Farm output sinks deeper into contraction in Q3, likely denting GDP

MANILA, Philippines — Farm output worsened its slump in the third quarter after the sector was plagued by a devastating combo of typhoons and a local outbreak of the deadly African swine fever.

Agriculture production collapsed 2.6% year-on-year in the July-September period, worse than 1.5% contraction recorded in the preceding quarter, the Philippine Statistics Authority reported Monday.

The drop reversed the 0.7% output growth posted in the same period last year. In the first nine months, farm production sagged 2.5% annually, making the Department of Agriculture’s watered-down growth target of 2% for this year almost impossible to hit.

PSA data showed the contraction in agriculture output, valued at P446.46 billion in the third quarter, was due to losses in livestock, crops and fisheries sub-sectors. The lackluster performance would likely put a damper on the third quarter gross domestic product figure, Nicholas Mapa, senior economist at ING Bank in Manila, said.

“The negative farm output will likely weigh on overall third quarter gross domestic product, which we expect to have grown by 3.8% year-on-year and 0.7% quarter-on-quarter,” Mapa said in an e-mail.

Broken down, crop production, which accounted for 54% of total agriculture output, inched down 0.2% year-on-year in the third quarter after a 6.7% annual growth in palay (unhusked rice) yield was overshadowed by typhoons’ damage to corn production, which dropped at an annualized rate of 18.6%.

Meanwhile, ING Bank’s Mapa said the lingering ASF outbreak continued to wreak havoc on the local farm sector. Data showed third quarter livestock output shrank 15.2% from a year ago, with notable annual declines recorded in production of hog (-17.8%), goat (-7.4%), dairy (-3.6%) and cattle (-2.5%).

The fisheries subsector fell 0.4% year-on-year last quarter, with production of bigeye tuna (tambakol) posting the biggest annual slump in output at 41.4%. Figures showed poultry production was the only sub-sector the posted growth during the period after expanding 1.3% year-on-year.

Historically, agriculture accounts for 10% of the country’s GDP employs about a quarter of Filipino workers. But despite its important role to the economy, the farm sector has been left behind by other industries while agriculture workers live in abject poverty. And the Duterte administration is now struggling to revive it.

State statisticians will report the third quarter GDP performance on Tuesday.