a tariff rate of 65% for imports in excess of the
MAV quantities. This agreement had been essentially blocking the Philippines’ sugar imports for
years. In 2010, the then president Gloria Macapagal-Arroyo issued Executive Order No. 892, which
provided for a gradual reduction of the tariff on sugar products imported from ASEAN members to 5%
by the end of 2015. The Philippines exports sugar mainly to the US under a quota system, designating
its highest-quality sugar for export. To meet its export quota for the 2016-2017 crop year, the
Philippines diverted part of its second-best class of sugar, destined for domestic consumption, and
filled the gap through imports from regional peers. In February 2017, to protect the domestic market
for sugar, the SRA issued Guidelines on the Issuance of Clearance for Release of Imported High
Fructose Corn Syrup (HFCS) and Chemically Pure Fructose, which took effect on March 10, 2017. The
sugar market was seriously affected by increased HFCS imports, which dragged down sugar demand
and prices in the country in 2017.
Source: Rappler.com, bwroldonline.com, USDA, sugaronline.com, The Philippine Star

Inclusive Partnerships for Agricultural Competitiveness Project

On June 9, 2017, the World Bank approved financing for the Philippines' USD 231mn Inclusive
Partnerships for Agricultural Competitiveness (IPAC) Project, which aims to enhance the market access
and competitiveness of smallholder farmers in certain agrarian reform community (ARC) clusters. This
will be financed partially through a USD 99.3mn soft loan from the World Bank, while the remainder
will be funded by the Philippine government and IPAC’s beneficiaries. The project, which will be
implemented over the next five years by the DAR, is expected to benefit 300,000 farmers from 650
farmer organisations. The organisations included in the IPAC project are entitled to funding in the
form of grants, loans and soft projects, which should improve their access to markets and boost the
competitiveness of smallholder farmers as well. The agricultural products, approved by the National
Economic and Development Authority, which will receive IPAC funding support, are: copra, organic and
low-chemical rice, cacao, cassava, coffee, oil palm, muscovado sugar, abaca, and rubber.
Philippine Development Plan 2017-2022 for Agriculture, Forestry and Fisheries

In July 2017, the National Economic and Development Authority (NEDA) issued the Philippine
Development Plan 2017-2022 for Agriculture, Forestry and Fisheries. According to the Plan, the
government’s target is to improve productivity in agriculture, forestry and fisheries, and increase
economic opportunities for small farmers and fisherfolk. The Plan’s main target is to increase
agriculture sector GVA growth so that it has reached a rate of 2.5%-3.5% (at constant 2000 prices) by
2022. Annual growth in the labour productivity of farmers and fisherfolk is projected to increase from
4.6% in 2015 to 5%-6% in 2022. Annual growth in the value of agriculture and fisheries exports is
targeted to increase to 9% in 2022 – compared to a negative growth of 21.6% experienced in 2015.
Specific measures envisaged in the Plan include: publication of a colour-coded agricultural map
identifying the comparative advantages in production of the various regions; construction and
rehabilitation of small-scale irrigation systems; enhancement of access to agricultural machinery and
equipment; and promotion of crop diversification. The government will improve the smallholder’s
access to markets and credit and will promote agricultural insurance. Farm mechanisation will be
encouraged in order to reduce production costs, with a focus on the regions of Ilocos, Central Luzon,
and MIMAROPA. Another major task is the replacement of quantitative restrictions on rice imports by
tariffs. Access to better economic opportunities for small farmers and fisherfolk will be achieved by
linking production areas to markets through improved infrastructure and logistics systems. Small
farmers and fisherfolk will be encouraged to create formal groups, while farms will be urged to
establish clusters.
Source: World Bank, The Philippine Star, The Philippine Inquirer, NEDA

Agricultural Smuggling
The Act Declaring Large-Scale Agricultural Smuggling as Economic Sabotage was signed into law by
the then president Benigno Aquino III in May 2016. Under this act, to be considered economic
sabotage, the amount of agricultural product smuggled must be worth at least PHP 10mn in the case
of rice, and equal to or higher than PHP 1mn for other agricultural products such as sugar, corn, pork,
poultry, garlic, onion, carrots, fish, and cruciferous vegetables. Violators are penalised by a maximum
of life imprisonment and a fine of twice the fair value of the smuggled agricultural products, plus the
taxes, duties, and other charges to which a legitimate shipment would be subject. While smuggling is
not expected to be completely eliminated, its frequency and intensity are expected to diminish. As of
November 2017, more than a year after the act was passed into law, there had been several cases of
illegal shipments of rice, onion, garlic, and sugar, but the Bureau of Customs (BOC) had not filed a
single case against the smugglers. The first case was filed in September 2017 by Senator Panfilo
Lacson against the former Customs Commissioner Nicanor Faeldon and several others for their
alleged involvement in rice smuggling.
Farm Tourism
The Farm Tourism Development Act was also signed by president Aquino in May 2016. Its enactment
was expected to increase support for the agricultural sector and provide additional income for small
farmers, as well as more opportunities to get their products to larger markets. Farm tourism was
introduced in the Philippines in 2012, with the Costales Nature Farm in Laguna. At present, there are
more than 100 accredited establishments nationwide, the majority of which are located in Luzon. In
October 2017, the Department of Tourism (DOT) announced the creation of a National Farm Tourism
Strategic Action Plan to turn agriculture into a tourism product. An interim farm tourism development
board will work on the action plan draft: this will be composed of representatives from the DOT, the
DA and the Department of Trade and Industry (DTI), as well as representatives from the private sector.
Coconut Industry Trust Fund

