Q3 farm output weighs on overall economic growth with first drop in seven quarters

THE COUNTRY’s agricultural production fell for the first time in seven quarters in the three months to September amid the onslaught of four storms, according to data released on Wednesday by the Philippine Statistics Authority (PSA), showing the sector weighed on overall economic growth for the same period which will be reported Thursday.

Farm output sank 0.83% in value terms last quarter, a reversal from a three-quarter-low 2.32% growth a year ago and the first contraction since the 1.11% drop recorded in 2016’s fourth quarter. Third-quarter farm data brought growth in the nine months to September to a nearly flat 0.15%, compared to 4.64% in last year’s comparable period and the 2.5-3.5% annual target for the sector under the 2017-2022 Philippine Development Plan.

Agriculture production has historically contributed about a tenth to gross domestic product (GDP) and accounted for a fourth of employed persons.

Q2 GDP ESTIMATE REVISED
The PSA on Wednesday also upgraded second-quarter GDP growth to 6.2% from six percent previously, on upward revisions to real estate, renting and business activity, mining and quarrying, and “other services”.

The updated second-quarter growth pushed up last semester’s average economic expansion slightly to 6.4% from 6.3% previously, but that still compared to 6.6% a year ago.

“We expect GDP growth in Q3 to be higher than the first half revised growth of 6.4% — at least 6.5% — due to the 30% growth in NG (national government) expenditures and the 8.8% real growth in manufacturing production. We also expect growth to be investment-led due to the 47% rise in NG capital outlays,” Finance Undersecretary Gil S. Beltran told reporters in a mobile phone message.

CROPS
Production of crops, which contributed 45.58% to total value of agricultural output in the third quarter, fell 3.64% compared to a year-ago 5.24% increase, fueling a 1.38% drop as of September compared to an 8.38% hike in 2017’s comparable nine months.

Weighing particularly on crop and overall farm output was a drop in production of palay, which made the biggest contribution among individual farm segments at 16.17% of total value. Palay production fell by 5.7% to 3.196 million metric tons (MMT) last quarter from 3.39 MMT a year ago. That was bigger than the 1.97% drop projected as of August on a smaller harvest area. The nine months to September saw production of this staple slip by 0.41% to 11.909 MMT from 11.959 MMT a year ago.

“This was attributed to damage brought by typhoons ‘Henry’, ‘Inday’, ‘Josie’ and ‘Ompong’ in the northern Luzon and the delayed planting due to the ongoing rehabilitation of irrigation facilities and late release of irrigation water in Cagayan Valley and CALABARZON (Cavite-Laguna-Batangas-Rizal-Quezon region). There were also reports of movement of planting caused by the late occurrence of rainfall in some part of MIMAROPA (Occidental and Oriental Mindoro, Marinduque, Romblon and Palawan) region,” the report read.

Typhoon Mangkhut, locally called Ompong, alone that ravaged northern and central Luzon’s crop fields on Sept. 15, wreaked P26.77 billion and P7.161 billion in farm and infrastructure damage, respectively, according to Oct. 6 government estimates.

Production of corn, which had the fourth-biggest contribution to total farm output value at 7.58%, saw volume drop 14.83% to 2.205 MMT last quarter from 2.589 MMT a year ago, compared to a 2.74% fall in July-September 2017. That compared to a 15.75% drop expected for the quarter in August. The PSA noted that, besides damage from last quarter’s four storms, corn output fell on delayed planting due to late rains in Cagayan Valley, which also saw a shift from this crop to banana, pineapple, ginger, eggplant, sugarcane and tobacco due to these alternatives’ higher buying prices. Production of this grain dropped 5.08% to 5.966 MMT year to date from 6.286 MMT in 2017’s comparable nine months.

OTHER SECTORS
Production of livestock, which contributed 18.89% to total farm output value, grew 2.15% last quarter compared to just 0.72% a year ago, fueling a two percent year-to-date expansion against 0.81% the past year. Most items under this category increased, except for carabao output which fell 1.63%. Hog production, which made the second-biggest contribution to the total after palay at 15.87%, grew 2.55% to 541,030 MT, against a 0.91% increase the past year.

Growth of poultry output, which contributed 18.44% to the entire sector’s value, picked up to 5.45% last quarter against 3.42% a year ago, driving year-to-date increase to 5.31% against 4.56% in 2017’s comparable nine months. “Output gains were noted for chicken, chicken eggs and duck eggs,” the report read. Production of chicken alone, which had the third-biggest contribution to total farm production value at 13.95%, grew 4.31% to 428,770 MT, against the year-ago 2.52%.

Production of fisheries, which contributed 17.08% to total agriculture output value, slipped by 2.64% compared to the year-ago 4.24% drop. Year-to-date production, however, fell by a bigger 2.21% from a 1.96% drop in January-September last year. “Production of milkfish, tiger prawn, roundscad and yellowfin tuna went down while tilapia, skipjack and seaweed posted output gains,” according to the report.

PRICES BETTER OVERALL
On the average, farmers got a better deal for their produce, with farmgate prices rising 7.71% compared to 3.61% a year ago.

Year-to-date, such prices went up 6.85% compared to 4.08% in January-September last year.

By sector, last quarter saw crop farmgate prices rise by 5.68% (compared to 1.34% a year ago), with rice going up 16.86% (compared to 0.76% a year ago) and corn surging 22.44% (turning around from the year-ago 3.98% drop).

Livestock farmgate prices rose by a slower 6.52% compared to the year-ago 13.81%, with the increase in hog prices alone slowing to 5.96% from 15.46%. Year-to-date, livestock farmgate prices grew 9.24% compared to an 11.24% increase in the nine months to September last year.

Prices of poultry recovered with a 13.03% third-quarter surge compared to the past year’s 7.67% drop, fueling a 4.85% year-to-date increase compared to a 1.79% fall in January-September 2017. Prices of chicken alone went up by 19.14% last quarter, turning around from the past year’s 10.8% drop.

Finally, the increase in fisheries prices picked up to 15.26% last quarter from 8.4% a year ago, driving the year-to-date rise to 10.33% compared to 7.97% in the nine months to September last year. — with R. J. N. Ignacio