Agribusiness to the Philippines (2023)

Trends and opportunities

The market

The Philippines has a young consumer base of over 104 million people (Source: CIA World Fact Book, July 2017),with an estimated 20 million consumers enjoying rising income levels(average annual income of A$16,510), spending power and a growing appetitefor quality and premium imported products (Source: US Gain Report, May 2017). Strong population growthalongside rising per capita consumption of cereal, meat and horticultureproducts are resulting in increased dependency on agricultural commodityimports.

Australian agribusiness exporters represent a growing percentage of themarket and are seen as a reliable source of major commodities and products.Increasingly, Australia is also seen as a provider of innovativeagricultural technologies and services that contribute to enhancedproductivity. Australia is also seen as a strategic partner in helping thePhilippines improve food security and strengthen supply chains throughoutthe country. Australian agricultural exports to the Philippines increasedby 16 per cent, from A$ 618 million in 2015 to A$ 717 million in 2016.

The key agriculture exports in 2016 were: (Source: ABS Data on Global Trade Atlas 2016)

  • wheat (A$ 300 million)
  • meat (A$ 149 million)
  • dairy products (A$ 74 million)
  • fruits and nuts (A$ 22 million)

Opportunities

One of the factors driving growth is the change in how Filipinos buyagrifood products. Private consumption of imported products is growing assupermarket chains challenge the dominance of local wet markets, with theformer providing broader accessibility and variety of productstraditionally offered merely in the latter.

Moreover, a lack of government and private financing, inadequateinfrastructure and adverse weather events in recent years have affectedlocal supply chains and hampered efforts to increase productivity.

Lastly, the retail and food service sectors are enjoying a growing healthyand quality-conscious consumer base. The widespread use of digitaltechnology is also creating digitally-informed and up-to-date consumers whoare deemed by retail and food service sectors as key target markets forimported agrifood products.

These trends present multiple opportunities for Australian companiesinterested in supplying premium food and agrifood commodities.

Wheat and other grains

The Philippines milling wheat demand is forecast to grow amidst anexpanding middle class and sustained economic growth. Feed wheat importsare likely to further increase fueled by the country’s rising livestockand poultry industries. The US continues to dominate the local millingwheat market. At nearly 2.05 MMT (A$ 688 million), the Philippines ranks asthe US’s third largest export market for milling wheat (Source: USDA Gain Report, March 2016).

New supply opportunities exist in the food milling industry with new millscoming online (four in the last two years) and a new generation ofmanagement who are more open to exploring wheat varieties from differentcountries of origin, outside the traditional US wheat suppliers.

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The local baking industry is also undergoing adjustments. Consolidation andincrease in the market share of large and sophisticated bakery operationsare noticeable, as they displace the small traditional ‘mom and pop’ bakeries. Growing demand for mass-produced yet high-quality baked productsis a trend which local industry contacts expect to continue in theforeseeable future.

These recent developments indicate increasing and long-term wheat flourdemand in the future, thus providing trade and investment opportunities forAustralian grains and flour exporters.

The Philippines livestock industry is likewise flourishing and attractinginvestments from large multinational companies, with Australia owning alion’s share of the feed wheat market in the Philippines due to quality andconsistency. Importation of feed wheat has been increasing in the lastthree years with total volume reaching around 2.5 million tons in calendaryear (CY) 2016. Continued demand from the consolidating hog industry andthe growing broiler and layer operations is also evident.

Due to rising income as a result of the strong performance of thePhilippine economy, local industry contacts anticipate demand for millingand feed-grade wheat to steadily grow.

Temperate fruits and other vegetables

The value of Australia’s fruit exports to the Philippines has grown fromA$ 500,000 in 2010 to more than A$ 22 million in 2016, due to improvements inprotocol for the importation of Australian fruits and the strength of ourrelationship with key Filipino importers. The Now in Season Australiaretail promotions, which were conceptualised and piloted in thePhilippines, established Australia as a strong counter-seasonal supplierfor imported temperate fruits.

The Philippines has become an emerging market for Australian horticultureexporters and will continue to be a key export destination for Australianfresh produce.