On January 29, 2018, the government approved a bill creating the Coconut Farmers and Industry
Development Trust Fund CFIDTF, which is to be deposited in the Bureau of Treasury. Under the bill, the
PHP 10bn initial trust fund will be used within two years after the approval of the CFIDTF. During the
Plenary session, the Makabayan political coalition opposed the new fund’s approval, stating that the
coco levy funds that had gone to dictator Ferdinand Marcos should be returned to farmers rather than
deposited in a new fund. The initial coco levy fund was created in 1971 by the then President Marcos
to collect taxes from coconut farmers. Rather than being used for development of the coconut
industry as promised, the fund was used for personal profit by Marcos and his cronies.
Source: USDA, The Philippine Star, Manila Bulletin, PCA, The Philippine Inquirer

Comprehensive Agrarian Reform

Program (CARP)
Comments
The Philippines has been plagued by land tenure problems ever since the country’s independence in
1946. Land was concentrated in the hands of large landowners and throughout the years this has
resulted in protests of peasants demanding equitable access to the land, which is their main source
of livelihood and sustenance. The Agrarian Reform has become an issue with social, economic and
political implications, and one that has been reflected in a total of three Philippine constitutions –
including those of 1935 and 1973, as well as the 1987 constitution currently in force.
The Comprehensive Agrarian Reform Program (CARP) took effect in June 1988 and was a part of the
then Philippine president Corazon C. Aquino’s agenda for economic growth and development. CARP
aims to increase agricultural productivity and improve the access of Philippine farmers to land and
other resources. To qualify as beneficiaries under the programme, farmers must be aged above 15, be
residents of the area where the land plot allocated for distribution is located, and own no more than
three hectares of agricultural land. Land holdings eligible for distribution under the programme total
7.8mn ha of land. Alongside redistributing agricultural land and educating land beneficiaries, the
programme also aims to improve their access to bank credit, infrastructure, technology, and post-
harvest and marketing facilities. The Comprehensive Agrarian Reform Program Extension with
Reforms (CARPER) was adopted in 2009 to extend CARP’s deadline for distributing agricultural land to
farmers by five years to 2014. The extension was met with outrage from many farmers who have been
pushing instead for the passage of the Genuine Agrarian Reform Bill (GARB), first filed during the 14th
Congress (July 2007-June 2010), and calling for more effective reform to resolve centuries-old agrarian
problems.
The slow progress of land distribution has been due to the numerous challenges associated with the
process, such as problems with the technical descriptions in the land titles, destroyed titles, farmers
being unable to prove their qualifications, and landowners contesting in court whether their land is
subject to mandatory acquisition. An additional challenge is posed by mining activities, which
typically take place in the midst of farming communities and often result in displacement of
indigenous peoples and the need for compensations. The conversion of productive land to non-
agricultural use, which increases land profitability for the owners, is another problem threatening the
livelihoods of farmers. According to DAR, about 4.8mn ha was distributed to 2.8 million agrarian
reform beneficiaries (ARBs) between the start of CARP’s implementation and 2017. Despite CARP’s
expiry in 2014, the DAR still has the power to continue distributing and developing agricultural land
under the reform. During 2018, it aims to distribute 53,841 ha of land, which will benefit 46,072 ARBs.
Source: Asia Pacific Journal of. Multidisciplinary Research , Official Gazette, RCSD Chiang Mai University, DAR, The Philippine
Star
Comprehensive Agrarian Reform

