1. business and industrial
2. agriculture and forestry
3. crops and seed

5.
Key Commodity Performance
This chapter analyzes the performance and competitiveness of the selected key
industries from 1993-1998 (pre-AFMA) and 1999-2004 (post AFMA). These
industries are as follows:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Rice;
Corn;
Coconut;
Sugarcane;
Banana;
Mango;
Onion;
Swine;
Broiler;
Chicken egg;
Bangus;
Tilapia;
Tuna; and
Seaweeds.
The specific areas discussed were production volume, area harvested and yield,
trade performance, benchmarking with relevant Asian countries (e.g. China,
Indonesia, Malaysia, Thailand, Vietnam), competitiveness analysis, and
strengths, weaknesses, opportunities and threats (SWOT) analysis.
5- 1
5.1 RICE
Production, Area, and Yield
5.1.1 Palay production has been increasing over the last twelve years averaging
4.9% growth. However, the severest El Niño that hit the country in 1998 caused
production to decline by 24% although recovery was made in the following years
with sustained growth. Growth over the pre-AFMA years (1993-1997) without the
effect of the severe El Niño averaged 4.7% which was slightly above the growth
during the post AFMA years (1999-2004) at 4.2%.
5.1.2 Area harvested over the pre-AFMA years grew by 4.1% annually
excluding the year 1998 when it dropped by 17.5%. During the post AFMA years,
area hardly moved at 0.6% growth and stood at four million hectares over the six
year period.
Figure 5.1.1 PALAY: Production and Area harvested, 1993-2004
16.00
5.00
14.00
Production ('M tons)
10.00
3.00
8.00
2.00
6.00
4.00
Volume
2.00
Area
1.00
-
Area harvested ('M
ha)
4.00
12.00
93 94 95 96 97 98 99 00 01 02 03 04
Source: BAS
5.1.3 Considering 1993 as a reference year, it would be noted that succeeding
productions were all above the base year at an increasing rate except for 1998
due to the severe El Niño phenomenon.
Production index
(1993=100)
Figure 5.1.2 RICE: Production Index, 1993-2004
180
160
140
120
100
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 2
5.1.4 In terms of regional distribution, five regions account for almost 60% of
total production. The highest contributor to rice production has been Central
Luzon with total share of 16-18% over the years. Western Visayas and Cagayan
Valley occupy the second and third positions with almost the same share while
the Ilocos is stable in the fourth spot. Bicol has been moved out of the fifth spot
by Soccsksargen. There has been no considerable change in production
distribution among the regions in the pre and post AFMA years.
Figure 5.1.3 RICE: Regional Distribution of Production, 1993, 1998 and 2004
1993
Total: 9,434,208 tons
1998
Total: 8,554,824 tons
Central
Central
Luzon
Luzon
18%
Others
16%
Others
Valley
41%
Western
41%
Cagay an
13%
Visay as
16%
Bicol
Ilocos
7%
9%
Cagay an
Valley
Soccsk
Ilocos
9%
sargen
10%
Western
Visay as
12%
8%
2004
Total: 14,496,784 tons
Central
Luzon
17%
Others
40%
Western
Visay as
13%
Soccsk
Ilocos
sargen
9%
8%
Cagay an
Valley
13%
Source of basic data: BAS
5.1.5 Production growth during the post AFMA years has been largely due to
the sustained growth of yield averaging 3.6% during the period compared to the
0.5% growth from 1993-1997. The post AFMA years were characterized by the
intensified campaign on the use of hybrid and inbred seeds.
5- 3
Figure 5.1.4 RICE: Average Yield, 1993-2004
4.00
3.50
3.00
Yield (ton/ha)
2.50
2.00
1.50
1.00
0.50
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
Trade
5.1.6 The Philippines is still a net importer of rice despite the mandate of AFMA
for self-sufficiency. There was minimal import in 1993-1995 which shot up in
1996 likely caused by the 1995 El Niño phenomenon. Imports peaked in 1998 to
two million tons as a result of the severe El Niño and again reached over one
million tons in 2002. Rice imports during the pre-AFMA period averaged
690,0000 tons which grew to an average 840,000 tons from 1999-2004. Total
import expenditure amounted to $1.27 billion and $1.13 billion during the preAFMA and post-AFMA period, respectively. It is expected that total imports for
2005 will reach 1.6 million tons.
5.1.7 Comparing the volume indices, it can be seen that there have not been
enough spikes in production to abate the seeming periodic surges in imports
following the occurrence of an extreme weather disturbance such as the El Niño.
Figure 5.1.5 RICE: Production and Import Volume Index, 1993-2004
1,200
Production
1,000
Import
Volume Index
(1993=100)
800
600
400
200
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
5- 4
Benchmarking
5.1.8 Benchmarking yield levels among selected Asian countries indicated that
the Philippines remains to be far behind China, Vietnam, and Indonesia although
it has overtaken Malaysia. Philippine yield performance from 1993-1998 was
lowest at negative 1.2% but it topped yield growth from 1999-2004 with 4.5%
followed only by Vietnam. The growth was probably driven by the strong push for
hybrid rice commercialization.
Table 5.1.1. RICE: Comparative Yields of Selected Asian Countries, 1993,
1998 and 2004
Country
Yield (ton/ha)
1993
1998
2004
China
5.85
6.35
6.31
India
2.83
2.88
3.03
Indonesia
4.38
4.20
4.54
Malaysia
3.03
2.88
3.25
Philippines
2.87
2.70
3.51
Thailand
2.17
2.47
2.59
Viet Nam
3.48
3.96
4.82
Source of basic data: FAO
5.1.9 In terms of producer prices, the Philippines came out to be the most
expensive producer of rice among selected Asian countries by a relatively wide
margin. The trend has not changed with the coming of AFMA although there was
a significant decrease in prices in 2002 for all countries except Indonesia.
Table 5.1.2. RICE: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2002
Country
Price ($/ton)
1993
1998
2002
China
149.43
165.00
140.87
India
141.38
119.73
116.09
Indonesia
147.28
93.86
132.47
Philippines
199.12
207.48
170.92
Thailand
126.97
160.28
103.00
Source of basic data: FAO and IFS
Competitiveness analysis
The discussion on competitiveness draws heavily on the study undertaken by the
UA&P Foundation on Global Competitiveness and Benchmarking (2000).
5.1.10 Rice production has been for domestic consumption over the past two
decades. The export parity/domestic price ratios were generally less than one at
exchange rates between P35.00 and P40.00 per dollar implying that rice
5- 5
provincial domestic prices were not competitive with the rice export parity price.
This price uncompetitiveness could be due to the relatively high per unit cost of
production across the rice production technologies and the long distances
between the producing provinces to the Manila wholesale market. (UA&P
Foundation, 2000)
5.1.11 The analysis of the import parity/domestic price comparisons showed that
domestic wholesale prices of rice across four major rice producing provinces
were competitive with price of rice imports. The price ratios were all greater than
one at different exchange rates (P35, P40, and P45) implying price
competitiveness. The results showed further that as the exchange rate increases,
the more domestic rice prices become competitive. (UA&P Foundation, 2000)
5.1.12 In terms of cost, the analysis showed that in general, the Philippines had
no competitive advantage in rice export except marginal competitiveness for high
technologies at the exchange rate of P45. (UA&P Foundation, 2000)
5.1.13 Results of the estimation showed that at different exchange rates and at
different production systems showed that the Philippines is generally an efficient
producer of rice to substitute for imports. The RCRs, the indicators of global
competitiveness were generally less than one, implying competitive advantage.
(UA&P Foundation, 2000)
SWOT Analysis
5.1.14 The strength-weakness-opportunity-threat (SWOT) analysis of an industry
will provide an understanding as to its overall condition, problems besetting the
industry and opportunities waiting to be tapped. The SWOT analysis is therefore
a vital input to formulation of strategies and action programs that should be
implemented to attain the goals of the industry.
5.1.15 The strengths, weaknesses, opportunities and threats of the rice industry
were identified across the various segment of the supply chain.
5.1.16 The SWOT analysis suggests that a holistic approach is necessary where
the actions of the different sectors converge to move the rice industry towards a
sustainable growth. Farmers must be willing to adapt to the recommended inputs
and mechanization. Grains businessmen must be willing to invest in modern
facilities. The government must provide the public infrastructures in transport and
irrigation. It must provide the investment climate together with improved policies
on credit, trade, and distribution (Table 5.1.3).
5.1.17 The rice industry is endowed with resources that are highly regarded as
modern and improved technologies. One of the strengths of the industry is the
availability of the high-yielding cultivars. Pest and disease resistant seeds and
adverse environment-tolerant rice varieties are available in the country. However,
5- 6
there is a problem with distribution of these HYV seeds. The instability of the cost
of fossil fuel-based inputs adds to the burden of the farmer.
5.1.18 An increase in the yield of the farmers can also be attributed to fertilizer
and pesticide use. Inputs such as these are available through local suppliers.
However, farmers complain of high price quotation to such inputs. High prices of
these inputs can be partly due to monopoly that exists in the inputs sub-sector.
An opportunity can be seen in the development of the biological/organic fertilizer
sources due to the high demand for organic rice abroad.
5.1.19 Credit allows rice farmers to expand and continue their production. Thus,
presence of informal creditors makes it easy for farmers to adjust to farming
systems that can increase their yields. But high transaction cost for the loan
lowers the net income of the farmers. The industry also identified the limited
accessibility of the farmers to formal loan sources. This can be due to
complicated requirements when applying for loans, high interest rates offered by
the banking institutions and low repayment performance of the borrower.
5.1.20 The Philippine rice industry is backed-up by the extensive R&D program
particularly from those of the academe and the government research agencies.
However, practices such as low utilization of certified seeds and low fertilizer
usage decrease the yield level that can be realized by the farmer. The local rice
farming shows a heavy dependence on inorganic fertilizers and pesticides. Low
farm mechanization is prevalent in the farm areas because of the high
investment costs for this technology. A typical rice farm shows lower yield but
studies conducted for the industry shows otherwise. Thus, adoption of the
recommendations posted by the R&D institutions can help the farmers increase
its annual yield.
5.1.21 Natural resources such as land and water, shows favorable condition for
rice farming. We have a high precipitation nationwide that gives farmers a
potential for high cropping intensity. However, only 44% of potential irrigable
areas are covered by irrigation services. Rapid land conversion, declining quality
of land and water due to salinization, declining water supply and irrigation
investments are identified as threats to rice production.
5.1.22 Rice sector is characterized by the availability of highly capable human
resource. These human resources are recognized as industrious farmers. An
intensive training in integrated crop management, balanced fertilization strategy
and crop diversification is necessary to increase yield, income and consequently
the farmer’s expertise. On the other hand, urban migration and aging farm labor
decreases the labor force available for the rice sector.
5.1.23 Processing subsystem is in charge of changing the form of the product.
The palay is processed to become milled rice, rice-based products or other rice
by-products as desired by the consumer. The processing subsystem offers
5- 7
strong technical competence on processing technologies. However, postharvest
facilities are lacking during the main season. Processors complain of high cost of
mechanical drying. Facilities available for them are either outmoded or poorly
managed. There are also inadequate processing facilities in the rural areas. The
demand for the postharvest facilities enhances the research and acquisition of
the government and private sector of the modern postproduction technologies.
These technologies increase the capacity of the postproduction manufacturing
industry and after-sale services. The investment for processing technologies is
needed because there is an increasing demand for rice-based food products.
5.1.24 One of the problems of the agricultural sector is the instability of supply of
the commodity such as rice in a given time of the year. Thus, a facility like
storage is needed to make rice available at any time. The rice sector is gifted
with the availability of warehouse spaces. However, storage facilities are either
not in good condition or located at displaced areas. Farmers should consider
storage because of the seasonality in supply. Prices are high when the
commodity is not in season. The industry should take into consideration the
declining public investments in storage facilities.
5.1.25 Established marketing channels characterize the marketing subsystem of
the rice sector. However, presence of the numerous market intermediaries
makes marketing and distribution perform inefficiently. There is an increase in the
marketing costs as another middleman joins the system. High transport costs
also add to the price paid by the consumers. Also, inadequate infrastructure
increases the cost of the middleman. Although the marketing subsystem is
confronted by quite a number of inefficiencies, there are still markets not totally
exploited. Rice sector has a continually growing huge consumer base because it
is the staple food for the Filipino. Demand for rice will increase as population
increases. The threats to marketing and distribution subsystem include the
budgetary constraints of NFA limiting procurement to less than 10% of total
marketed paddy, entry of cheaper imports and rice smuggling.
5.1.26 The institution subsystem shows the rice sector having strong linkages
and partnership with institutions focusing on rice researches such as PhilRice
and Rice R&D Network, IRRI, UPLB, SCUs, NFA, and other private companies.
These institutions extend consultations and services to the rice sector with the
aim of increasing the yield per hectare and the income received by the farmers.
However, the institution subsystem performs poorly in terms of governance. Rice
programs are put off because of frequent turnover of DA leadership. There is
also ineffective implementation of the national rice programs. Access of the rice
sector to international donor agencies like the FAO and USAID make it possible
for the government to continue research and development. An expansion of the
market for the rice sector is also possible because of the country’s membership
to international trade associations such as AFTA and WTO. Coordination among
the national and local governments is imperative in the implementation of rice
programs.