Opportunities exist to further increase volumes for key fresh fruitcommodities such as table grapes and citrus while the changing consumptionbehaviour provides larger prospects for vegetables, stone fruits, apples,pears and berries.

Reduced chipping potato tariffs in the Philippines opens opportunity for Australian exporters until 2020

In-quota tariffs for chipping potatoes under the Philippine Government’sMinimum Access Volume (MAV) have been significantly reduced from 40% to 3%,effective from 2017 to 2020. This is stipulated inExecutive Order No. 20(EO 20), which expands the opportunities for increased imports for chippingpotatoes.

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Australian chipping potato exporters stand to benefit if they work withPhilippine importers who apply for in-quota MAV, as tariffs under the ASEANAustralia, New Zealand Free Trade Agreement (AANZFTA) still remain at 40%tariff for both in-quota and out-of-quota chipping potato imports.[1]Reduced tariffs at 32% under the AANZFTA will take effect only in 2020onwards.

HS Code MFN
2016
MFN - EO No. 20
June 2017 - 2020
AANZFTA
2017 - 2019
AANZFTA
2020 and subsequent years
07.01

0701.90.00A

Potatoes, fresh or chilled
Other:
  • Chipping Potatoes In-Quota
40% 3% 40% 32%
0701.90.00B
  • Chipping Potatoes Out-quota
40% 40% 40% 32%
0701.90.00C
  • Other In-Quota
40% 40% 40% 32%
0701.90.00D
  • Other Out-Quota
40% 40% 40% 32%

Filipinos indulge in snacking, both of sweet and savoury foods. The savourysnack industry is expected to reach a retail value growth CAGR of 4%reaching A$2.4 billion in 2023. Potato chips will continue to be the keygrowth driver with a 10% forecast growth in 2018, mostly due to localmanufacturing with multiple flavour innovations led by both local andimported brands, such as Universal Robina Corporation, Liwayway MarketingCorporation, Frito-Lay Corp., and Leslie Corporation. [2]

In 2017, the Philippines imported 20,500 tonnes valued at A$11.6M of freshor chilled potatoes, the bulk of which was used exclusively for chipsmanufacturing. Top potato suppliers are the United States valued at A$7.7M(66.8%) and China at A$3.4M (29.5%). [3]

Livestock

The Philippine government’s initiative to raise productivity levels and meet food demand presents an opportunity to supply livestock genetics, equipment and services. The government aims to provide modern and inclusive agriculture such as in irrigation, farm-to-market roads and the establishment of modern post-harvest facilities to minimize production losses.

Competitive Environment

Australia faces competition from the US, Canada, Ukraine, India, China andArgentina. Because of previous economic ties with the US, they are thedominant player and preferred market of choice. The US Wheat Associateshave a very strong presence in-market and continue their aggressivemarketing programs to sustain their position.

The implementation of the ASEAN Australia New Zealand Free Trade Agreement(AANZFTA) in 2010 has given Australia a competitive edge it did notformerly have against other international producers, including establishedexporters to the Philippines like the US, China, Chile and South Africa.

Tariffs, regulations and customs

The implementation of the AANZFTA is helping to strengthen Australia’scommercial ties with the Philippines. In particular, the reduction orelimination of existing tariffs has resulted in substantial new markets forAustralian producers. For example, before the agreement was forged, thePhilippines had just one agricultural line (of 1,407) with a zero tariff.As a result of the agreement, 75 per cent of all agricultural lines are noweligible for zero tariffs.

Significant gains include the elimination of:

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  • 10 per cent tariff for citrus and seven per cent for grapes and citrus
  • 7 per cent tariff for most stone fruits and apples
  • 3 per cent tariff of wheat exports to the Philippines
  • 3 per cent tariff of rolled or flaked oat grain

See theAANZFTA Tariff Finderfor more information on applicable tariffs.

Marketing your products and services

Market entry

The Philippines’ retail sector is continuing to expand and modernise, withseveral multi-national retailing groups now entering the market. Thisevolution is providing Australian producers with more avenues for thedistribution of their products.