Program (CARP) (cont’d)
Comments
The enactment of a genuine agrarian reform law has been continuously supported by former DAR
Secretary Rafael Mariano, who has urged lawmakers to pass the GARB. In April 2017, President Duterte
reappointed Mariano as DAR Secretary, expressing confidence in his bid to implement genuine
agrarian reform in the country. However Mariano failed to gain approval from the Commission on
Appointments in September 2017. On December 1, the vacant post was filled by John Castriciones, who
was officially appointed by President Duterte. In his inaugural message, the new DAR Secretary called
on authorities to fast-track the distribution of certificates of land ownership awards to agrarian
reform beneficiaries, and provide support programs and services to beneficiaries’ organisations. He
emphasised that under his leadership, farmers, especially the qualified beneficiaries of the agrarian
reform programme, must be prioritised.
In a 2017 study titled “Land Reform: What Has Been Its Impact After 30 Years?”, the Philippine
Institute for Development Studies (PIDS) wrote that the accomplishments of CARP in terms of area
covered and number of beneficiaries have been significant. The reformed area covered 70% of
estimated non-owner-cultivated agriculture lands, benefiting about 54% of agricultural households in
the country. CARP has also supported the distribution of about 2.5mn ha of alienable and disposable
lands and the issuance of stewardship rights for forest lands and leasehold rights for agricultural
lands not covered by land reform. The PIDS considers revision of the CARP law unnecessary, as there
are only a few large tracts of agricultural land left for distribution. Instead, the government should
focus on resolving long-standing issues, such as land-ownership conflicts. PIDS recommends that DAR
should adopt a progressive land-taxation scheme to deal with land-ownership issues, such as the
cancellation of titles and default on land payments by ARBs.
In January, 2018, the Philippine government approved a measure granting ARBs full crop-insurance
coverage for losses due to natural calamities and pest infestation. The bill, which will amend CARPER,
also aims to expand the access of qualified farmers to credit. Under the bill, the DA and DAR will
coordinate to implement the insurance programme, while the Land Bank of the Philippines and the
DAR will submit to the DA the complete list of qualified beneficiaries and leaseholders to be included
in the Registry System for Basic Sectors in Agriculture for participation in the programme.
Source: PIDS, The Philippine Star, Manila Bulletin

06
CROP
PRODUCTION

06 CROP PRODUCTION CONTENTS
Cereal Production Highlights
Overview
The Philippines agricultural sector is dominated by crop farming, among which cereal production has
the largest share in value terms. In 2017, the Philippines produced PHP 443.9bn worth of cereals, which
is 46% of the crop subsector’s income. The production volume reached 27.2mn tonnes, recording an
increase of 9.4% y/y. The Philippines’ cereals production consists of rice and corn, of which rice is the
staple food for the country’s population, providing about 45% of the average Filipino’s daily calorie
intake, and claiming between 20% and 30% of household budgets, according to the USDA. Rice is
mainly produced in Ilocos Region, the Cagayan Valley, and Central Luzon. Corn is the feed grain
preferred by local farmers. The country’s major corn producing areas are the Cagayan Valley, Northern
Mindanao, and SOCSARGEN Region. In 2017, favourable weather conditions resulted in better yields for
rice and corn. While the average farmgate price of rice registered a 4.5% y/y increase in 2017, the price
of corn fell by an average of 6.3% y/y, due to oversupply on the market.
Challenges
There is no commercial production of wheat in the Philippines, which makes the country entirely
dependent on wheat imports. At the same time, it is a major rice importer, since the rice produced
domestically is insufficient to feed the country’s population of over 100 million. The government aims
to increase yields and achieve self-sufficiency in rice by 2022; however, this will be a challenge given
the growing population and the rising demand for food. The major constraint on grain production in
the Philippines is the scarcity of water for irrigation – due to climate change, as well as weather
disturbances – which makes the crop sector performance largely a function of weather.
Outlook
BMI projects that the Philippines’ rice production will increase to 12.1mn tonnes by 2021. This increase
will be fuelled by improvements in infrastructure and yields in line with the country’s self-sufficiency
target. The government is preparing to remove the QR system under which the Philippines currently
imports rice. The move is expected to increase the imports of cheap rice and threaten the livelihood
of domestic farmers. Those farmers who are unable to increase their production efficiency and bring
down operating costs are likely to switch to corn production after the QR is scrapped, and this is the
main factor behind the projected increase in corn output in the next few years. Demand for wheat and
flour is set to increase in the future, driven by an expanding population, rising disposable incomes,
and a growing middle class eager to switch to a westernised diet involving higher wheat consumption
than the traditional national diet. Demand for feed-grade wheat and corn is also projected to rise,
against the backdrop of the burgeoning hog and poultry farming subsectors.
Source: USDA, Business Monitor, BMI, PSA