5- 8
Table 5.1.3. RICE INDUSTRY: SWOT Analysis
STRENGTHS
Inputs
1. Availability of HYVs and modern
technologies
2. Presence of input suppliers
3. Presence of informal creditors
Farm Production
4. Extensive R&D program
5. Adequate production technologies
6. Wide adoption of modern varieties
7. High precipitation nationwide
Processing
8. Presence of mills
9. Strong technical competence on
processing technologies
10. Availability of warehouse space
Marketing and Distribution
11. Established marketing channels
Institutions
12. Presence of institutions focused
on rice both government and private
13. Presence of national rice program
14. Presence of trained extension
workers and agricultural technicians
WEAKNESSES
1. Limited distribution and access to HYV
seeds
2. High costs of inputs (hybrid seeds,
fertilizers, pesticides)
3. High transaction cost
4. Slow irrigation development
5. Low utilization of certified seeds
6. Low fertilizer usage
7. Dependence on inorganic chemicals
8. Low farm mechanization
9. High production losses
10. Poor maintenance of irrigation
systems
11. High production cost
12. Low milling recovery
13. Lack of postharvest facilities during
main season
14. Outmoded processing facilities
15. High cost of mechanical drying
16. Lack of incentive for quality drying
17. Inadequate farm level grains center
18. Dilapidated warehouse facilities
19. Presence of diverse grain types
20. Numerous market intermediaries
21. High marketing cost
22. High transaction cost (transport)
23. Inadequate infrastructure (FMRs)
24. No continuity of rice programs
(frequent change of DA leadership)
25. Ineffective implementation of national
rice program
26. Weak extension system due to
devolution
5- 9
OPPORTUNITIES
1. Vitamin-enriched seeds
2. Biotic and abiotic stress-tolerant
varieties
3. Development of biological/organic
fertilizers
4. Increasing yield levels
5. Organic rice for export
6. Balanced fertilization strategy
7. Development of productivityenhancing technologies
8. Crop diversification
9. Availability of modern postproduction technologies
10. Growing consumer base
11. Opportunities for grain quality
12. Presence of international donor
agencies
Source: STRIVE and CFA-UA&P
THREATS
1. Spiraling cost of oil-based inputs
2. Monopolies of input sources
3. Limited access to formal loan sources
4. Pests and diseases
5. Land conversion
6. Declining water supply
7. Declining investment on irrigation
systems
8. Aging farm labor
9. Unregulated entry of imported rice and
rice-based products (smuggling)
10. Low cost of imported rice
11. Low priority of LGUs to agriculture
12. Lack of coordination between NG
and LGU in implementing rice programs
5- 10
5.2 CORN
Production, Area, and Yield
5.2.1 Corn production has been growing very slowly over the last twelve years
averaging 1.5% growth. The severest El Niño in 1998 caused production to
decline by 12% with no sustainable growth pattern in the following years. Growth
over the pre-AFMA years (1993-1997) even without the effect of the severe El
Niño averaged a negative 2.4% which was very much smaller than the growth
during the post AFMA years (1999-2004) at 3.7%.
5.2.2 Area harvested was on the decline for most of the years. It decreased
during the pre-AFMA years by 3.4% annually excluding the year 1998 when it
dropped by 13.6%. During the post AFMA years, area declined at a much lesser
pace at 0.8% and averaged 2.5 million hectares over the six year period.
Figure 5.2.1 CORN: Production and Area harvested, 1993-2004
6.00
3.50
5.00
3.00
Production ('M tons)
2.00
3.00
1.50
2.00
Volume
1.00
1.00
Area
0.50
-
Area harvested ('M
ha)
2.50
4.00
93 94
95 96 97 98
99 00 01 02
03 04
Source: BAS
5.2.3 Performance has not been encouraging based on production indices.
Corn production indices have been below the 1993 level for all years except
2004. The pre-AFMA years exhibited lower indices whereas improvement was
manifested in the post-AFMA period. There is need to sustain growth as in 2004.
Figure 5.2.2 CORN: Production Index, 1993-2004
120
100
Production index
(1993=100)
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 11
5.2.4 The top five corn producing regions account for 75-80% of total
production. The highest contributor to production has been changing over the
years: Soccsksargen (38%) in 1993, Northern Mindanao (22%) in 1998, and
Cagayan Valley (22%) in 2004. Cagayan Valley considerably increased its share
of production from only 9% in 1993 to 22% in 2004 while Soccsksargen halved
its share from 38% to 19% in the same period. Northern Mindanao, ARMM and
Davao have generally maintained their production share.
Figure 5.2.3 CORN: Regional Distribution of Production, 1993, 1998 and
2004
1993
Total: 4,797,977 tons
1998
Total: 3,823,184 tons
Northern
Others
Dav ao
21%
Soccsk
Region
Mindanao
25%
22%
sargen
5%
38%
Cagay an
Ilocos
Valley
9%
Others
6%
ARMM
Northern
10%
Mindanao
Soccsk
ARMM
Cagay an
12%
Valley
17%
sargen
20%
15%
2004
Total: 5,413,386 tons
Cagay an
Others
Valley
25%
22%
Dav ao
Region
5%
Soccsk
ARMM
Northern
12%
Mindanao
sargen
19%
17%
Source of basic data: BAS
5.2.5 During the post AFMA years, production growth was sustained with
increased yield growth averaging 4.4% as against the 1.1% growth from 19931997. However, these yield growths were unable to offset the reductions in area
harvested to greatly influence production levels. Corn yields have been very low
throughout the years thus the need to intensify the use of hybrid and open
pollinated varieties.
5- 12
Figure 5.2.4 CORN: Average Yield, 1993-2004
2.50
Yield (ton/ha)
2.00
1.50
1.00
0.50
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
Trade
5.2.6 The Philippines is a net importer of corn with AFMA’s mandate for selfsufficiency limited to white corn. There was minimal import in 1993-1994 which
surged over 300 times in 1995. Imports peaked in 1996 and 2000 to a little over
400,000 tons while 2004 exhibited the lowest imports at only 364 tons. Corn
imports during the pre-AFMA period averaged 210,000 tons which contracted to
an average 160,000 tons from 1999-2004. Total import expenditure amounted to
$41 million and $24 million during the pre-AFMA and post-AFMA period,
respectively. It should be noted that bulk of the total imports are used for feeds
and that there is also a considerable imports of corn substitutes.
5.2.7 From the volume indices of production and import, it can be seen that
production has not influenced imports which do not necessarily follow the pattern
of extreme weather disturbances.
Figure 5.2.5 CORN: Production and Import Volume Index, 1993-2004
66,000
Production
Import
Volume Index
(1993=100)
47,000
28,000
9,000
100
(10,000)
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
5- 13
Benchmarking
5.2.8 Benchmarking corn yield levels among selected Asian countries indicated
that the Philippines lags far behind China, Thailand, and Indonesia although it
has overtaken India in 2004. Philippine yield performance from 1993-1998 was
lowest at 1.3% but its yield growth improved from 1999-2004 with 4.8% following
Malaysia and Vietnam. The growth can probably be attributed to the expanded
plantings of hybrid corn seeds.
Table 5.2.1. CORN: Comparative Yields of Selected Asian Countries, 1993,
1998 and 2004
Country
Yield (ton/ha)
1993
1998
2004
China
4.96
5.27
5.12
India
1.60
1.80
2.00
Indonesia
2.20
2.65
3.34
Malaysia
1.90
1.85
3.00
Philippines
1.52
1.62
2.14
Thailand
2.73
3.34
3.87
Viet Nam
1.78
2.48
3.49
Source of basic data: FAO
5.2.9 In terms of producer prices, the Philippines came out to be the most
expensive corn producer among selected Asian countries which was $40 more
expensive than Indonesia. There was a significant decrease in Philippine prices
which saw the country with lower prices than Indonesia in 2002.
Table 5.2.2. CORN: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2002
Country
Price ($/ton)
1993
1998
2002
China
97.01
131.90
108.86
India
108.06
112.17
116.64
Indonesia
130.97
86.77
141.41
Philippines
170.72
144.54
124.41
Thailand
109.00
95.02
96.42
Source of basic data: FAO and IFS
Competitiveness analysis
5.2.10 The results of parity price ratio estimation showed that corn production
systems in Isabela and South Cotabato were not price competitive with corn
exports. The export parity/domestic price ratios across different levels of
technology and exchange rates were all less than one implying noncompetitiveness with the corn export price (UA&P Foundation, 2000)
5- 14
5.2.11 The import parity/domestic price ratios across three corn producing
provinces (Isabela, Nueva Ecija, South Cotabato) were greater than one implying
that the domestic production of corn in these provinces was price competitive. It
was noted that the higher the exchange rate, the more price competitive
domestic corn becomes in these provinces. (UA&P Foundation, 2000)
5.2.12 The analysis of corn cost competitiveness showed that the domestic corn
production systems in Isabela and South Cotabato were not competitive in the
export market (UA&P Foundation, 2000)
5.2.13 The estimates showed that domestic corn production across production
technology and province was more efficient than corn imports. Resource cost
ratios (RCR) were less than one for high technology production system in South
Cotabato as well as low technology hybrid in Isabela implying global
competitiveness. (UA&P Foundation, 2000)
SWOT Analysis
5.2.14 A strength of the corn industry is the availability of high yielding varieties,
Bt corn and modern technologies together with the presence of input suppliers
and seed producers. However, inputs are relatively expensive and some areas
have limited access to good quality seeds.
5.2.15 For the new technologies to be adopted in the farmers’ field, financing is
very important. Farmers often seek the very active informal sector for credit.
Though this could be counted as a weakness due to high interest rates of 5% per
month, at least there is some source of credit for the farmers who cannot afford
to borrow from formal lending institutions due to their basic inability to comply
with the usual requirements.
5.2.16 One opportunity where farmer can afford to borrow from formal institutions
is through the integration of production of high value crops and/or livestock to
diversify the sources of income. But there may be hesitation from banks and
government financing institutions (GFIs) to grant loans in such areas unless the
basic issue of loan payment, which is in turn related to market, is addressed. For
this to happen, the private sector and the government should unite and resolve to
act together to help the farmers in such area and condition.
5.2.17 Looking at the national picture, there is a surplus of white corn but when it
comes to the regional level especially in the consumption areas, there are
deficiencies. As previously cited, this is because of general separation of areas of
corn production from that of consumption (Table 5.2.3).
5.2.18 Corn’s productivity level has been increasing at slower pace and this can
be attributed to low usage of higher yielding varieties, low level of inputs
application and planting in more marginal areas. About 70% of area devoted to
5- 15
white corn is still planted to traditional varieties. By targeting even 50% of the
70% planted to traditional varieties, requirement could be met with the use of
available higher yielding varieties such as OPV or hybrids.
5.2.19 Productivity could also be enhanced by farming systems approach which
could also conserve the production environment most of which are in sloping
areas. White corn production could also expand under coconut areas. In this
case, their income from their main crop will be complemented by white corn
production.
5.2.20 At the processing plant level, post harvest facilities are usually available.
But farmers’ harvest sometimes does not reach this far due to the poor road
condition in such remote and marginal production areas. Technologies which are
suited for small farm/landholders like corn farmers are available from Agricultural
Mechanization Development Program (AMDP), Bureau of Post Harvest
Research and Extension (BPRE) and local manufacturers. However, funding is a
problem since the farmers’ economic condition won’t permit him to procure such
machine and implements.
5.2.21 Staple. As a staple, white corn has a strong regional demand in the
south specifically in Central Visayas, Zamboanga Peninsula, and Northern
Mindanao where consumption of white corn as staple is highest. However,
Central Visayas’ demand cannot be covered by its production and even that of
nearby regions of Eastern and Western Visayas. Thus, the distance from main
production source becomes a problem. Importing from Mindanao has usually
been the practice but it entails higher transport costs and grain quality
deterioration due to long distance traveled.
5.2.22 An opportunity could therefore be seen in the stabilization of rice and corn
prices especially in white corn eating regions. If demand of the white corn eating
regions will be sufficiently supplied, then at least there will be less demand for
rice in those regions thereby lessening the pressure on rice sector to produce
more. There are also opportunities in the snack food sector for corn as basic raw
material.
5.2.23 The big concern though is the lack of post harvest facilities. Preserving
grain quality is very essential. Spoiled grain would not translate to economic
benefits for the farmers. At the peak of harvest in the second semester which
coincides with the major production season, rainfall is also at its peak which
leads to more grain spoilage during this season. There is an obvious need for the
establishment of post harvest facilities. It is estimated that annual post harvest
loss is about 15 to 20% of harvest which would be around P4 billion. Investing
P1.2 billion would save such production annually but the problem is who will
shoulder the expenses (Corcolon, Salazar and de Torres, 2000).
5- 16
5.2.24 Feeds. There is a very big demand for corn in the poultry and livestock
industries. However, local production cannot meet the volume and quality
requirements which have led the end-users to resort to substitutes.
5.2.25 Cornstarch. The four cornstarch manufacturing plants in the country,
namely Cagayan Corn Products, Julu Cornstarch, PHILTRADE and Lamsan
have a total capacity of 590 mt per day or 184,080 mt per year. This high
capacity means additional market for our local corn farmers – both for white and
yellow. However, its industry association is not that active. As in staple grain, an
identified threat is the lack of post harvest facilities at field level. If there is no
accessible facility for drying and transport, supply of white corn to the
manufacturing plants will be affected.
5.2.26 In terms of institutions, the DA-Regional Field Units (RFUs) in coordination
with the local government units (LGUs) carry out at the farm level extension
activities such as trainings, field demos and distribution of technology packages,
among others. However, reaching farmers particularly those in remote areas can
be difficult physically due to the poor road condition.
5.2.27 Farmers sometimes are also not open to new technologies because of
perceived lack of sustainability in the assistance from the government. These
weaknesses are sometimes addressed by some non-government organizations
as well as through the use of radio which could reach highly remote areas.
5.2.28 A part of the internal revenue allocation (IRA) of the LGUs supposedly for
food security could be used to reach out to more corn farmers. There are some
LGUs however which may opt not to give priority to food security concerns. But
as the government persists in reaching out to the farmers and the farmers, in
turn, opening up to the government and new technologies, then, there could be
more opportunities for economic development in the countryside.