While some companies are beginning to import directly, most still rely ontraders and agents to supply their produce.

When dealing with importers, Australian agribusiness companies should notethat the Philippines is a price sensitive market and at times Filipinoimporters will look at price over quality. This often happens in the tradeof commodities like grains, dairy and fresh produce.

Australian livestock exporters will often deal with a trader or breeder whosells to other farms, or purchases on behalf of the government. Co-load orco-shipment arrangements are also common for larger shipments of cattle.Air-freight shipment of thoroughbred horses and small ruminants, like goatsand sheep, are also becoming more common.

Distribution channels

There are various channels for exporting agribusiness products to thePhilippines. For agribusiness commodities such as grains, exporters caneither sell to traders or directly to food or feed millers.

Industry associations, which represent the majority of the feed millers andprocessors, also import wheat in bulk.

The channel for fresh produce exports is normally through wholesalers ortraditional importers who sell to distributors and/or supermarketconcessioners. There are a small group of importers who are alsodistributors and supermarket concessionaires themselves.

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Transport

Sea freight to the Philippines from Australia takes approximately two weeks(14-28 days), with transshipment points in Singapore or Hong Kong. Manila isthe main port, followed by Cebu (Visayas) and Davao (Mindanao). Sea freightis generally used by most exporters.

Airfreight takes eight to twelve hours and is the only option for perishables,but available space on flights is at a premium.

Links and industry contacts

Bureau of Animal and Industry
Bureau of Plant and Industries
Department of Agriculture
Federation of Goat and Sheep Producers Associations of the Philippines Inc.
National Dairy Authority

______________________________
[1] Tariff Commission of the Philippines, Executive Order No. 20 of 2017 [2] Euromonitor: Savoury Snacks in the Philippines, 2018 [3] Trade Map Data, 2017

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.

FAQs

How agribusiness contribute to the Philippine economy? ›

Agriculture plays a significant role in the Philippine economy. Involving about 40 percent of Filipino workers, it contributes an average of 20 percent to the Gross Domestic Product.

Why agribusiness is important in the development of the country? ›

Financing agribusiness can increase the added value of raw materials, strengthening local rural economies, food security and nutrition, and improving the quality of life in many homes at risk of exclusion and vulnerability.

What is agribusiness and why is it important? ›

Agribusiness refers to agriculture-related activities that put farmers, processors, distributors, and consumers within a system that produces, processes, transports, markets, and distributes agricultural products.

Why is the Philippines considered as an agricultural country? ›

The Philippines is an agricultural country with a land area of 30 million hectares, 47% of which is agricultural land. We have rich land, natural resources, hardworking farmers and agri-research institutions.

How agriculture helps the Philippine economy? ›

Agriculture dominates Philippine economy. It furnishes employment to about 3 million persons or about 60 per cent of the gainfully employed workers. Agricultural operations provide 40 to 45 per cent of the total national income and about 75 to 80 per cent of the country's exports.

What is the impact of agribusiness in the society? ›

The agribusiness approach is a method of examining farming problems in a new and more comprehensive setting. One benefit from this approach has been the release of workers—farm manpower—from agriculture for employment in new nonfarm occupations—including the armed forces during wars.

Why agribusiness is important for agriculture? ›

It helps to forge the necessary link between the agriculture and manufacturing sectors, which in turn can catalyse the development of broader manufacturing industries by providing material inputs for food processing, textiles and biofuels.

How important is agribusiness to your everyday life? ›

Agriculture impacts society in many ways, including: supporting livelihoods through food, habitat, and jobs; providing raw materials for food and other products; and building strong economies through trade. Source: The Balance Small Business.

What is the main problem of agribusiness in the Philippines? ›

Without irrigation, the soil would become dry and the crops will wilt. Pests and crop diseases have been a major problem in the agricultural sector of the Philippines.

What are the positive impacts of agribusiness? ›

It help to increase monthly income on an average 30.07% which contribute to socio-economic development of the area and economy through providing support to rural poor people and creation rural entrepreneurs.