Coconut Production Highlights
Overview
The Philippines is the world’s second-largest coconut fruit producer, after Indonesia, and the largest
coconut oil producer and exporter. The country is home to some 340mn coconut trees, which produce
approximately 15bn nuts a year, according to the United Coconut Association of the Philippines
(UCAP). The coconut industry provides a livelihood to about a third of the Philippine population.
Coconut products are a flagship Philippine export, with top overseas markets including the US, Japan,
Germany, and China. Coconut product exports grew at a staggering rate of close to 1,000% between
2008 and 2015, driven by coconuts’ reputation as a “superfood” and growing demand from health-
conscious consumers worldwide and from the cosmetics industry. In 2017, the country produced
14.0mn tonnes of coconuts, up by 15.3% y/y. The value of production rose by 12.5% y/y to PHP 120.9bn.
The Philippines’ coconut production is concentrated in Davao Region, Northern Mindanao, and the
Zamboanga Peninsula.
Challenges
Even though the coconut industry is a significant generator of employment in the Philippines, some
60% of coconut farmers in the country live below the poverty line, global news channel CNN reported
in 2015. Coconut farmers earn an average of PHP 25,000 a year, the National Anti-Poverty Commission
(NAPC) said in the same year. The industry is plagued by many layers of middlemen, who benefit at
the expense of small farmers. Processing inefficiencies, high levels of wastage and expensive
transport are additional challenges which the sector faces. In 2015, the Philippine government
acknowledged that farmers need to move away from copra to higher value-added products, but most
coconut farmers lack the technology and equipment for such products. The low productivity of the
sector is another issue that needs to be solved. Many of the Philippines’ coconut trees were planted
not long after World War II and are currently past their prime nut-bearing years and need to be
replaced. Other challenges include extreme weather conditions, such as Typhoon Haiyan in 2014,
which damaged 44mn coconut trees.
Outlook
The outlook for coconut product demand is bright, and the Philippines is aware of the untapped
potential of many coconut product segments apart from copra. The government encourages farmers
to diversify into higher value-added products such as coconut water, coconut sugar and others, in
order to reduce their dependence on coconut oil. To modernise the industry and increase the
capabilities of farmers, a portion of the PHP 75bn coconut levy fund will be allocated to R&D, PCA
stated in 2017. The Agency also said it planned to distribute 20mn coconut seedlings over the next
three years through its massive replanting programme, in a bid to revitalise the coconut industry in
the country. At least half of the PHP 1.4bn budget proposed by the PCA will be allocated to this
replanting, most specifically in areas severely hit by typhoons and affected by pests and diseases.
Source: UCAP, CNN, PSA, PCA

Sugar Production Highlights
Overview
Sugarcane is not sensitive to soil type and is therefore grown in many areas across the Philippines.
More than half of the Philippines’ sugarcane is grown on the island of Negros, followed by Mindanao
and Luzon. Sugar farming is very fragmented, but the individual farmers, numbering about 65,000, are
grouped into four major sugarcane planter federations. As of end-2016, the country had 24 sugar mills,
running at about 60% capacity, and 11 sugar refineries reporting about 73% capacity utilisation. Most
of the annual sugar output is consumed domestically, and about 20% is exported, mainly to the US.
Tightness of supply and bad weather led to sugar price hikes in 2015 and 2016, but prices started to
fall with the return of normal weather conditions in 2017, which boosted output. Sugarcane production
expanded by 30.9% y/y to 29.3mn tonnes. The annual farmgate price of sugar in 2017 was on average
23.8% lower than that in 2016. Another major reason for the decline in prices was the influx of HFCS
and other sugar substitutes, which reduced the use of sugar in beverage manufacturing.
Challenges
As is the case with other agricultural products in the Philippines, sugar output is highly dependent on
weather conditions. Sugar production has sometimes been seriously affected by extreme weather
conditions caused by the El Nino and La Nina phenomena. Output volumes are also challenged by the
decline in sugarcane area, reportedly the result of the conversion of land from agricultural use to
other commercial and industrial purposes, such as solar energy parks and real estate development
projects. The sector has limited opportunities for export, as the production costs of Philippine-made
sugar are high compared to those in neighbouring countries. At the same time, domestic sugar
producers are challenged by the imports of low-priced HFCS that have taken place in recent years.
Outlook
Demand for sugar, both on the domestic front and in the US (the country’s top export market), is
likely to remain high for the foreseeable future. BMI Research projects that the Philippines’ annual
sugar production will grow by 22.9% to 2.6mn tonnes by 2021. At home, drivers for the industry include
an expanding food-processing industry and rising population. Another positive development has been
the adoption of the Sugarcane Industry Development Act and the Sugar Industry Roadmap, which are
intended to spur sector development through improved infrastructure, more R&D, and farmer
diversification into speciality muscovado sugar, ethanol and other sugar by-products. Boosting sugar
yields is particularly important, since the Philippines reports lower yields than its major competitor,
Thailand, and is further plagued by declining production because of bad weather and conversion of
land to alternative uses.
Source: USDA, BMI, PSA

