May 17, 2004

 

 

Growth In Philippine 1st Quarter, Farm Output At 15-Year High

 

The Philippine farming sector turned in its best performance in 15 years in the first quarter, prompting the government to upgrade its economic growth forecast for the period.

 

Agricultural production expanded a surprisingly strong 8.16% on year in first three months of this year, the fastest growth rate since 1988 and up from 3.63% in the first quarter of 2003, the Department of Agriculture said Friday.

 

The farming sector, which accounts for about one-fifth of gross domestic product and employs roughly 40% of the country's work force, is now projected to grow 4% this year, compared with an estimated 3.8% in 2003.

 

Following the stronger-than-expected farm output data, Economic Planning Secretary Romulo Neri said GDP now is expected to have grown at least 4.9% on year in the January-to-March period, up from 4.3% forecast earlier.

 

The government is scheduled to publish first-quarter GDP data later this month.

 

The secretary said he had been expecting agricultural growth of less than 5% in the quarter because of an anticipated decline in poultry and livestock output.

 

Neri also said the farming sector's robust expansion improves the government's chances of meeting its full-year 4.9%-5.8% GDP growth target, which some have said may be too optimistic. The Asian Development Bank, for example, has forecast GDP growth of just 4.5% this year.

 

Agriculture Secretary Luis Lorenzo said the country's harvests were boosted in the first quarter by improved irrigation following the government's repair and expansion of the system.

 

Wider use of hybrid seeds, fertilizers and other farm inputs also shortened the growing season and increased productivity, he said. Favorable weather, particularly in northern Luzon and parts of Mindanao in the South, helped improve output as well.

 

But some economists doubt the farming sector can maintain the pace it set in the first quarter.

 

"The trend for agriculture has been 3%-3.5% growth every quarter," said Owen Dimaano, chief economist at Equitable PCI Bank, the country's third-biggest lender. She said the strong growth in the first quarter also may have been exaggerated by a low base of comparison the year before. "At best, it could grow 5% for the year," Dimaano said.

 

Nonetheless, stronger agriculture production should help underpin the domestic economy, which has been weighed down by weak investment. Since the later part of last year, foreign investors have been reluctant to invest in the country because of political concerns ahead of the just-completed presidential elections.

 

All the presidential candidates pledged to provide food for the poor, and so whoever emerges as the victor, the government is expected to continue supporting the farming sector.

 

Crop production, which accounted for half of the total value of farm output, rose 6.22% on year in the first quarter, bolstered by a jump in the harvesting of rice and corn.

 

The production of rice expanded 13.14% to 3.43 million metric tons in the quarter, while that of corn grew 13.37% to 1.53 tons.

 

The fishery subsector attained the highest growth rate at 20.84%. This was due mainly to increased production of seaweed in Mindanao following a rise in market demand for the product, the government said.

 

Poultry production rose 3.40% in the first quarter, while livestock output rose 3.32%.

 

The total value of agricultural production at current prices rose 13.83% on year in the quarter to 192 billion pesos ($1=PHP55.967).

 

Lorenzo said the agriculture sector has shown consistent growth for the past three year, which he said suggests that country has been "able to extricate ourselves from the boom-and-bust cycle that characterized our agricultural sector in the past."