Table 5.2.3. CORN INDUSTRY: SWOT Analysis
STRENGTHS
Inputs
1. Availability of HYVs, Bt corn and
modern technologies
2. Presence of input suppliers
3. Very active informal creditors
4. Presence of seed producers
Farm Production
5. Surplus status for white corn
WEAKNESSES
1. Limited distribution and access to HYV
seeds
2. High costs of inputs (hybrid seeds,
fertilizers, pesticides)
3. Very high interest rates of informal
creditors
4. Low adoption of HYVs
5. Low level of inputs application
6. Planted more in marginal areas
5- 17
7. Practically no crop insurance
Post Production
6. Availability of postharvest facility at
the processing plant level
7. Availability of warehouse space
Marketing and Distribution
8. Established marketing channels
9. Strong regional demand for white
corn in the south
10. Strong demand from the poultry
and livestock industries
11. High cornstarch manufacturing
capacity
Institutions
12. Presence of corn program
8. Poor road condition in remote and
marginal areas
9. High cost of mechanical drying
10. Lack of postharvest facilities at field
level
11. Numerous market intermediaries
12. Long distance from production to
market
13. High marketing cost
14. Drop in local prices
15. No continuity of corn programs
(frequent change of DA leadership)
13. Strong coordination between DA- 16. Farmers not open to new
RFUs and LGUs
technologies due to perceived absence
of government assistance
14. Establishment of PhilMaize
17. Difficulty in physically reaching out to
farmers
OPPORTUNITIES
THREATS
1. Availability of hybrids and OPVs
1. Relative low profitability
2. Farming systems approach
2. Land conversion and crop shifting
3. Expansion under flat coconut areas 3. Lack of funds for postproduction
machineries
4. Availability of technologies from
4. LGUs not prioritizing food security
government and local manufacturers concerns
5. Augment rice supply in the south
5. Hesitancy of formal creditors to lend
6. Demand from snack food
6. Lack of infrastructure for quality
manufacturers
management
7. Development of bio-fuels e.g. corn 7. Presence of substitutes
ethanol
8. Other value added processed
products
Source: STRIVE and CFA-UA&P
5- 18
5.3 COCONUT
Production, Area, and Yield
5.3.1 Coconut production in nut terms grew moderately averaging 2.2%
annually over the last twelve years. The impact of the severest El Niño was felt
by the industry more in 1999 with a 9.5% production decline following another
negative year in 1998. Production made a marked recovery in 2000 and
continued to have modest gains in the following years. Growth over the preAFMA years (1993-1997) without the effect of the severe El Niño averaged 4.4%
which was slightly below the growth during the post AFMA years (1999-2004) at
4.5%.
5.3.2 Area harvested has relatively remained the same over the period ranging
from 3.1-3.25 million hectares. Average growth has been less than one percent
over the pre and post AFMA years.
16.00
3.30
14.00
3.25
12.00
3.20
Production ('M tons)
10.00
3.15
8.00
3.10
6.00
4.00
Volume
2.00
3.05
Area
3.00
-
Area harvested ('M
ha)
Figure 5.3.1 COCONUT: Production and Area harvested, 1993-2004
2.95
93 94 95 96 97 98 99 00 01 02 03 04
Source: BAS
5.3.3 In terms of indices, production improved a maximum of 17% over the 1993
figure in 1997 which was not sustained and dropped by one percent in 1999 as a
result of the El Niño. On a positive note, the succeeding post-AFMA productions
were all above the base year even at a slightly increasing rate.
Figure 5.3.2 COCONUT: Production Index, 1993-2004
140
120
100
Production index
(1993=100)
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 19
5.3.4 In terms of regional distribution, five regions account for 60-65% of total
production. Davao continues to lead all regions in terms of production with total
share of 17% in 2004 although this is a large drop from its 25-26% share in 1993
and 1998. Eastern Visayas and Calabarzon have maintained shares of 11-12%.
On the other hand, Zamboanga has gone down from third to fifth position but has
managed to maintain its 9% production share. Other regions which have moved
in and out of the top five include Bicol, ARMM, and Northern Mindanao. The
traditional producers have not changed in the pre and post AFMA years.
Figure 5.3.3 COCONUT: Regional Distribution of Production, 1993, 1998
and 2004
1993
Total: 11,669,480 tons
1998
Total: 12,806,429 tons
Others
Dav ao
Dav ao
Region
Region
26%
37%
Others
25%
35%
Eastern
Visay as
Calabarzon
Bicol
Eastern
Zamboanga
Region
Visay as
Peninsula
8%
8%
9%
12%
ARMM
Zamboanga
9%
Calabarzon
Peninsula
11%
11%
9%
2004
Total: 14,366,186 tons
Dav ao
Region
17%
Others
Eastern
41%
Visay as
12%
Zamboanga
Northern
Peninsula
Mindanao
9%
10%
Calabarzon
11%
Source of basic data: BAS
5.3.5 The moderate production growth over the years can be attributed to the
yield gains averaging 1.7% during the period. However, the average productivity
of 4 tons has not been enough to enhance farmer income and push coconut
further into the export market. More vigorous programs were done during the
post AFMA years on replanting, fertilization, and the use of high yielding
varieties.
5- 20
Figure 5.3.4 COCONUT: Average Yield, 1993-2004
5.00
Yield (ton/ha)
4.00
3.00
2.00
1.00
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
Trade
5.3.6 The Philippines is a major exporter of coconut products led by coconut oil.
Coconut oil exports have exceeded the 1 million ton mark in six of the last twelve
years as indicated by the years exceeding 25% of the1993 figure. Like most
crops, coconut is affected by weather aberrations thus the extreme drop in
production in 1999 caused a 44% contraction in oil exports. Exports peaked in
2001 to 1.4 million tons. There was no difference in coconut oil exports between
the pre and post AFMA periods as both averaged just over one million tons. Total
export value reached $3.6 billion and $2.6 billion during the pre-AFMA and postAFMA period, respectively.
5.3.7 The volume indices indicate that export volume is affected by production
volume particularly in years with extreme weather disturbances. However, since
coconut oil is an export commodity, its volume is highly influenced by the
competitiveness of the other vegetable oils in the world market.
Figure 5.3.5 COCONUT: Production and Export Volume Index, 1993-2004
Volume Index
(1993=100)
180
160
140
120
100
80
60
Production
Oil Export
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
5- 21
Benchmarking
5.3.8 The top three coconut producers are Indonesia, Philippines and India.
Coconut yield levels among selected Asian countries showed that the Philippines
is far behind Indonesia and India. Yield growth from 1993-1998 was negative for
most of the countries except for China and Vietnam. However, a marked
improvement in yield growth was observed from 1999-2004 led by the Philippines
with 5.4%.
Table 5.3.1. COCONUT: Comparative Yields of Selected Asian Countries,
1993, 1998 and 2004
Yield (ton/ha)
Country
1993
1998
2004
China
9.33
10.03
10.39
India
5.44
5.31
5.00
Indonesia
5.53
5.44
6.12
Malaysia
3.94
3.60
3.97
Philippines
3.68
3.43
4.41
Thailand
4.24
4.15
4.37
Viet Nam
5.70
5.90
7.01
Source of basic data: FAO
5.3.9 The Philippines came out to be the cheapest coconut producer in 1993
among selected Asian countries. However this position was not sustained as
Indonesia and Thailand had lower prices in 1998 and 2002, respectively.
Nevertheless, the significant decrease in 2002 Philippine prices saw the country
with lower prices than Indonesia and India.
Table 5.3.2. COCONUT: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2002
Price ($/ton)
Country
1993
1998
2002
China
584.35
144.95
161.65
India
126.09
83.59
60.89
Indonesia
93.35
69.83
115.23
Philippines
74.48
77.26
54.65
Thailand
88.47
100.78
45.88
Source of basic data: FAO and IFS
Competitiveness analysis
5.3.10 Since most coconut products are exported, the best measure of
competitiveness is its cost competitiveness. A comparative costs and returns of
coconut oil (CNO) and palm oil (CPO) revealed that while CNO has a higher
price than CPO, its return to revenues is much lower due to low farm productivity.
(UA&P Coconut discussion paper, 2006)
5- 22
5.3.11 The low farm productivity has put in question the competitiveness of the
Philippines as a reliable supplier of coconut-based products. In the fats and oils
market, coconut oil is only one among 17 traded in the world led by soybean oil,
palm oil, rapeseed oil, sunflowerseed oil, and cottonseed oil. Combined with
other producers, coconut oil accounts for only 5% of the world oils and fats
business.
5.3.12 The unstable supply of coconut oil in the international markets have led
importers to look for alternative sources of lauric acid. The main competitor of
CNO in this area is palm kernel oil. However, there are alternatives being
developed like cuphea and rapeseed oil rich in lauric acid.
5.3.13 The quality competitiveness of coconut is challenged by food safety and
health issues like the powerful lobby by soybean interests against coconut oil as
a coronary heart disease risk. Other concerns are the presence of aflatoxin and
polycyclic aromatic hydrocarbon in coconut oil caused by the improper drying of
copra.
5.3.14 A classic example of quality which was not followed is in nata de coco.
Given the huge demand in the 90s, some traders shipped sub-standard products
to Japan without observing production protocols. The Philippines lost the
Japanese market to Thailand which the country is still in the process of regaining.
5.3.15 One competitiveness asset of the coconut industry is its product
innovation. In 2005, the industry exported 37 different products and byproducts
from coconut to 114 countries. This includes the traditional products and the
upcoming potential winners like virgin coconut oil, coconut cream and
geotextiles. There is also the potential use of coconut for the biodiesel.
SWOT Analysis
5.3.16 The coconut industry despite being tagged by some as a “sunset” industry
is still thriving with full of potentials but beset by many weaknesses. There is
availability of good clones and technologies with established marketing system,
export facilities, and processing plants. However, the industry has a basic supply
and quality problem given the minimal areas planted to good clones, senile trees,
lack of fertilization, plantings in marginal lands and lack of good drying facilities at
the field level.
5.3.17 There are many things going for the industry since the crop has many
product possibilities with multiple stakeholders. The traditional products from
coconut have been added with opportunities in several value added products like
virgin coconut oil, geotextiles, oleochemicals, and alternative fuel.
5- 23
5.3.18 While the country is the largest exporter of coconut products, it is still a
price taker given the competition from the other vegetable oilseeds. This puts
pressure on farm prices and incomes as most farms do not practice intercropping
thus the reliance on coconut for their livelihood.
Table 5.3.3. COCONUT INDUSTRY: SWOT Analysis
STRENGTHS
Inputs
1. Availability of good clones
Farm Production
2. Favorable climate in most areas
3. Availability of technologies
4. Unique lauric structure of coconut
oil
WEAKNESSES
1. Only 1% of the areas are planted
with good clones
2. No irrigation system in coconut areas
3. Senile trees (30% of stands)
4. Only 1% of the farms apply fertilizers
5. Plantings in marginal lands
6. Intercropping in only 30% of the land
Logistics
5. Established marketing system
6. Export facilities
Milling
7. Presence of many mills
8. Presence of refiners
Other Value Adding
9. Many product possibilities
Institutions
10. Multi-stakeholders
11. Organized industry associations
7. High assembly/freight costs due to
poor roads and fragmented, small
holdings
8. Multi-layered marketing channels
9. Scattered/unclustered ports mean
costly ocean freight.
10. Underutilized mills/old technologies
11. Underutilized refineries
12. Shortage of raw materials
13. High assembly costs
14. Low quality copra
15. Scattered factories mean costly local
freight
16. Cost of raw materials
17. Frequent changes in DA/PCA
leadership
18. Lack of program support; too
dependent on coco levy resolution
19. Politization of management over
coco levy companies
5- 24
OPPORTUNITIES
1. Stable and growing export and
domestic markets
2. Good prospects for value added
products (VCO, geotextiles, etc)
3. Alternative fuel (coconut methyl
ester- biodiesel) demand
4. Low domestic oil consumption vis a
vis growing population
5. Renewable source of vegeoil
based applications vs depleting
mineral oil reserves
THREATS
1. Poor global image in supply reliability
2. Perception of government inaction
3. Competition from other tropical oils
(i.e. palm oil and palm kernel oil)
4. Development of rapeseed and cuphea
with high lauric content
5. Zero Asean tariff/ GATT without
promised safety nets in place
6. More stringent sanitary and phytosanitary (SPS) standards
7. Unregulated cutting of trees
Source: CFA-UA&P
5- 25
5.4.
SUGARCANE
Production, Area and Yield
5.4.1 Production fluctuated throughout 1993-1998. There were sharp declines
in 1995 and 1998 of more than 20% reducing production to 17.5 million tons with
around 20% fall in area harvested mainly due to crop shifting and effects of the El
Niño weather phenomenon. Meanwhile, from 1999 to 2004, production fell by
11% in 2000 but expanded by 5% per year since then. The major growth drivers
were the use of good quality cane varieties with improved farm management.
Figure 5.4.1. SUGARCANE: Volume of Production, 1993-2004
Volume
30,000
Area
500
400
20,000
Area harvested
('000 ha)
Production ('000 tons)
25,000
300
15,000
200
10,000
100
5,000
-
93 94 95
96 97 98 99
00 01 02 03
04
Source: BAS
5.4.2 Output in 2004 was only 12% higher than in 1993. Production was
relatively stable during 1999 to 2004 than in 1993 to 1998.
Production index (1993=100)
Figure 5.4.2. SUGARCANE: Production Index, 1993-2004
120
100
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.4.3 There are about 54,000 sugarcane farms in 2004 and 80% of which are
10 hectares and below. Production is concentrated in Western Visayas
accounting for about 60% of total during 1993 to 2004. It was followed by
Northern Mindanao, Central Visayas, and Southern Tagalog and Central Luzon.