Main Events
§ The eruption of Mount Mayon – a volcano in the Philippines’ north-eastern Albay province – on
January 22, 2017 caused huge damage to agriculture. According to the initial report of the provincial
agriculture office, almost PHP 100mn worth of agricultural crops were damaged, including rice
paddies with an expected yield of over 11,000 tonnes worth PHP 73mn, 35,000 tonnes of vegetables
and root crops worth PHP 19mn, as well as 291 tonnes of corn worth more than PHP 6mn.
Nationwide, a total of 2,000 rice farmers, 3,000 vegetable farmers and 190 corn producers suffered
losses as a result of the eruption.
§ In June 2017, three key industry players – BASF, Cargill, and P&G – along with the German federal
development enterprise GIZ, announced their collaboration in a development partnership to
upgrade the production of sustainable certified coconut oil in the Philippines. The main goal of the
development partnership is to increase the incomes of coconut farmers by improving the
productivity of their farms. This will be achieved through trainings in Good Agricultural Practices
(GAP), intercropping, and enhanced farm management skills. Around 3,000 smallholders in
Southern Mindanao and Southern Leyte in the Philippines will benefit under the programme.
§ In December 2017, BASF inaugurated a new Rice Knowledge Centre at its Agricultural Research
Station in Bay, a municipality in Laguna province in the Philippines. The new facility centralises
BASF’s global expertise in rice cultivation, and supports the delivery of enhanced agronomic and
technical support to farmers seeking to increase their productivity more sustainably.
Source: The Philippine Star, The Philippine Inquirer, Far East Agriculture

Crop Production Volume
Rice and Corn Production Volume, thou Coconut and Sugarcane Production
tonnes Volume, thou tonnes
29,287
19,276
18,968
18,150
25,030
17,627
22,926
22,371
14,735
14,696
14,016
13,837
7,915
7,771
7,519
7,219
2014 2015 2016 2017 2014 2015 2016 2017
Rice Corn Sugarcane Coconut
Fruit Production Volume, thou tonnes Coffee, Tobacco and Rubber Production
Volume, thou tonnes
14,696
14,735
14,016
13,837
453
407
398
363
9,166
9,084
8,903
8,885
2,672
2,613
2,583
2,507
76
72
69
62
61
57
56
51
903
885
814
737
70
72
68
69
2014 2015 2016 2017 2014 2015 2016 2017
Coconut Banana Pineapple Mango Abaca Rubber Coffee Tobacco
Source: PSA

Crop Production Value
Rice and Corn Production Coconut and Sugarcane Production

Value, PHP mn Value, PHP mn
120,903
378,219
108,478
104,932
349,182
96,073
311,088
304,599
45,852
44,517
43,102
41,299
100,629
94,678
92,481
85,326
2014 2015 2016 2017 2014 2015 2016 2017
Rice Corn Coconut Sugarcane
Fruit Production Value, PHP mn Coffee, Tobacco and Rubber Production

Value, PHP mn
11,413
11,285
147,705
147,432
136,350
130,696
8,631
8,102
6,034
5,786
5,721
5,687
4,334
3,914
3,799
3,727
28,841
25,550
23,565
23,209
20,946
20,384
19,731
19,356
4,406
4,223
3,316
2,948
2014 2015 2016 2017 2014 2015 2016 2017
Banana Pineapple Mango Abaca Rubber Coffee Tobacco
Source: PSA