What is agribusiness in your own words? ›

Agribusiness is a combination of the words "agriculture" and "business" and refers to any business related to farming and farming-related commercial activities. Agribusiness involves all the steps required to send an agricultural good to market, namely production, processing, and distribution.

Why agriculture is so called a backbone of the Philippine economy? ›

Agriculture is the backbone of the Philippine economy. The agriculture sector accounts for 11.3% of the country's gross domestic product in 2014 and 32% of total employment in 2012. About 67% of the population is directly or indirectly involved in the sector.

What is the present status of agriculture in the Philippines? ›

As of the second quarter of 2020, the agricultural production status in the Philippines managed to grow 0.5 percent. 5.0 percent growth in production. It shared 53.7 percent of the total agricultural output, where palay went up by 7.1 percent and corn by 15.4 percent.

Why agriculture is important in the Philippines essay? ›

Agriculture is important because it is the Filipinos' main employment and everyone are engaged in it, even children. Most of Filipinos should be wealthy with the use of our agriculture. Hence, it is still one of the social problems here in the Philippines.

Why agriculture is the main livelihood in the Philippines? ›

Due to its terrain and tropical climate condition, farming and fisheries have been the largest agricultural sub-sectors in the Philippines. Crop production, particularly of sugarcane, palay or rice, coconut, and bananas were among the highest nationwide and were also among the top export products.

How can agriculture contribute to the country's economic development? ›

Agriculture plays a major role in economic growth and development. As the provider of food it is a cornerstone of human existence. As a furnisher of industrial raw materials it is an important contributor to economic activity in other sectors of the economy.

What is the economic impact of agribusiness? ›

Agriculture, food, and related industries contributed $1.055 trillion to the U.S. gross domestic product (GDP) in 2020, a 5.0-percent share. The output of America's farms contributed $134.7 billion of this sum—about 0.6 percent of GDP.

How does agriculture impact the community? ›

Agriculture creates both jobs and economic growth. Communities also hold agricultural-based events, such as crop and livestock judging competitions and 4-H exhibits at their county fair. Many communities benefit from having Famers Markets where smaller farmers can interact directly with consumers.

How does agribusiness reduce poverty? ›

Firstly, increased productivity in agriculture would contribute to lower prices for local food, thus also reducing poverty among those not wor- king in agriculture.

What is agribusiness advantages and disadvantages? ›

The positives of agribusiness include more food security and cheaper prices for consumers. However, many farmers have been forced out of business and the big companies can be seen to have too much power over the market price of goods. There are also negative consequences for the environment from this type of farming.

What is the main importance of agriculture? ›

Agriculture provides most of the world's food and fabrics. Cotton, wool, and leather are all agricultural products. Agriculture also provides wood for construction and paper products. These products, as well as the agricultural methods used, may vary from one part of the world to another.

What is the effect of the development of agriculture in the Philippines? ›

Through commercial agriculture and improved infrastructure, small-holder farmers can increase their incomes and slowly become more self-reliant. Developing irrigation systems in rural farming lands which is an important aspect of the project, makes farming more efficient for the people of the Philippines.

Is agribusiness good for the environment? ›

The large agribusinesses that own the majority of the land and control trade in grain, biotech and industrial food production force out local food producers and impoverished people, and drive environmental degradation with the highly polluting activities and intensive water use at the core of their practice.

What is the biggest challenge in agribusiness? ›

Farmers need to deal with many problems, including how to: Cope with climate change, soil erosion and biodiversity loss.

What is Agribusiness management in Philippines? ›

Agribusiness management encompasses many aspects of the economy: agricultural producers, businesses that provide supplies and services to the producers, businesses that add value to agricultural products, and those that facilitate the marketing of agricultural products to an ever- growing marketplace”.

Is agribusiness profitable in the Philippines? ›

Agriculture and farming businesses have seen the fastest growth in the poultry industry. This is a highly profitable business that can be started with little capital and, as such, does not require specialization or complex knowledge.

Is agribusiness a good business? ›

Agribusiness is one of the most profitable businesses in the world. There are many ways on how you can make money in agribusiness industry.