5- 26
Figure 5.4.3. SUGARCANE: Regional Distribution of Production, 1993, 1998
and 2004
1993
Total: 22,915,065 tons
1998
Total: 17,333,372 tons
Western
Western
Visay as
Visay as
57%
60%
Central
Others
Luzon
Others
Central
7%
10%
8%
Visay as
Northern
Mindanao
8%
Central
Visay as
Calabarzon
Northern
Mindanao
9%
7%
9%
Central
Calabarzon
Luzon
8%
10%
7%
2004
Total: 25,579,213 tons
Western
Visay as
54%
Northern
Others
10%
Central
Luzon
5%
Calabarzon
7%
Central
Visay as
Mindanao
14%
10%
Source of basic data: BAS
5.4.4 Area harvested varied from year to year. It decreased by 2.5% annually
during 1993 to 1998. Large areas were shifted to other crops in 1995 and ceded
to agro-forestry in Western Visayas in 1997. Meanwhile, from 1999 to 2004, area
planted was relatively stable. It declined slightly every year from 2000 to 2002
with areas converted to other crops. On the contrary, area harvested expanded
in Cagayan Valley, SOCCSKSARGEN and in the provinces of Cavite, Camarines
Sur and Bukidnon in 2003 while bigger hectarage of sugarcane were reported in
Davao del Sur, Bukidnon and Batangas in 2004.
5.4.5 Meanwhile, yields for sugarcane were relatively stable from 1993 to 1997.
In 1993, Northern Mindanao registered the highest yield at 88 tons per ha,
followed by Cagayan Valley at 86 tons per ha. By 1998, average yield dropped
by 5% while Calabarzon and Western Visayas recorded the top yields at 65 and
61 tons per ha, respectively. From 1999 to 2004, average yield posted growth of
5- 27
2% per year. In 2004, Western Visayas remained among the highest yields with
73 tons per ha but was bested by ARMM with 77 tons per ha.
Figure 5.4.4. SUGARCANE: Average Yield, 1993-2004
70.0
Yield (ton/ha)
65.0
60.0
55.0
50.0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
Trade
5.4.6 Sugar exports fluctuated from 1993 to 1998. From 1999 to 2004, it
continuously declined during 1999 to 2001 but managed to bounce in the next
three years. Exports comprised mostly of centrifugal (raw) sugar (85% of total
value) with bulk going to the premium-priced US quota market.
5.4.7 Meanwhile, sugar importation has changed over the years. Imports
increased significantly in 1995 to 1996 in part due to production shortfalls but
mainly to massive importation by sugar traders. However, it decreased since
2000. The country became a net exporter of sugar since 2002 as a result of
increases domestic production. Over the 12 year period, the bulk of imports were
in the form of refined and raw sugar, although no raw sugar imports were
registered from 2003 to 2004. The dominant suppliers for refined were Thailand
and South Korea while for raw were Thailand and Australia.
Figure 5.4.5. SUGARCANE: Production and Trade Volume Index by Product
Type, 1993-2004
Production
Centrifugal imports
1,400
Refined imports
Centrifugal ex ports
1,200
Volume index
(1993=100)
1,000
800
600
400
200
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
5- 28
Benchmarking with Relevant Asian Countries
5.4.8 The Philippines is doing better in terms of yield compared with other Asian
countries. It has overtaken Indonesia, the highest in 1993. Philippine yield
performance improved from 1999-2004 with 7.6% growth. The growth can be
attributed to the increasing use of high yielding varieties.
Table 5.4.1.
SUGARCANE: Comparative Yields of Selected Asian
Countries, 1993, 1998 and 2004
Country
Yield (ton/ha)
1993
1998
2004
China
59.86
73.47
65.35
India
63.87
66.52
59.05
Indonesia
79.02
68.95
71.11
Pakistan
43.02
50.28
49.72
Philippines
77.47
76.50
82.28
Thailand
40.16
51.08
57.94
Viet Nam
42.42
48.92
55.33
Source of basic data: FAO
5.4.9 In terms of producer prices, the Philippines came out to be the most
expensive sugarcane producer among selected Asian countries in 1998 which
was almost four times more expensive than Thailand. There was a significant
decrease in Philippine prices in 2002 compared with 1998 prices. During this
period, the Philippines had lower prices than China.
Table 5.4.2. SUGARCANE: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2002
Country
Price ($/ton)
1993
1998
2002
China
21.35
27.54
32.26
India
21.25
18.57
19.09
Indonesia
26.86
13.05
19.19
Philippines
29.57
40.55
31.49
Thailand
14.18
11.73
13.03
Source of basic data: FAO and IFS
Competitiveness Analysis
5.4.10
Sugar continue to earn dollar for the country due to the US quota.
However, locally produced sugar is generally not competitive in the export
markets like Thailand in terms of both price and cost.
5- 29
5.4.11 The derived export parity prices are relatively lower than domestic
wholesale prices especially for sugar coming from Thailand.
SWOT Analysis
5.4.12 The Philippine sugar industry has a highly organized private sector who
are actively participating for the development of the industry. They serve the
interest of the farming sector in terms of technical services. Given available
workforce provided with technical skills and modern technology are strengths of
the sugar sector.
5.4.13
The industry’s weaknesses, if not addressed well, could cause a
long-term decline in competitiveness. Among the major factor to look into is
low farm productivity. This is attributed to the limited use of high yielding
varieties in some production areas, limited irrigation, limited mechanization
and poor agronomic practices (i.e. early harvesting).
5.4.14 The future of the industry offers promise provided the strengths are
capitalized on and the weaknesses frontally addressed. There are still high
potentials for yield and quality improvements. Moreover, potentials for area
expansion is still present to increase production. The strong domestic
demand due to increasing population and expanding usage of food
processors provide more opportunities to the industry.
5.4.15 The development and expansion of the industry are constrained by a
number of factors. The threats and the weaknesses must be addressed with
concerted actions by the stakeholders. Extension of CARP implementation, for
example, can lead to inefficiencies in farm production. The declining US Quota is
considered a threat because it is the reliable market for Philippine sugar which
pays premium price. Presence of artificial sweeteners as substitute also cuts
down sugar consumption.
5- 30
Table 5.4.3. SUGAR INDUSTRY: SWOT Analysis
Strengths
Weaknesses
Inputs
1. Increasing use of high yielding
1. Small farm sizes
varieties
2. Development of propagation
2. Limited irrigation
nurseries
3. Large pool of competent scientists
3. Limited mechanization
and farm workforce
4. Manpower: Poor agronomic
practices
Farm Production
4. Land consolidation efforts of some
millers
5. Low and declining farm productivity
6. High production cost (high cost of
inputs)
7. Uncertainty on production caused
by CARP
Logistics
8. Poor logistics
9. Inadequate Infrastructure
10. High cost of transport
Processing
5. Increasing cane supply and
improving cane quality
Marketing
6. Established miller and planter
marketing relationship
Opportunities
1. Growth in domestic consumption
due to increasing population and
expanding usage of industrial sectors
i.e. beverage, food processors
2. Research and development efforts
by government and private sector to
improve yield
11. Inefficiency in the milling process
- Low utilization: 60%
- Low recovery:79%
12. Cut-throat competition
13. Price Volatility
Threats
1. Declining US Quota
2. Artificial sweeteners
3. Extension of CARP implementation
5- 31
5.5 BANANA
Production, Area and Yield
5.5.1 The country grows many varieties of banana. The major cultivars consist
of Cavendish (mainly for the export market), and native varieties like lakatan,
latundan, bungulan and señorita (table bananas) and saba/cardava (processing
type which is made into banana chips, among others). The available production
data for bananas, however, is not disaggregated according to variety.
Nonetheless, the export volume for fresh bananas (primarily Cavendish) is a
good indicator of Cavendish production.
5.5.2 Production (all varieties) expanded by 3.8% per year from 3.8 million tons
in 1993 to 4.4 million tons in 1997. Output dropped by 6.8% in 1998 due to
adverse weather conditions but bounced back by 11.3% in 1999. From 19992004, growth averaged 4.3% annually. Output stood at 5.6 million tons in 2004.
6,000
500
5,000
400
4,000
300
3,000
200
2,000
Volume
Area
Area ('000 ha)
Production ('000 tons)
Figure 5.5.1. BANANA: Volume of Production and Area Planted, 1993-2004
100
1,000
-
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.5.3 Production performed relatively better in 1999-2004 than in 1993-1998.
This could be attributed to more favorable weather conditions, good crop
maintenance, additional bearing plants, and area expansions especially for
Cavendish in Mindanao. Increases in the number of bearing hills were also
noted in Ilocos Region and the provinces of Romblon and Mindoro Oriental in
Luzon but these are mainly for native varieties.
5- 32
Figure 5.5.2. BANANA: Production Index (1993=100)
Production volume index (1993=100)
160
140
120
100
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.5.4 The Davao Region, a heavily Cavendish area, consistently accounted for
the biggest share of output from 1993 to 2004. It managed to increase its share
from 30% (1.2 million tons) to 41% (2.3 million tons) during the period. It was
followed by SOCCSKSARGEN and Northern Mindanao with 11% and 10%
output shares in 2004. The increasing shares are mainly due to Cavendish
expansions in Mindanao.
Figure 5.5.3. BANANA: Regional Distribution of Production, 1993, 1998
and 2004
1993
1998
Total: 4,106,698 tons
Total: 3,809,372 tons
Dav ao
Dav ao
Others
Region
Others
Region
37%
30%
33%
38%
SOCCSK
ARMM
SARGEN
6%
Cagay an
Valley
7%
CARAGA
7%
Northern
Mindanao
9%
10%
Cagay an
Valley
6%
SOCCSK
SARGEN
8%
Northern
Mindanao
9%
5- 33
2004
Total: 5,631,250 tons
Dav ao
Others
Region
26%
41%
Western
Visay as
Northern
SOCCSK
Mindanao
SARGEN
10%
11%
ARMM
5%
7%
Source of basic data: BAS
5.5.5 Meanwhile, area planted improved by 1.6% per year from nearly 326,761
hectares in 1993 to 348,648 hectares in 1997. Despite the abnormal weather
conditions in 1998, area managed to grow by 1.5% to 353,707 hectares in 1998.
From 1999-2004, area expansion improved to 2.2% annually reaching 414,510
hectares in 2004. Cavendish plantations are estimated to account for some
45,000 – 50,000 hectares.
5.5.6 The country’s average yield fluctuated from 1993-1998, posting its lowest
level at 11.6 tons in 1998. On the average, yield grew by 2.1% per year from
1993-1997 but declined by a sharp 8.2% in 1998. From 1999-2004, yield has
generally been on an uptrend, with average growth of 2.1% yearly. In 2004, yield
stood at 13.6 tons per hectare. Yield levels are much higher in the Cavendish
farms in Mindanao averaging about 40 tons per hectare.
Figure 5.5.4. BANANA: Average Yield, 1993-2004
14.0
Yield (ton/ha)
13.5
13.0
12.5
12.0
11.5
11.0
10.5
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5- 34
5.5.7 Across regions, yield was highest in Davao at nearly 35 tons per hectare
in 2004, nearly double the national average of 13.6 tons. It was followed by
SOCCSKSARGEN at 26.1 tons per hectare. It is worth mentioning, however, that
the yield levels represent averages for all varieties grown. Cavendish yield levels
in Mindanao can go as high as 52 tons to 78 tons per hectare, at par with global
standards.
Trade
5.5.8 The Philippines is a major banana exporter. Exports, consisting of both
fresh and processed bananas (i.e., chips), accounted for at least 30% of
production in 2004. Fresh exports are comprised mostly of Cavendish
although small volumes of lakatan and latundan are finding their way into
export markets like China.
5.5.9 Fresh exports posted declines of 0.10% per annum on volume and
0.90% per annum on value from 1993-1998. Aside from abnormal weather
conditions which affected supplies, growth was pulled down by the sharp
drop in demand in overseas markets like Saudi Arabia, China, Hong Kong
and South Korea in 1997. Exports fared relatively better in 1999-2004 with
yearly growth of 6.8% and 6.6% on volume and value, respectively. In 2004,
exports reached nearly 1.8 million tons valued at US$326 million.
5.5.10 The leading destination has consistently been Japan although this
market has reached saturation, as evidenced by the decline in its share to
total fresh Philippine exports from 65% of volume in 1993 to 51% in 2004.
Other leading destinations in 2004 were Iran, China, Taiwan and United Arab
Emirates.
5.5.11 Meanwhile, exports of banana chips performed better than fresh
exports growing by 3% and 6.3% on volume and value, respectively, from
1993-1998. Annual growth further accelerated to 16% on volume and 14.9%
on value during 1999-2004, amid strong demand in overseas markets like
China. Exports amounted to 36,421 tons worth US$36.6 million in 2004. The
leading markets included China, the USA, Germany, Taiwan, and the United
Kingdom.
5.5.12 For both fresh bananas and banana chips, the volume indices relative
to 1993 levels were generally increasing from 1993-2004. The rate of
increase for chips, however, is a lot faster compared to fresh, implying that
more and more production are going into processing.
5- 35
Production and export volume indices (1993=100)
Figure 5.5.5. BANANA: Production and Export Volume Index by Product
Form, 1993-2004
300
Production
Fresh
Chips
250
200
150
100
50
93 94 95 96 97 98 99 00 01 02 03 04
Source of basic data: NSO
Benchmarking with Relevant Asian Countries
5.5.13 Relative to its Asian neighbors, Philippine yield levels for all banana
varieties were the lowest in 1993 and 1998. In 2004, however, the country
managed to post a slight edge over Thailand. Nonetheless, the data masks the
fact that the Cavendish farms in Mindanao are among the best in the world.