07
FISHERIES

07 FISHERIES CONTENTS
Highlights
Overview
The Philippines, encompassing more than 7,100 islands, is a major fishing nation and is the world’s
second-largest archipelagic state, after Indonesia. It is the country with the longest coastal lines at
39,284 km. Fisheries contributed 12.9% to agricultural GVA, and 1.2% to national GDP in 2017. In that
year, the GVA output in value terms of fishing subsector grew by 6.3% as a result of higher fish prices
– following a drop of 4.6% in 2016. Aquaculture typically accounts for about a half of the country’s
total fish production. According to the Food and Agriculture Organisation of the United Nations (FAO),
most of the Philippines’ fish output tends to be consumed locally. The fishing and aquaculture
industry in the country employed some 1.2mn people in 2017 nationwide, according to PSA data.
Fisheries and aquaculture were the only agricultural subsector to report a drop in output in 2017 in
volume terms, mainly due to unfavourable weather conditions. The Philippines produced 4.3mn tonnes
of fish in 2017, a decline of 1% y/y, which was offset by the higher product prices leading to a positive
y/y growth in the subsector’s GVA.
Challenges
The Philippines is one of the world’s most disaster-prone countries, which is a major challenge for
fishing operations. The Philippines, together with five other countries, is a member of the Coral
Triangle Initiative (CTI), an effort to address issues such as food security, climate change, and marine
biodiversity. A serious problem is water contamination with chemicals, as well as illegal fishing
practices such as “electric pulse fishing” and “cyanide fishing”. The sector also has to deal with
overfishing and smuggling, which threaten fish populations. Although the country has abundant
water resources which can be used to develop the fishery and aquatic subsectors, it continues to
import fish and aqua products to meet the needs of the local market.
Outlook
Fish will continue to be one of the Philippines’ major export products, as demand for seafood in the
major consuming economies is projected to remain strong in the short-to-medium term. In recent
years, the Philippine government is increasing its support to the fishery subsector in an effort to
guarantee food security. In June, the MA announced that the country’s major river basins and lakes
will be seeded with fingerlings of indigenous and non-invasive fish species over the next five years
under a project named BASIL. In August 2017, the DA launched the first two Filipino-made multi-
mission patrol vessels to combat illegal and unregulated fishing in the Philippines’ offshore areas.
According to the Philippine Development Plan 2017-2022, the fisheries subsector’s three major groups
– commercial, municipal, and aquaculture – are projected to grow by 2.5%, 1% and 2% at constant 2000
prices, respectively.
Source: FAO, The Philippine Star, Manila Bulletin, PSA

07 FISHERIES CONTENTS
Fisheries Production
Fish Production Volume, thou tonnes

5,000 4,705 4,689 4,649
4,500
4,500 4,354
1,068 1,107 1,085 4,000
4,000
1,016
3,500
3,500
3,000 1,264 3,000
1,244 1,217
1,138
2,500 2,500
2,000 2,000
1,500 1,500
2,373 2,338 2,348 2,201
1,000 1,000
500 500
0 0
2013 2014 2015 2016
Aquaculture Municipal Commercial Total
Fish Production Value, PHP mn
300,000 244,552 250,000

241,944 239,702
228,934
250,000
200,000
69,923 66,190 64,875
200,000 58,867
150,000
150,000
80,898 81,805 81,486 78,926
100,000
100,000
50,000
50,000 93,731 93,949 93,341 91,142
0 0
2013 2014 2015 2016
Aquaculture Municipal Commercial Total
Source: PAS

CONTENTS
Fisheries by Product
Production Volume, thou tonnes Production Volume, thou tonnes

1,742
1,727
1,664
261
1,588
1,566
1,550
242
234
234
1,415
1,405
225
220
212
187
143
140
106
103
416
403
402
393
313
312
311
301
50
49
48
46
2014 2015 2016 2017 2014 2015 2016 2017
Others Seaweed Milkfish Tilapia Skipjack Roundscad Yellowfin Tuna Tiger Prawn
Production Value, PHP mn Production Value, PHP mn

114,039
109,378
109,110
108,632
15,752
15,381
14,956
14,671
14,636
14,279
14,229
13,455
11,812
11,535
11,370
10,982
10,518
8,315
8,301
6,105
38,041
36,244
35,712
35,387
22,994
22,444
22,421
21,494
20,967
20,829
20,770
19,347
2014 2015 2016 2017 2014 2015 2016 2017
Others Milkfish Tilapia Tiger Prawn Skipjack Roundscad Yellowfin Tuna Seaweed
Source: PSA

08
LIVESTOCK
AND POULTRY

08 LIVESTOCK AND POULTRY CONTENTS
Highlights
Overview
Pork is the main meat produced and consumed in the Philippines. Together with rice and chicken, pork
is one of the staple foods of the country, accounting for 81.6% of the livestock subsector’s output. In
the poultry subsector, chicken is the predominant variety, with a 75.4% share of all poultry output in
volume terms. Central Luzon is the main region for livestock and poultry breeding. The Philippines is a
large importer of red meat: in 2016 it imported 113,050 tonnes of frozen bovine meat, mainly from
India, Australia, and the US. Chicken meat is another product which is high in demand in the
Philippines. In 2017, the country produced 1.7mn tonnes of chicken, and imported 235,770 tonnes,
mainly from the US, Netherlands, and Brazil. The country is heavily reliant on milk imports. The
Philippines imports mainly milk powder from the New Zealand and the US.
Challenges
Livestock and dairy farming in the Philippines is dominated by backyard producers, who face
difficulties achieving economies of scale and quality meeting the requirements of the growing
domestic meat processing industry. In spite of significant domestic production, the country imports
both pork and chicken meat, which exposes the segments to commodity price fluctuations and
exchange rate pressures. Domestic production of dairy products is very limited: the country produced
22,760 tonnes of dairy products in 2017, compared to 431,430 tonnes of milk and cream products
imported in 2016. Meat smuggling is another challenge with negative effects. Following reports on
rampant smuggling of agricultural products, the DA ordered the cancellation of all import permits for
various agricultural products, mainly meat. Philippine meat importers had to reconfirm their orders,
which raised concerns about delays and interruptions in meat imports into the country.
Outlook
Meat consumption in the Philippines is expected to increase in the short-to-medium term, driven by
growing disposable incomes, a burgeoning middle class, urbanisation, and a shift towards a more
meat-heavy western diet. The demand for fresh meat in the hotel and restaurant industries continues
to rise. The demand for convenience and pre-packaged foods will spur growth in meat processing as
well. This, in the absence of domestic sector consolidation, is projected to result in higher reliance on
imports. The performance of the domestic animal farming industry will also hinge on its ability to
boost food safety and quality by improving farm hygiene and access to quality feed. The Philippine
Development Plan 2017-2022 targets an increase of GVA growth in both the livestock and poultry
subsectors to 3%-4% at constant 2000 prices in 2022. The annual growth rate of milk and dairy
production is expected to increase from 1.8% in 2015 to 10% in 2022.
Source: The Philippine Star, PSA, NEDA