How can you improve agriculture in our country? ›

How to Improve Farming Productivity
  1. Implementation of land reforms. For improving the production, land reforms are the first and predominant point. ...
  2. Interplant. ...
  3. Plant more densely. ...
  4. Plant many crops. ...
  5. Raised beds. ...
  6. Smart water management. ...
  7. Heat Tolerant Varieties. ...
  8. Use nitrogen.
10 Mar 2022

Why the agriculture sector in the Philippines is not improving? ›

The farmers lack support, training and a moral boost. First, they lack basic skills in farming. Many are not educated or are only elementary graduates. Second, good fertilizers, pesticides and seeds are imported from other countries, making them very expensive and unaffordable for the lowly farmer.

How important is agriculture in the Philippine economy Quora? ›

Agriculture is the base of a strong society, having a surplus of agricultural products will make the Philippines more progressive and stable, having to depends mostly on imports makes the country poorer.

What is the focus of Philippine agricultural industry? ›

The Philippines' key agricultural policy objectives focus on food security and poverty alleviation through guaranteeing a stable supply of staple food (rice) at affordable prices.

Is agriculture still the backbone of Philippine economy? ›

Agriculture is considered the backbone of the Philippine economy because it employs about 40 percent of Filipino workers.

What is the status of agriculture in the Philippines 2022? ›

Crops posted a -1.6 percent decrease in the value of production in the first quarter of 2022. It accounted for 58.0 percent of the total value of production in agriculture and fisheries. Palay and corn production registered declines by -1.9 percent and -0.2 percent, respectively.

Is the Philippines still an agricultural country? ›

The Philippines is still primarily an agricultural country despite the plan to make it an industrialized economy by 2000. Most citizens still live in rural areas and support themselves through agriculture.

What is the contribution of agricultural sector to the economy of the country? ›

The sector is important for inclusive growth, with agriculture being the key driver of the economy in the rural areas where most Filipinos live (but where poverty incidence remains high). 2 Agriculture remains a major source of employment, with about 36% of the total employed population working in the sector.

How does agriculture contribute to the economy? ›

Growth in the agriculture sector is two to four times more effective in raising incomes among the poorest compared to other sectors. Agriculture is also crucial to economic growth: accounting for 4% of global gross domestic product (GDP) and in some least developing countries, it can account for more than 25% of GDP.

What are the contributions of agriculture to economic development? ›

Higher agricultural valued added per worker implies that more income is generated from agriculture which contributes to lower levels of poverty in rural areas. Lower poverty rates in rural territories is also associated with more production and income diversification and with more market oriented economies (D.

Does the agribusiness sector has a significant role in the economy of our country? ›

It involves all the steps required to send an agricultural good to market, namely production, processing, and distribution. This industry is an important component of the economy in countries with arable land since agricultural products can be exported.

What is the important importance of agriculture? ›

Agriculture provides most of the world's food and fabrics. Cotton, wool, and leather are all agricultural products. Agriculture also provides wood for construction and paper products. These products, as well as the agricultural methods used, may vary from one part of the world to another.

Why is agriculture so important? ›

Agriculture is the world's largest industry. It employs more than one billion people and generates over $1.3 trillion dollars worth of food annually. Pasture and cropland occupy around 50 percent of the Earth's habitable land and provide habitat and food for a multitude of species.

What are the advantages and disadvantages of agribusiness? ›

The positives of agribusiness include more food security and cheaper prices for consumers. However, many farmers have been forced out of business and the big companies can be seen to have too much power over the market price of goods. There are also negative consequences for the environment from this type of farming.

What are the challenges of agribusiness? ›

Farmers need to deal with many problems, including how to:
  • Cope with climate change, soil erosion and biodiversity loss.
  • Satisfy consumers' changing tastes and expectations.
  • Meet rising demand for more food of higher quality.
  • Invest in farm productivity.
  • Adopt and learn new technologies.

Why is agriculture the backbone of our economy? ›

“It is, after all, considered as the backbone of the economy. It forms the basis for food and nutrition security and provide raw materials for industrialization.

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