Table 5.5.1. BANANA: Comparative Yields of Selected Asian Countries,
1993, 1998 and 2004
Yield (Ton/Ha)
Country
1993
1998
2004
China
India
Indonesia
Malaysia
Philippines
Thailand
Viet Nam
14.2
23.0
13.6
17.4
9.4
12.5
14.8
19.9
32.8
12.3
17.8
10.7
12.8
14.7
23.2
24.7
15.5
20.4
13.6
13.1
14.7
Source: FAO
5- 36
5.5.14 Philippine bananas commanded the lowest producer price in Asia. This
may be due to the following reasons: (1) for Cavendish bananas, the plantations
are relatively cost-efficient; and (2) for the native bananas, minimal maintenance
expenses are incurred since the usual practice is to just leave the trees alone.
Table 5.5.2. BANANA: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2004
US$ per ton
Country
1993
1998
2002
China
India
Indonesia
Philippines
Thailand
266.1
129.3
318.2
112.8
174.7
797.2
147.8
165.6
111.5
205.1
724.9
140.7
277.0
87.6
173.8
Source of basic data: FAO and IFS
Competitive Analysis
5.5.15
Cavendish banana is highly competitive in the domestic and export
markets, as evidenced by its sustained and dominant presence in Asia and the
Middle East (Dy, 2000).
5.5.16
Native varieties like lakatan and saba possess varying levels of
competitiveness. Lakatan is not competitive with exports as domestic prices are
higher than derived export prices. While there are potentials for expanding
exports considering that lakatan can compete in terms of cost, there are
constraints related to poor farm practices – from product handling to packaging
and distribution, limited farm budget for higher chemical use, and low productivity
levels, as well as cultural preferences for Cavendish in markets like Japan, Hong
Kong and China (UA&P Foundation, 2000). Further, the relatively favorable
prices in the domestic market which does not impose any quality requirements
also leads farmers to prefer to serve it rather than the more discriminating export
market.
5.5.17 Saba, meanwhile, is competitive in both the domestic and export markets
(UA&P Foundation, 2000). The cost of producing saba is said to be very low
(since farm maintenance activities are usually very minimal) making it a strong
candidate for export. Similar to lakatan, however, there are constraints on
productivity, production volumes, and cultural preferences of importing countries.
5- 37
SWOT Analysis
5.5.18 Banana is a relatively well established industry in the country. The
industry’s strengths include favorable climate for banana growing, year-round
production and availability of processing technologies. For Cavendish which is
geared mainly for export, the advantages stem from the availability of tissuecultured planting materials, the highly integrated operations from input supply to
production to marketing, the relatively well-developed export marketing
infrastructure from cold storage facilities, reefer vans, ports, ships, and
established global presence due to the dominance of multinational firms like Del
Monte and Dole, as well as local companies like Lapanday.
5.5.19 Despite these strengths, the industry suffers from rising costs of inputs
like labor, fertilizers, and chemicals, declining soil fertility resulting from
continuous farming and application of chemicals, and incidence of pests and
diseases, among others. For the native varieties, there are still constraints
related to sourcing of tissue-cultured planting materials, low productivity and
product quality, and multi-layered marketing system. Processing is also limited
by the availability of raw material supply (specifically saba/cardava) and the
increasing costs of inputs like sugar, cooking oil as well as utilities (electricity,
water). For Cavendish, the lack of market diversification (or the continuing
reliance on traditional markets like Japan) poses as a constraint.
5.5.20
Overall, however, there are opportunities for expanding both production
and exports considering the growing demand in both the domestic and
export markets not just for fresh but for processed products as well. To
be able to capitalize on these opportunities, however, there is need to
manage the threats brought about by increasing competition in the global
market, the imposition of non-tariff barriers by importing countries (such
as in the case of Australia which continues to ban Philippine bananas on
sanitary and phytosanitary grounds), the uncertainties of land reform,
and rising input costs. Managing the peace and order situation in
Mindanao, where most commercial banana plantations are located, is
also critical.
5- 38
Table 5.5.3. BANANA INDUSTRY: SWOT Analysis
STRENGTHS
WEAKNESSES
Inputs
1. Availability of tissue cultured
1. High input costs (labor, fertilizers
planting materials (Cavendish)
and chemicals)
2. Declining fertility of lands
3. Difficulty in accessing good lands of
economic size
4. Hectarage limitation (LOI 790)
(Cavendish)
5. Limited availability of quality
planting materials of native varieties
Production
2. Favorable climate for banana
6. General low yield of native varieties
growing
due to inadequate clonal materials
and poor crop management
3. Year-round production
7. Poor quality of native varieties
4. Highly integrated operations
8. Incidence of pests and diseases
(Cavendish)
9. Sporadic plantings of native
varieties
Processing
5. Availability of processing
10. Limited raw material availability
technologies
11. High cost of utilities
12. High cost of inputs (e.g. cooking oil,
sugar, saba)
Marketing
6. Established export marketing
13. Multi-layered marketing system
infrastructure (Cavendish)
particularly for non-Cavendish
varieties
7. Global brand presence (Cavendish) 14. Heavy dependence on traditional
export markets (Cavendish)
OPPORTUNITIES
THREATS
1. Strong domestic demand
1. Increasing competition in export
markets
2. Uncertainties of agrarian reform
(CARP)
3. Rising input costs
4. Peace
and
order
situation
(especially in Mindanao)
5. Non-tariff barriers in certain markets
2. Increasing demand for “organic”
bananas in the world market
3. Expanding China market
4. Growth of processing industries
(e.g. chips and sauce/ketchup)
5- 39
abroad
5- 40
5.6 MANGO
Production, Area and Yield
5.6.1 Production posted double digit growth throughout 1993-1997, with average
of 16.3% from 544,606 tons to 990,246 tons in 1997. The expansion was driven
by increased number of bearing trees, proper management and use of flower
inducers, amid favorable weather conditions. Growth decelerated to 0.4% in
1998 as a result of the El Niño weather disturbance, causing a decline in the
overall growth from 1993-1998 to 13.1% yearly. Meanwhile from 1999-2004,
output expanded by 2.3%, pulled down by the sharp contraction of 12.9% in
1999. The decline continued through 2000, brought about by continuous rains
which affected the flowering and fruiting stages of the tree. Output peaked in
2003 at a little over 1 million tons but declined to 967,473 tons in 2004 due to
unfavorable weather conditions.
Figure 5.6.1. MANGO: Volume of Production and Area Planted, 1993-2004
200
Production ('000 tons)
1,000
150
800
600
100
400
Volume
200
50
Area
-
Area harvested ('000 ha)
1,200
93 94 95 96 97 98
99 00 01 02 03 04
Source: BAS
5.6.2 Compared to 1993 levels, output improved by 83% in 1998 and 78% in
2004. Production levels were generally higher in 1999-2004 compared to 19931998 although the rate of growth in output was faster in the latter.
Figure 5.6.2. MANGO: Production Index (1993=100)
Production index (1993=100)
200
150
100
50
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5- 41
5.6.3 The biggest regional producer of mango is the Ilocos Region, particularly
the province of Pangasinan. Ilocos managed to increase its share to total
production from only 30% (167,281 tons) in 1993 to 41% (399,592 tons) in 1998
and further to 44% (430,851 tons) in 2004. It used to be followed by Region IVA, led by the province of Batangas, but was overtaken by Central Luzon in 2004
with 9%. Other big producers are Central and Western Visayas.
Figure 5.6.3. MANGO: Regional Distribution of Production, 1993, 1998 and 2004
1993
Total: 544,606 tons
1998
Total: 994,002 tons
Ilocos
Others
Region
27%
30%
Others
Ilocos
20%
Region
41%
Western
Visay as
5%
Central
Visay as
8%
Cagay an
Valley
10%
Western
Region IV-A
Visay as
15%
Central
10%
Luzon
Cagay an
Region IV-A
9%
Valley
16%
9%
2004
Total: 967,473 tons
Ilocos
Others
Region
26%
44%
Western
Visay as
5%
Region IV-A
Central
Central
9%
Visay as
Luzon
6%
9%
Source of basic data: BAS
5- 42
5.6.4 Meanwhile, area planted expanded by 8.2% from 91,213 hectares in 1993
to 124,947 hectares in 1997. Growth decelerated to 3.9% in 1998, pulling down
the average growth from 1993-1998 to 7.3%. Growth further slowed down to
3.8% per year from 132,232 hectares in 1999 to 158,943 hectares in 2004. Area
expansions especially in Central Luzon, Northern Mindanao and Davao were
more aggressive in 1993-1998. Back in 1993, Ilocos accounted for the biggest
hectarage at 17,430 hectares, or about 19% of the total area planted to mango
during the year. In 1998, it was overtaken by Central Luzon, which managed to
grow its share from 14% to nearly 20%, while Ilocos’ share dropped to 16%.
Central Luzon has retained the top spot since then. In 2004, it cornered 19% of
the hectarage devoted to mango.
5.6.5 Meanwhile, yield improved by 7.5% per year from nearly 6 tons per
hectare in 1993 to 7.9 tons in 1997. Yield dropped by 3.4% in 1998 to 7.7 tons
per hectare. It continued to post a downtrend, with growth averaging 1.4% per
annum from 6.6 tons per hectare in 1999 to 6.1 tons per hectare in 2004.
Possibly, many of the fruits that were planted in the earlier years were just
starting to bear fruit.
Figure 5.6.4. MANGO: Average Yield, 1993-2004
10.0
Yield (ton/ha)
8.0
6.0
4.0
2.0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.6.7 Yield was highest in the Ilocos Region at 20.2 tons per hectare in 2004,
more than three times the national average of only 6.1 tons per hectare. The rest
of the regions had yield levels below 7 tons per hectare.
Trade
5- 43
5.6.8 The country is a net exporter of mangoes. Total export receipts
increased by 2% per year from US$42.3 million in 1993 to US$51 million in
2004. About 60% of the total value of exports in 2004 were in fresh form and
the rest are processed mango products such as puree, juice, dried, frozen,
concentrates, drained or crystallized, in brine and pickled. Exports increased
by 5% per year from 1993-1998 and picked up further in 1999-2004, growing
by 7.6% per annum. The growth driver in the earlier years were fresh
mangoes but processed exports propelled growth in the latter period. In
particular, puree, dried and frozen mangoes posted substantial increases in
2003 because of strong demand overseas.
5.6.9
The country exported 33,662 tons of fresh mangoes worth US$28.7
million in 2004. The leading market volume-wise was Hong Kong, absorbing
61% of total exports during the year. Japan was a far second with a 30% share.
In terms of value, however, Japan was a far bigger market than Hong Kong since
it offers a price premium. It accounted for 62% of the total value of fresh mango
exports during the same year. Growth in these markets, however, has been
rather anemic.
5.6.10
Puree exports, meanwhile, totaled 9,291 tons in 2004, generating
US$9.2 million in foreign exchange earnings. The leading buyers were South
Korea (47% of volume), Japan (19%) and the USA. On the other hand, juice
exports amounted to 3,360 tons during the same year, valued at US$3 million.
The primary destination was the USA (44% of volume), followed distantly by
Canada (10%) and Japan (9%). In the case of dried mangoes, exports reached
1,912 tons valued at US$8.1 million also in 2004. Some 41% of the volume went
to the USA, followed by Singapore (12%) and Japan (10%).
5.6.11 Considering the two leading mango exports – fresh and puree – the
volume indices relative to 1993 levels were generally increasing for puree but
was decreasing for fresh mangoes especially from 2000-2004. This could
imply that more and more of production are going into processed rather than
fresh exports.
Index (1993=100)
Figure 5.6.5. MANGO: Production and Export Volume Index by Product
Form, 1993-2004
Production
450
400
350
300
250
200
150
100
50
93
94
95
96
Fresh ex ports
97
98
99
00
Puree ex ports
01
02
03
04
5- 44
Source of basic data: BAS and NSO
Benchmarking with Relevant Asian Countries
5.6.12
Philippine yield levels are comparable to many of its neighbors in Asia.
It managed to post the highest yield in 1998, possibly boosted by the
strong production in 1997-1998 due to the dry spell which favored the
fruiting of trees. In 2004, it fared better than Indonesia and Malaysia
and was at par with Vietnam but was a little behind China, India and
Thailand.
Table 5.6.1. MANGO: Comparative Yields of Selected Asian Countries,
1993, 1998 and 2004
Yield (Ton/Ha)
Country
1993
1998
2004
China
8.5
6.4
8.6
India
8.3
7.3
6.8
Indonesia
3.6
4.5
4.6
Malaysia
5.0
5.0
3.9
Philippines
6.8
8.2
6.1
Thailand
5.9
4.8
6.3
Viet Nam
6.7
4.9
6.1
Source: FAO
5.6.13 In terms of producer prices in 2002, the Philippines possessed a certain
advantage over China but was still higher than India and Indonesia. In 1998, the
country posted the highest price compared to its Asian competitors. Prices may
have been boosted by strong demand in the domestic and export markets.
Table 5.6.2. MANGO: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2004
US$ per ton
Country
1993
1998
2002
China
2,485.1 504.4
386.9
India
332.5
380.3
361.8
Indonesia
660.7
161.4
270.0
Philippines
572.6
516.5
377.7
Source of basic data: FAO and IFS
5- 45
Competitiveness Analysis
5.6.13
Mango is one of the leading fruit crop exports of the country. Mangoes
coming from the major producing areas like Zambales, Guimaras and
Davao del Sur are generally competitive in export markets like Japan
and Hong Kong in terms of both price and cost (UA&P Foundation,
2000).
5.6.14
Japan appeared to be the more attractive market especially for
producers from Davao del Sur and Zamboanga since the derived export
parity prices are relatively higher than domestic wholesale prices.