Main Events
Comments
§ In March 2017, Thailand’s largest agricultural company, Charoen Pokphand Group (CP Group),
announced that it was planning to invest an additional USD 2bn in the Philippines to expand its
hog and chicken production in the next five years. The expansion is expected to create at least
2,000 jobs. The project will have 10 modules of 6,000 hectares each for corn and soybean production
to be used as livestock feed. The group will continue to use its production model of entering into
contract growing agreements with local growers or partnering with entrepreneurs who will build
facilities on a lease agreement.
§ In August 2017, two UK organisations – the Department of Environment, Food and Rural Affairs
(DEFRA) and the Agriculture and Horticulture Development Board (AHDB) -- announced that the UK
and the Philippines had signed a deal worth about GBP 34mn on British beef exports to the
Philippines over the next five years. In addition to this, GBP 5.5mn worth of beef from the UK
province of Northern Ireland will be exported to the Philippines over the same period. This followed
a decision in May 2017 by the World Organisation for Animal Health to give Northern Ireland
“negligible risk” status – the best possible rating – in respect of the cattle disease Bovine
Spongiform Encephalopathy (BSE).
§ On December 5, 2017, Cargill Joy Poultry Meats Production Inc (C-Joy) opened its new poultry
processing plant in the Philippines. C-Joy is a JV between the US-based commodities conglomerate
Cargill and Jollibee Foods Corporation, the Philippines’ biggest fast food chain operator. With a
processing capacity of 45mn chickens per year, the newly-established plant is the largest in the
country and provides dressed and marinated chicken to meet increased demand in the Philippines.
A total of USD 17.5mn was invested in the plant.
Source: The Philippine Star, Manila Standard, The Philippine Inquirer, Far East Agriculture

Production Volume
Livestock and Dairy Production,

Comments thou tonnes
In 2017, the Philippine production of hog meat
increased by 1.5% y/y to 2.3mn tonnes, while
chicken meat production went up by 4.3% y/y to
2,265
2,232
2,120
1.7mn tonnes. The output of meat from domestic 2,032
cattle, carabao and goat, marked slight declines
on the previous year, due to higher demand for
hog and chicken meat. Dairy production rose by
7.6%, spurred by increased demand from the
domestic market coupled with support from the
National Dairy Authority (NDA), which continued
to provide technical and management
interventions to enhance farmer efficiency. 270
267
266
261
145
144
143
142
According to the NDA, milk production from NDA-

77
77
77
76
23
21
20
20
assisted and monitored dairy farms accounted for

2014 2015 2016 2017
73% of the country’s total milk production in 2016.
In that year, too, the NDA purchased 280 heads of
cattle from New Zealand for breeding purposes,
in order to accelerate the development of the Hog Cattle Carabao Goat Dairy
domestic dairy production.
Egg Production, thou tonnes Chicken and Duck Production,

thou tonnes
492.4
1,745.9
1,674.5
1,660.8
461.7
444.6
1,571.8
415.7
45.4
44.2
42.4
41.5
34.6
33.9
32.2
31.1
2014 2015 2016 2017 2014 2015 2016 2017

Chicken eggs Duck eggs Chicken Duck
Source: PSA, NDA, The Philippine Star

Production Value
Comments Livestock and Dairy Production, PHP mn

The production value of all livestock and poultry
subsector categories marked y/y growth in 2017,
241,847
driven by higher average farmgate prices for all
products except chicken meat. Chicken prices
211,427
206,711
204,105
dropped significantly at the end of the third
quarter of 2017 after avian flu outbreaks in
certain areas in North Luzon. Demand for chicken
softened, which meant both lower selling prices
and lower volumes sold. With the avian flu
already under control, chicken prices started to
recover in October. In 2017, the average farmgate
price of chicken meat went down by 1.9%, but this
was more than offset by higher production
volumes, and the net result was a 4.5% y/y
26,622
25,879
24,595
23,642
growth in the total value of chicken meat
12,594
11,342
11,101
10,740
9,702
9,123
8,932
8,649
produced. As a result of a significant output
809
715
653
622
expansion, the production value of dairy products

rose to PHP 809.3mn in 2017, an increase of 13.1% 2014 2015 2016 2017
y/y. The country’s hog meat production value

Hog Cattle Carabao Goat Dairy
went up 14.4% y/y in 2017, due to high demand
and prices.
Egg Production, PHP mn Chicken and Duck Production, PHP mn

50,875
156,604
149,801
145,936
144,916
46,223
42,695
40,148
4,363
4,084
3,779
3,662
2,866
2,807
2,835
2,696
2014 2015 2016 2017 2014 2015 2016 2017
Chicken eggs Duck eggs Chicken Duck
Source: PSA, The Philippine Daily

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EMIS Insights - Philippines Agriculture Sector Report 2018 - 2019 PDF

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THE PHILIPPINES

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EMISPDF us-eyintranet from 180.190.35.234 on 2020-10-02 09:31:02 BST. DownloadPDF.

AHFF Agriculture, Hunting, Forestry and Fishing

ARB Agrarian-Reform Beneficiary

BSP Bangko Sentral ng Pilipinas

CARP Comprehensive Agrarian Reform Program

CARPER Comprehensive Agrarian Reform Program Extension with Reforms

FAO The Food and Agriculture Organization of the United Nations

GARB Genuine Agrarian Reform Bill

GVA Gross Value Added

HFCS High Fructose Corn Syrup

MAV Minimum Access Volume

NCR National Capital Region

NEDA National Economic and Development Authority

NFA The Philippines National Food Authority

PCA Philippine Coconut Authority

PCIC Philippine Crop Insurance Commission

PSA The Philippine Statistics Authority

SRA Sugar Regulatory Administration

UCAP United Coconut Associations of the Philippines, Inc

USDA The United States Department of Agriculture

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02 SECTOR IN FOCUS p.13

03 COMPETITIVE LANDSCAPE p.32

04 COMPANIES IN FOCUS p.38

EMISPDF us-eyintranet from 180.190.35.234 on 2020-10-02 09:31:02 BST. DownloadPDF.

08 POULTRY AND LIVESTOCK p.68

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25.4% 9.6% 8th

*Data is for 2017.

Source: World Risk Report 2017, PSA, USDA, World Bank

PHILIPPINES AGRICULTURE SECTOR 2018/2019 6

Source: UK Department for International Trade, TMF Group, SGV

PHILIPPINES AGRICULTURE SECTOR 2018/2019 7

Key Player Revenues,

* End-October 2017 Data

Source: Philippine Statistics Authority, Company Data

PHILIPPINES AGRICULTURE SECTOR 2018/2019 8

Source: Philippine Statistics Authority, USDA, PwC, Reuters

PHILIPPINES AGRICULTURE SECTOR 2018/2019 9

Growth of GVA in AFF Sector, constant

140,000 142,095 140,000 860,000

69,334 71,635 740,000 1%

Male Female Total GVA in the AFF Sector % y/y change

Source: Philippine Statistics Authority, USDA, BMI, NEDA

PHILIPPINES AGRICULTURE SECTOR 2018/2019 10

PHILIPPINES AGRICULTURE SECTOR 2018/2019 11

PHILIPPINES AGRICULTURE SECTOR 2018/2019 12

Any redistribution of this information is strictly prohibited.

Source: Philippines Statistics Authority

PHILIPPINES AGRICULTURE SECTOR 2018/2019 14

Main Economic Indicators

2013 2014 2015 2016 2017

GDP, current prices, PHP mn 11,538,410 12,634,187 13,322,041 14,480,720 15,797,503

Real GDP, % y/y change 7.1% 6.1% 6.1% 6.9% 6.7%

GDP Fishing, PHP mn 197,766 195,504 193,778 184,796 196,474

Total GDP of Sector, PHP mn 1,298,356 1,431,578 1,366,866 1,397,615 1,524,184

CPI Inflation, annual average, % 2.9% 4.2% 1.4% 1.8% 3.2%

Inflation Target, upper limit, % 5.0% 5.0% 4.0% 4.0% 4.0%

Policy Rate, year-end, % 3.5% 3.7% 4.0% 3.5% 3.5%

Exchange Rate USD/PHP, year-end 44 45 47 50 50