Despite the high cost of transporting mangoes domestically, the
premium prices offered by the Japanese market may have spelled the
difference.
SWOT Analysis
5.6.15
The Philippine mango industry caters to both the domestic and export
market. One of its strengths is that it could be produced year-round
since there are already existing production technologies and at the same
time, land areas for expansion are available. In addition, it is regarded
as one of the best varieties in the world. The country’s strategic location
in Asia also gives the industry an advantage.
5.6.16
The industry, however, is not without its weaknesses. These include
the lack of quality (certified) planting materials – this is very critical
considering that mango is a long-gestating crop; high cost of inputs
such as fertilizers, flower inducers, and other chemicals; prevalence of
backyard farms which contribute to low productivity, low quality and high
post-harvest losses; lack of post-harvest facilities such as cold chain
and vapor heat treatment facilities; high costs of transport; and the need
to improve quality standards to meet especially the requirements in the
export markets.
5.6.17
There are also opportunities which the industry can tap. These include
the untapped demand particularly in the global market for both fresh and
processed products. The development of technologies for prolonging
the fruit’s shelf life also offers possibilities of shipping to distant markets
like the US and Europe.
5.6.18 The threats, meanwhile, are posed mainly by increasing competition in
the global market. Many countries are expanding their outputs such as Thailand,
Cambodia, Viet Nam, China, Australia, Pakistan, Ivory Coast, Honduras and Haiti
5- 46
to cater to exports. The industry also faces restrictions related to the imposition of
sanitary and phytosanitary measures by overseas buyers for fresh and
processed products. Examples include the lowering of maximum residue levels
for chlorpyrifos and other chemicals in the Japanese market and China’s
requirement of VHT treatment for fresh mangoes. Meanwhile, certain additives
are regulated or prohibited for processed products. Other threats include the
country’s inability to service overseas demand during off-season which could
lead to market shifts to other country-suppliers, and the agrarian reform program
which puts a cap on the size of land ownership and thus, limits the possible
benefits from economies of scale.
5- 47
Table 5.6.3. MANGO INDUSTRY: SWOT Analysis
STRENGTHS
WEAKNESSES
Inputs
1. Lack of quality (certified) planting
materials
2. High cost of inputs (e.g. fertilizers,
chemicals for spraying)
Production
1. Philippine super mango is
considered as one of the best
varieties in the world
2. Year-round production possible
3. Availability of production
technologies
4. Expansion of new plantings in other
regions for off-season production
5. Priority fruit crop supported by the
DA, DTI and DOST
Processing/Post-harvest
6. Availability of processing
technologies
Marketing
7. Strategic location of Philippines in
ASEAN and Asian markets
8. Peak season coincides with most
favorable market in Hong
Kong/China
OPPORTUNITIES
3. Long gestation period
4. Low productivity
5. Low marketable quality due to
prevalence of backyard farms
6. High losses due to high
perishability
7. Susceptible to insect pests,
diseases and disorders
8. Lack of post-harvest facilities (e.g.
cold chain, VHT)
9. Availability of raw materials for
processing (fresh mango)
10. High freight cost and inadequate
transport facilities/price fluctuation
11. Lack of quality assurance plan and
HACCP
12. Inadequate marketing and other
information to support decision
making of industry players
THREATS
1. Growing domestic consumer base
1. Increasing competition in the global
market
2. Strategic location of the Philippines
in ASEAN and Asian markets
2. Unmet demand during off-season
hence the danger of exportsubstitution from other mango
producing countries
3. Imposition of sanitary and
3. Expansion of markets (USA,
5- 48
Australia, South Korea, China)
4. Untapped demand especially in
other overseas markets
5. International trade accounts for less
than 2% of world production
phytosanitary measures by importing
countries
4. Agrarian reform law
6. Development of technologies for
prolonging shelf-life (e.g. controlled
atmosphere, modified atmosphere
packaging) making possible
shipment to distant markets
7. Tariff reductions in overseas
markets
Source:
Adapted from “Strategic Action Plan:
Mango,” Department of
Agriculture, April 2002, and Minguez, Guia. Lecture Material for Food Systems
Management Course on High Value Fruits and Vegetables, CFA-UA&P, March
2002
5- 49
5.7 ONION
Production, Area and Yield
5.7.1 There are basically three varieties of onions grown: the red onion (Red
Creole), the white onion (Yellow Granex) and the multiplier onion, otherwise
known as shallot (a native variety commonly referred to as “Sibuyas Tagalog”).
Production is highly seasonal, with peak in March - April and lean period during
June - December. In fact, most of the supplies in the second half of the year
come from cold storage.
5.7.2 Production increased by 9.1% per annum from 61,464 tons in 1993 to
85,383 tons in 1997. It benefited from the robust growth in area harvested by
16.2% per year from 6,519 hectares to 11,888 hectares during the period. Output
further rose by 1.9% to 6,978 tons in 1998 as area likewise grew by 7.5% to
12,779 hectares. Despite this increase, however, there was a shortage of onions
in the local market during the year, prompting a substantial rise in imports.
5.7.3 In 1999, both production and area harvested posted declines. Output
suffered from the flashfloods especially in Nueva Ecija, the major production
area. The surge in imports during the year also discouraged many farmers from
planting onions, thus, contributing to the production decline through 2001.
Production peaked in 2002 at 96,358 tons, boosted by a combination of factors:
the use of good quality seeds, lower incidence of pests and diseases, additional
production areas and favorable weather conditions. The succeeding years, 20032004, were characterized by production slippages brought about by decreases in
area planted due to unfavorable market prices, crop shifting, and weather
disturbances (i.e., dry spell especially in Ilocos in 2003, and heavy rains in 2004).
On the whole, growth decelerated to 0.7% per annum from 1999-2004 as area
planted posted a flat growth.
Figure 5.7.1. ONION: Volume of Production and Area Planted, 1993-2004
14
12
Production ('000 tons)
80
10
60
8
40
6
20
Volume
4
Area
2
-
Area harvested ('000 ha)
100
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5- 50
5.7.4 Relative to 1993 levels, production was up by 41% in 2004. The gains in
production were higher in 1993-1998 at 7.7% as compared to only 0.7% in 19992004.
Production index (1993=100)
Figure 5.7.2. ONION: Production Index (1993=100)
180
160
140
120
100
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.7.5
Production is highly concentrated in two regions- Central Luzon,
particularly in the province of Nueva Ecija, and the Ilocos Region (practically the
whole region, i.e., Ilocos Norte, Ilocos Sur and Pangasinan, except La Union).
Central Luzon contributed 59% (35,976 tons) of the total onion harvest in 1993
while Ilocos’ share stood at 39% (23,892 tons). By 2004, the former’s share
dropped to 50% (42,850 tons) while the latter increased to 48% (41,480 tons).
Figure 5.7.3. ONION: Regional Distribution of Production, 1993, 1998 and 2004
1993
1998
Total: 61,464 tons
Total: 86,978 tons
Ilocos
Central
Region
Luzon
39%
59%
Mimaropa
0.2%
Others Cagay an
Calabarzon
Valley
0.7%
0.2%
1.5%
Central
Ilocos
Luzon
Region
58%
40%
Others Soccsk0.6% sargen
0.2%
Northern Cagay an
Mindanao
Valley
0.3%
1%
5- 51
2004
Total: 86,741 tons
Ilocos
Region
Central
48%
Luzon
50%
Others
0.3%
Cagay an
Mimaropa Calabarzon
0.3%
0.3%
Valley
2%
Source of basic data: BAS
5.7.6 Yield, meanwhile, dropped by 5.1% per annum from 9.4 tons per hectare
in 1993 to 7.2 tons per hectare in 1997. Yield also suffered a decline in 1998 by
5.2%, resulting to an overall decline of 5.9% per annum during 1993-1998. The
relatively poor yield levels were an offshoot of adverse climatic conditions,
among others. A slight turnaround was posted in 1999-2004 to 1% per year
from 8.9 tons per hectare to 9.1 tons per hectare.
Figure 5.7.4. ONION: Average Yield, 1993-2004
12.0
Yield (ton/ha)
10.0
8.0
6.0
4.0
2.0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
Trade
5.7.7 The country’s trade of onions (and shallots) covers fresh/chilled, dried and
prepared/preserved forms. Total exports fluctuated during the past 12 years
through 2004 ranging from a low of US$3 million in 1999 to a high of US$15
million in 1995. Fresh/chilled shallots (multiplier onions), destined mostly to
Indonesia, dominate exports, followed by fresh/chilled onions (Yellow Granex
variety), mainly to Japan.
5- 52
5.7.8 Total imports, meanwhile, have been rather minimal until 1996 when the
local market was liberalized. Imports, mostly fresh/chilled onions (also of the
Yellow Granex type), surged to US$383,000 from only US$18,000 in 1995. By
1998, imports swelled to US$2.5 million due mainly to local supply shortage.
Imports have remained at relatively high levels since then.
5.7.9 In terms of volume indices pegged at 1993 levels, fresh/chilled onion
exports were generally declining. Meanwhile, fresh/chilled shallots were volatile,
with peaks in 1997 and 2003. These were also years of relatively high
production. There were export declines especially in 1998-1999, which could be
attributed to the Asian financial crisis of 1997-1998, which affected not just local
exporters but the country’s overseas markets as well like Indonesia for shallots.
Figure 5.7.5. ONION: Production and Export Volume Index by Product
Form, 1993-2004
300
Index (1993=100)
250
200
150
100
50
93
94
Production
95
96
97
98
99
Fresh/chilled onions
00
01
02
03
04
Fresh/chilled shallots
Source of basic data: BAS and NSO
Benchmarking
5.7.10 The country’s yield lagged behind most of its neighbors in Asia. It is
much less than half of China which posted the highest yield but is three times
more than Vietnam, which posted the lowest. The low Philippine yield could be
due to adverse weather conditions, lack of irrigation, and the domestic
preference for small-sized onions.
Table 5.7.1. ONION (DRY): Comparative Yields of Selected Asian
Countries, 1993, 1998 and 2004
Yield (Ton/Ha)
Country
1993
1998
2004
China
20.0
20.6
21.2
India
10.9
11.4
10.4
Indonesia
7.5
7.8
8.5
Philippines
9.5
6.8
9.1
Thailand
12.5
14.9
16.0
Viet Nam
3.0
3.0
3.0
Source: FAO
5- 53
5.7.11 Compared to its Asian counterparts, the Philippines registered the second
highest producer price, next to Indonesia. This could be attributed to the
domestic preference for small sized onions which results to low yields and high
production cost per unit. The most competitive is India with its price nearly three
to four times lower than the Philippines, possibly due to bumper harvests and
state subsidies.
Table 5.7.2. ONION: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2004
US$ per ton
Country
1993
1998
2002
China
402.5
180.9
173.3
India
80.0
138.0
98.8
Indonesia
627.3
382.5
645.7
Philippines
416.7
498.6
267.8
Thailand
409.5
198.6
191.1
Source of basic data: FAO and IFS
Competitiveness Analysis
5.7.12 Local onions were generally competitive in the export market, particularly
Japan, in 1998 (UA&P Foundation, 2000). The derived wholesale prices from
FOB prices were higher compared to actual wholesale prices, indicating a
competitive advantage. The export window to Japan, the leading market for
fresh/chilled onions, is usually confined to the first quarter of the year only
(January to March), the production season. Competitiveness, however,
deteriorated in 1999 as domestic wholesale prices shot up due to supply
shortages.
5.7.13 The Philippines was also competitive in terms of cost in the export of
onions to Japan in 1998 (UA&P Foundation, 2000). This was particularly true
during the first three months of the year. In effect, the country enjoyed a
seasonal competitive advantage in the export market in terms of both price and
cost during the production months of January to March.
5.7.14 Philippine onions, however, were not price competitive with imports
coming from China in 1998-1999 (UA&P Foundation, 2000). The derived
wholesale prices were lower as compared to actual wholesale prices during the
months of October to December, when local supplies came mainly from cold
storage.
5- 54
SWOT Analysis
5.7.15
The main strength of onion is its versatility. Aside from being used as
basic sauté ingredient in everyday cooking together with garlic, it could
be eaten in various states - raw, fried, pickled, broiled, boiled, baked,
creamed, and steamed. Other strengths include the availability of good
quality seeds for Yellow Granex exports, and the presence of
technology and experienced farmers.
5.7.16
The crop has a lot of potential considering the growing demand not
just in the domestic but in the export market as well. There are,
however, many constraints that need to be overcome ranging from the
high costs of inputs such as seeds, fertilizers and pesticides, which are
mostly imported; the highly seasonal nature of production; the growing
incidence of pests and diseases such as leaf miners, twister
anthracnose, and fusarium wilt; the increasing acidity of soil due to
continuous burning of rice hull in onion fields to kill soil-borne diseases;
lack of irrigation which affects productivity; lack of access to credit
considering the relatively high cost of growing onions (around P100,000
cash costs based on BAS estimates for 2005); limited cold storage
facilities, the bulk of which are privately-owned and located in Metro
Manila; high cost of storage since many of the facilities are privatelyowned; and the multi-layered marketing system.
5.7.17
There are also threats such as the growing competition from other
country-exporters (e.g. Thailand), and the influx of cheap imports from
China.
Table 5.7.3. ONION INDUSTRY: SWOT Analysis
STRENGTHS
WEAKNESSES
Inputs
1. Available good quality seeds for 1. High cost of seeds
yellow granex exports
2. High cost of fertilizers and
pesticides
Production
2. Presence of technology and 3. Highly seasonal production
experienced onion farmers
4. Growing incidence of pests and
diseases
5. High cost of production
6. Lack of irrigation
7. Lack of access to credit
8. Increasing soil acidity
Processing
9. Limited cold storage facilities
5- 55
10. High storage cost
Marketing
3. Serves as basic ingredient for 11. Multi-layered marketing system
everyday cooking
4. Versatile crop
OPPORTUNITIES
THREATS
1. Large domestic market
2. Growing demand in export market
1. Competition from other exporting
countries (e.g. Thailand)
2. Influx of cheap imports
5- 56
5.8
SWINE
Production
5.8.1 Production grew by 5.3% annually, on the average from 1993 to 1997,
with 1.1 million tons liveweight production in 1993 to 1.4 million tons in 1997.
Growth decelerated to 3.6% in 1998 as a result of the El Niño weather
disturbance. Meanwhile from 1999 to 2004, output expanded by 3.1%, pulled
down by the sharp contraction of -1.4% in 2004. Output peaked in 2002 at 5.2%
growth due to production expansion by most of the growers.
Figure 5.8.1. SWINE: Volume of Production, 1993-2004
Quantity ('000 tons)
2000
1500
1000
500
0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.8.2 Compared to 1993 levels, production performed better in 1999-2004 than
in 1993-1998. Output in 2004 was 55% higher than in 1993.
Production index (1993=100)
Figure 5.8.2. SWINE: Production Index, 1993-2004
200
150
100
50
0
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 57
5.8.3 Swine growers are mostly located in Central Luzon and Southern Tagalog.
Central Luzon managed to increase its share to total production from 15% in
1993 to 16% in 1998 and in 2004. It used to be followed by Southern Tagalog at
15% share but was reduced to only 13% in 2004. Other big producers are
Davao Region, Central and Western Visayas.
Figure 5.8.3. SWINE: Regional Distribution of Production, 1993, 1998 and 2004
1993
Total: 1,101,520 tons
1998
Total: 165,458 tons
Others
Others
43%
42%
Central
Central
Luzon
Visay as
8%
15%
Western
Visay as
8%
Dav ao
Southern
Region
Tagalog
11%
15%
Central
Central
Visay as
Luzon
8%
Western
Visay as
8%
16%
Dav ao
Southern
Region
Tagalog
11%
15%
2004
Total: 1,406,592 tons
Others
48%
Dav ao
Central
Region
7%
Luzon
Central
Visay as
8%
Western
Southern
Visay as
Tagalog
8%
13%
16%
Source of basic data: BAS
Trade
5.8.4 Frozen pork imports surged to US$21.3 million in 1999 from only
US$29,000 in 1993. In 1995, the FMD scare bloated pork imports by more than
200% in terms of value. In 1996, imports further surged by more than 800%
following the lifting of import restrictions. By 1999, imports swelled to US$21.3
million (more than 200% increase over last year) due mainly to local supply
shortage brought about by foot and mouth disease (FMD). Imports have
remained at relatively high levels since then.
5- 58
5.8.5 In terms of volume indices pegged at 1993 levels, imports were generally
increasing while production increases are very minimal. There was a relatively
high imports since 1996 following the lifting of import restrictions which resulted
to imports surge in 1997 and 1999. There were import declines especially in
2002 which are almost at the 1998 level when imports were low brought about by
the Asian financial crisis of 1997-1998, which affected the local processors.
Frozen pork imports are used mostly by meat processors.
Volume index (1993=100)
Figure 5.8.4. PORK: Production and Import Volume Index, 1993-2004
9,000
Import
Production
7,000
5,000
3,000
1,000
100
(1,000)
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
Benchmarking with Relevant Asian Countries
5.8.6 Benchmarking production levels among selected Asian countries indicated
that the Philippines remains to be far behind China at close levels with Vietnam,
Korea and Japan. It has overtaken Korea and Japan in 2004. Philippine yield
performance from 1993-1998 was low at 27.6% but recovered its performance
levels with 47.5% growth from 1999-2004.
Table 5.8.1. PORK: Comparative Production of Selected Asian Countries,
1993, 1998 and 2004
Country
Production in Ton
1993
1998
2004
China
29,836,491
39,900,430
48,117,789
India
469,000
465,500
497,000
Indonesia
621,500
621,500
566,500
Japan
1,439,610
1,290,800
1,262,600
Korea
770,000
939,356
1,100,000
Malaysia
262,771
260,172
203,497
Philippines
731,000
932,810
1,376,129
Singapore
85,472
84,133
20,015
Thailand
458,757
468,950
677,040
Viet Nam
878,000
1,228,000
2,012,021
Source of basic data: FAO
5- 59
5.8.7 In terms of technical parameters, the Philippines is not far behind from
Thailand, Malaysia and Indonesia. These are in terms of feed conversion ratios,
pig sold per sow per year, average daily weight gains for fatteners, and average
farrowing rate. Among the four countries, Thailand is the most efficient reaching
18 pigs sold per sow per year for large farms, followed closely by Malaysia with
17 pigs and Philippines with 16 pigs. In terms of FCR, Thailand achieved the
highest 3.8 kilos followed closely by Philippines with 3.7 kilos. ADG was 0.55 kilo
for Thailand and 0.54 for Philippines and Indonesia (STRIVE Foundation and
UA&P, 2004)
5.8.8 In terms of producer prices, the Philippines came out to be one of the most
expensive producers among selected Asian countries. The trend has not
changed significantly with the coming of AFMA although there was a significant
decrease in prices in 2002 for all countries except Indonesia and a minimal for
Korea and Japan.
Table 5.8.2. PORK: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2002
Country
Price ($/ton)
1993
1998
2002
China
471.71
942.14
821.55
India
304.36
297.29
267.66
Indonesia
1,370.32
512.10
1,233.89
Japan
2,612.41
2,181.65
2,505.78
Korea
1,649.53
1,225.37
1,414.77
Philippines
1,304.20
1,190.91
991.78
Thailand
937.99
906.70
893.55
Source of basic data: FAO and IFS
5.8.9 Hog producers in the Philippines incur higher cost of production due to
high cost of marketing and processing specifically transport, handling, cold
storage, shrinkage and other trading cost. All these costs are far higher
compared to Thailand. Thailand had the least cost at US$0.66 per kilo for large
farms. Malaysia comes out to have the highest at US$1.08 per kilo. The
Philippines had the highest wholesale cost per kilo of pork at US$1.42 per kilo for
small farms compared to Indonesia and Malaysia at UA$1.27 and US$1.26 per
kilo, respectively. Thailand had the lowest wholesale cost of US$0.81 per kilo
(STRIVE Foundation and UA&P, 2004)
Competitiveness analysis
5.8.10 The discussion on competitiveness draws heavily on the Global
Competitiveness and Benchmarking Study undertaken by the UA&P Foundation
in 2000.
5- 60
5.8.11 Pork production has been for domestic consumption as the Philippines is
not allowed to export due to the FMD issue. Moreover, pork domestic prices were
not competitive with the export parity price as the export parity/domestic price
ratios were generally less than one at exchange rates between P35.00 and
P40.00 to a dollar. The price is not competitive due to the relatively high per unit
cost of production brought about by high feed costs especially corn. (UA&P
Foundation, 2000)
5.8.12 The analysis of the import parity/domestic price comparisons showed that
domestic wholesale prices of pork were not competitive with price of pork
imports. The price ratios were all less than one at different exchange rates (P35,
P40, and P45) implying that price is not competitive. Devaluation of peso does
not make local pork competitive. Locally produced pork, however, has a natural
protection under the import regime since local consumers prefer fresh/chilled
pork, rather than frozen pork.
5.8.13 In terms of cost, the analysis showed that in general, the Philippines had
no competitive advantage in pork export. Results of the estimation showed that
at different exchange rates and at different production systems showed that the
Philippines is generally not an efficient producer of pork to substitute imports.
The RCRs, the indicators of global competitiveness were generally more than
one, implying that local piggeries were not competitive.
SWOT Analysis
5.8.14 The hog industry has a large domestic market. Other strengths include
the presence of commercial raisers (about 23%) with production and
technologies that can address global standards. There is high degree of
organization among producers. Among the industry advantages is the high
utilization of pork by-products.
5.8.15 The industry’s major weakness is the high cost of production which
makes it not competitive in the global market. Hog raisers attribute the high cost
of production to at least two factors: high feed costs and high logistics costs for
swine and feedgrains. The former is caused by the high tariff on corn as well as
the high import dependence on other feed ingredients and biologics. Moreover,
the industry is dominated by backyard raisers (77%) with high incidence of
technical inefficiencies
5.8.16 The potential market for pork is large at more than 80 million people and
growing at over 2% annually. The current per capita demand of about 14
kilograms is very low by global standards which provide more room to increase
consumption.
Access to competitively-priced feeds and best practice
technologies especially among backyard raisers are needed to improve industry
performance.
5- 61
5.8.17 Threats of unknown diseases and entry of imported pork still continue.
There is also need to address the cost of imported feeds, which include corn,
soybean meal and fishmeal.
Table 5.8.3. SWINE INDUSTRY: SWOT Analysis
Strengths
Weaknesses
Inputs
1. Available production technology
1. High feeds cost
2. Heavy dependence of imported feed
ingredients
Farm Production
2. Dominated by small producers with 3. Inadequate program for disease
poor production performance
control
3. High degree of organization of
4. High incidence of technical
producers.
inefficiencies
4. Access to good genetics and
global technologies
5. Educated entrepreneurs and farm
managers
Logistics
6. Available infrastructure
5. High cost of logistics for swine and
feedgrains.
6. Lack of dedicated or specialized
logistics due to low volume and
prioritization problems
Processing
7. Available processing technologies
Marketing
8. Large domestic market.
7. Prevalence of poor quality abbatoir
8. Non observance of product
standards
9. Low purchasing power of the
masses
9. High utilization of pork byproducts.
Opportunities
1. Growing domestic market
Threats
1. Entry of imported pork
2. Bargaining power of retailers
3. Environmental compliance
4. Urbanization (communities
encroaching on swine growing areas
5- 62
5.9
BROILER
Production
5.9.1 Production increased by 8.21% per annum from 679,000 tons in 1993 to
930,000 tons in 1997. The tremendous increase in chicken imports in 1995 (2
million birds) resulted in a bumper broiler output in 1996 and 1997. Output
however dropped to -1.1% as integrators limited their production to prevent the
glut and recover losses in the past years. Despite this drop however, the industry
was able to recover in 1999 and posted an average annual growth of 5.9% from
1999 to 2004.
Figure 5.9.1. BROILER: Volume of Production, 1993-2004
Quantity ('000 tons)
1,400
1,200
1,000
800
600
400
200
0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.9.2 Compared to 1993 levels, production performed better in 1999-2004 than
in 1993-1998. Output in 2004 was 78% higher than in 1993.
Production index (1993=100)
Figure 5.9.2. BROILER: Production Index, 1993-2004
200
150
100
50
0
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 63
5.9.3 The biggest regional producers of broilers are Southern Tagalog and
Central Luzon. Central Luzon managed to increase its share to total production
from only 27% in 1993 to 29% in 1998 and further to 31% in 2004 surpassing
Southern Tagalog which used to be the leading producer in 1993. Other big
producers are Central and Western Visayas and Davao Region.
Figure 5.9.3. BROILER: Regional Distribution of Production, 1993, 1998 and 2004
1993
Total: 678,760 tons
1998
Total: 919,449 tons
Southern
Central
Tagalog
Luzon
31%
29%
Southern
Others
Others
22%
Central
Visay as
6%
Western
Dav ao
Visay as
Region
6%
8%
Tagalog
23%
Central
Luzon
27%
25%
Central
Western
Visay as
Visay as
7%
8%
Dav ao
Region
8%
2004
Total: 1,231,794 tons
Central
Luzon
31%
Calabarzon
Others
23%
27%
Central
Dav ao
Visay as
Visay as
Region
5%
7%
7%
Western
Source of basic data: BAS
5- 64
Trade
5.9.4 Imports of chicken meat and meat cuts are being undertaken to beef up
local supply. Total imports fluctuated during the past 12 years through 2004
ranged from a low of 106 tons in 1993 to a high of 29,000 tons in 1999. Imports
were minimal in 1995 as many integrators pursued expansion activities owing to
the FMD outbreak in pork. However, following the lifting of import restrictions in
1996, frozen imports surged in 1997-1999. Imports reached 20,300 tons in 2004
which is more than 50% from the previous year. This is a repeat of the 1999
scenario when influx of imported chicken meat was a record high. During the
period, the out-quota tariff on poultry has been reduced to 50% which made the
imported US leg quarters even cheaper.
5.9.5 The Philippines is not competitive in the export market due to high cost of
production. The year 2004 was blessed one for the industry because the country
was spared from the Avian Influenza (AI) epidemic which hits a number of Asian
countries. This provided an opportunity for the country to export ready-to-cook
processed chicken to Japan whose imports from AI infected countries like
Thailand were restricted.
5.9.6 In terms of volume indices pegged at 1993 levels, imports exhibited an
erratic trend with peaks in 1999 and 2004.
Volume index (1993=100)
Figure 5.9.4. BROILER: Production and Import Volume Index, 1993-2004
30,000
25,000
20,000
15,000
10,000
5,000
100
(5,000)
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
5- 65
Benchmarking with Relevant Asian Countries
5.9.7 The top three broiler producers are China, India and Japan. Performance
levels among selected Asian countries showed that the Philippines is far behind
these countries. Production growth from 1993-1998 was increasing for most of
the countries except for Indonesia and Japan. However, a marked improvement
in production was observed from 1999-2004 including the Philippines with 34%
growth.
Table 5.9.1. BROILER: Comparative Production of Selected Asian
Countries, 1993, 1998 and 2004
Production (ton)
Country
1993
1998
2004
China
4,571,943
7,954,083
9,895,485
India
560,000
710,000
1,650,000
Indonesia
687,634
604,707
1,190,900
Japan
1,318,000
1,211,671
1,241,981
Korea
361,000
349,746
386,000
Malaysia
606,000
675,000
825,466
Philippines
346,600
491,230
658,123
Singapore
80,000
82,248
68,726
Thailand
943,000
1,097,000
878,489
Viet Nam
120,000
239,200
316,409
Source of basic data: FAO
5.9.8 Based on the study conducted in 2004, in terms of technical production
parameters, Indonesia seemed to have the highest feed efficiency among broiler
integrators with feed conversion ratio of 1.5 to 1.7. The Philippines, Thailand and
Malaysia had identical FCR for integrators ranging from 1.9 to 2.1. It is also
noted that integrators across countries had higher percentage of livability and
shorter days of growing (STRIVE Foundation and UA&P, 2004).
5.9.9 The Philippines came out to be the most expensive producer of chicken in
1993 among selected Asian countries. However this position was not sustained
as Philippine prices went down in 1998 and 2002. Nevertheless, the significant
decrease in 2002 Philippine prices saw the country with lower prices than
Indonesia and Japan.
5- 66
Table 5.9.2. BROILER: Comparative Producer Prices of Selected Asian
Countries, 1993, 1998 and 2002
Price ($/ton)
Country
1993
1998
2002
China
887.37
645.97
523.50
India
954.65
1,136.60
994.80
Indonesia
1,106.80
558.74
1,030.37
Japan
1,670.86
1,333.74
1,380.49
Korea
1,397.83
926.19
918.40
Philippines
1,864.68
1,338.86
1,152.24
Thailand
895.34
775.16
713.69
Source of basic data: FAO and IFS
5.9.10 Based on the study conducted in 2004, Thailand appeared to have the
lowest wholesale cost of broiler at US$0.56-0.59 per kilo. The major reasons
were the cost of feeds, DOCs, labor, processing, transport and handling costs.
In contrast, the Philippines had the highest wholesale cost of broiler ranging from
US$1.13-1.14 per kilo (Strive Foundation and UA&P, 2004).
Competitiveness analysis
5.9.11 Based on the study conducted in 2000, domestic broiler production is not
competitive in the export market. The export parity/domestic price ratios were
generally less than one at exchange rates between P35.00 and P40.00 per dollar
implying that broler domestic prices were not competitive with the export parity
price. This price uncompetitiveness could be due to the relatively high per unit
cost of production attributed to high feed costs especially corn. (UA&P
Foundation, 2000)
5.9.12 The analysis of the import parity/domestic price comparisons showed that
domestic wholesale prices of chicken were not competitive with price of chicken
imports. The price ratios were all less than one at different exchange rates (P35,
P40, and P45) implying not price competitive with imports (UA&P Foundation,
2000)
5.9.13 In terms of cost, the analysis showed that in general, the Philippines had
no competitive advantage in chicken export except marginal competitiveness for
some benchmark farms at the exchange rate of P45. Results of the estimation
showed that at different exchange rates and at different production systems
showed that the Philippines is generally not a competitive with imports.
5- 67
SWOT Analysis
5.9.14 The chicken broiler industry has a large domestic market with a sizable
institutional market (fastfood chains). It is dominated by integrators (about 80%)
with production and technologies that can address global standards. There are
sufficient feed milling plants and toll processing plants which support industry
activities.
5.9.15 Among the weaknesses is the high cost of chicken. Growers attribute
the high cost of chicken to at least two factors: high feed costs and inflexible
pricing of retailers in the wet markets. The former is caused by the high tariff on
corn as well as the high import dependence of farm inputs. Low income and high
cost of chicken combine, make the per capita consumption (8 kilograms
annually) relatively low. The average Malaysian and Thais consume about 30 kg
and 15 kg, respectively. The low per capita consumption, however, can be
considered an opportunity because as income increases, demand for chicken
would increase.
5.9.16 The potential market of chicken is large at more 80 million people and
growing at over 2% annually. The current per capita demand of 8 kilograms is
very low by global standards which provide more room to increase consumption.
The presence of institutional market such as fast food chains can boost
consumption as eating out share on food spending continues to grow. Access to
competitively-priced feeds and best practice technologies, as well as good
market knowledge, are qualities needed to enter the export market.
Developments in processing processing/value added products like yakitori
chicken opens export potential to the industry.
5.9.17 Threats amid global competition continue due to the high cost of locally
produced chicken which deters more consumption and encourages imports. The
entry of cheap imported chicken parts (e.g. leg quarter) still poses threat to
industry players. Chicken leg quarters are perceived inferior in many western
countries which prefer white (breast) meat. There is also need to address the
cost of imported feeds, which include corn, soybean meal and fishmeal.
5- 68
Table 5.9.3. BROILER INDUSTRY: SWOT Analysis
Strengths
Weaknesses
Inputs
1. Access to feed and production
1. High feed cost: high tariff on corn;
technologies
high import dependence of farm inputs
2. Sufficient feedmilling plants
2. High cost of imported equipment
Farm Production
3. Presence of integrators
3. High cost of chicken
Achieving good technical efficiencies
4. Limited feed efficiency due to
(i.e. FCR)
preference for small birds
Logistics
4. Presence of needed infrastructure
5. High logistics costs
5. Presence of toll processing plants
Marketing
6. Large domestic market
6. Low per capita consumption
7. Large institutional markets
7. Inflexible pricing of retailers
8. Established marketing system
Opportunities
1. Growing domestic market of 80M
people
2. Growing eating out spending
3. Low per capita consumption
4. Export potential
5. Developments in processing/valueadded products
Threats
1. Entry of cheap imported chicken
parts
2. High price of domestic chicken
3. High cost of feeds
5- 69
5.10
CHICKEN EGG
Production
5.10.1 Domestic production comes from two sources: commercial and native
chicken. Output rose by about 4% annually from 202,100 tons in 1993 to 296,576
tons in 2004. The growth was due to increased investment (number of chicken
layers) and improved egg-laying efficiency ratio.
5.10.2 From 1993 to 1998, production increased by 3% per year while it grew
faster at 5% per year from 1999 to 2004. Production only declined in 1994 when
the importation of layer breeders was reduced.
Figure 5.10.1. CHICKEN EGG: Volume of Production, 1993-2004
Quantity (tons)
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.10.3 In 2004, volume of production was 47 percent higher than in 1993. Output
from 1999 to 2004 grew faster compared to production from 1993 to 1998.
Production index (1993=100)
Figure 5.10.2. CHICKEN EGG: Production Index, 1993-2004
160
140
120
100
80
60
40
20
0
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 70
5.10.4 Chicken egg is produced mainly from Southern Tagalog, Central Luzon
and Central Visayas. The three regions accounted for an average of 50% from
1993 to 2004. The key producing provinces include Batangas, Rizal, Bulacan,
Nueva Ecija and Cebu, where layer farms and these are near large markets.
Figure 5.10.3. CHICKEN EGG: Regional Distribution of Production, 1993,
1998 and 2004
1993
Total: 202,100 tons
1998
Total: 227,038 tons
Southern
Southern
Others
Tagalog
Others
Tagalog
34%
23%
33%
25%
Central
Central
Luzon
Western
Central
Dav ao
Visay as
Visay as
Region
9%
10%
10%
14%
Western
Visay as
9%
Luzon
Dav ao
Central
Region
Visay as
9%
10%
14%
2004
Total: 296,576 tons
Others
Calabarzon
30%
28%
Bicol
Region
8%
Northern
Central
Mindanao
Visay as
8%
11%
Central
Luzon
15%
Source of basic data: BAS
Trade
5.10.5 The country imports a small amount of egg and egg products. Total
import value grew by 10% per year from 1993 to 2004. The major suppliers in
1993 were Denmark, Germany and Netherlands while in 2004 were Denmark,
USA and India.
5.10.6 Importations comprised mostly of egg products (processed) such as
powdered, dried and other than dried. Import value of processed eggs
accelerated by 12% over the 12 year period. At present, the country does not
5- 71
produced processed eggs. Mayonnaise manufacturers and bakers, however, are
increasingly using processed eggs because it is convenient and economical.
Though, imports during 1993 to 1998 grew faster than in later years.
5.10.7 By contrast, table eggs imports were volatile. During 1993 to 1995,
imports decreased by 2% per year. There were no registered importations in the
next three years but from 1999 to 2004 the country’s imports dropped by an
average annual growth of 14%. Over the period, table egg imports comprised an
insignificant portion of supply.
Figure 5.10.4. CHICKEN EGG: Production and Import Volume Index by
Product Type, 1993-2004
Production
Pow dered imports
Egg y olk, other than dried imports
700
600
Volume index
(1993=100)
500
400
300
200
100
0
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
Benchmarking with Relevant Asian Countries
5.10.8 The Philippine egg industry primarily serves the domestic market. It is
relatively small compared to the top producers in Asia - China and India. By
industry size, the Philippines is a little over half of Indonesia and is slightly bigger
than Malaysia and Thailand.
Table 5.10.1. CHICKEN EGG: Comparative Production of Selected Asian
Countries, 1993, 1998 and 2004
Country
Production (ton)
1993
1998
2004
China
9,685,700 17,531,550 23,501,250
India
1,329,000
1,623,000
2,464,000
Indonesia
448,305
392,892
857,370
Malaysia
350,000
383,000
431,004
Philippines
335,000
528,000
480,000
Thailand
426,000
535,563
393,360
Viet Nam
115,000
161,333
197,000
Source: FAO
5- 72
5.10.9 During 1993 to 2002, India had the lowest producer price while Indonesia
had the highest. In 2002, the producer prices of a ton eggs in the Philippines at
US$1,213 was higher by US$722 than India but US$743 lower than Indonesia.
Table 5.10.2. CHICKEN EGG: Comparative Producer Prices of Selected
Asian Countries, 1993, 1998 and 2002
Country
Producer Prices (US$/ton)
1993
1998
2002
China
861
695
556
India
335
529
492
Indonesia
3,141
1,085
1,956
Philippines
1,583
1,293
1,213
Thailand
643
804
792
Source: FAO and IFS
Competitiveness Analysis
5.10.10 Chicken eggs are not price competitive in the export market but
competitive with imports in the domestic market at P35, P40 and P45 exchange
rates. Meanwhile, based on resource cost ratios (RCR) and varying exchange
rates, chicken eggs have competitive advantage only under import substitution
regime. The RCRs obtained across farms were less than one (UA&P Foundation,
2000). In another study, local table eggs are price competitive with imports at
P55 exchange rate but not at P45 and indifferent at P50 (Strive Foundation,
2000).
5.10.11 Based on technical parameters such as laying rate, number of eggs
produced, and FCR, the medium-sized chicken layer farms were the most
efficient in the Philippines while large layer farms produced more eggs in Asian
countries like Thailand, Malaysia and Indonesia. Moreover, the medium-sized
farms in the country were more profitable compared to large farms. By contrast,
large farms earned more in Thailand and Malaysia (Strive Foundation and UA&P,
2004).
SWOT Analysis
5.10.12 The strengths, weaknesses, opportunities and threats identified below
are factors that largely affect the chicken egg industry.
5.10.13 Among the advantages of the industry are the growing institutional
market which offers wider product offerings especially in their breakfast line that
usually includes eggs; the key players have the capability to produce their own
feeds and possess the technical know-how on the operations of the business;
and a medium sized cooked egg is equivalent to one serving of meat making it
the cheapest source of protein. Moreover, a large potential is seen given the low
domestic per capita consumption and growing population.
5- 73
5.10.14 Meanwhile, the major constraints of the industry are: production cost the rising costs of imported farm inputs like soybean meal, fishmeal, biologics
and medications; and market-presence of low-priced substitutes like noodles and
canned sardines.
Table 5.10.3. CHICKEN EGG INDUSTRY: SWOT Analysis
STRENGTHS
WEAKNESSES
Inputs
1. High cost of feeds
2. Alternative local feeds supply
undeveloped
Production
1. Access to feed and production
3. Limited land access
technologies
2. Achieving good technical
4. Occurrence of diseases
efficiencies
Logistics
5. High transport cost
Marketing
3. Large institutional market
6. Strong retail price fixing
4. Absence of ethnic taboo
7. Negative impression on eggs
5. Cheapest source of protein
8. Poor market information
6. Easy to prepare
OPPORTUNITIES
THREATS
1. Growing domestic market
1. Presence of lower priced
substitutes
2. Low per capita consumption
2. High cost of farm inputs
3. Increasing eating-out and baked
3. Entry of imported processed eggs
products spending
(i.e. powdered and frozen)
Source: Layer Industry Master Plan, 2002
5- 74
5.11
MILKFISH
Production
5.11.1 Milkfish continues to be an important part of the fish supply in the country.
It accounts for 50% of total fisheries supply from aquaculture (excluding
seaweeds). Although, milkfish is known to grow in marine and freshwaters pens
and cages, it is mainly cultured in brackish water fishponds. At present, there are
more than 176,000 hectares of ponds and 5,000 hectares of pens operated for
milkfish production (Lopez, 2005).
5.11.2 Production grew by about 6% per year from 148,970 tons 1993 to 274,150
tons in 2004. From 1993 to 1998, production grew at a modest rate of 2% per
year. The increase in output was attributed to the favorable weather condition,
better quality of fry/fingerlings, rehabilitation of ponds, pens and cages and
improved technology in brackish water fishponds.
5.11.3 By contrast, production grew rapidly during 1999 to 2004 with an average
annual growth rate of about 9%. The growth was due to the programs (e.g.
dispersal of fry/fingerlings) supported by government organizations such as the
Bureau of Fisheries and Aquatic Resources, Local Government Units and
QUEDANCOR, non-occurrence of calamities and increased stocking density.
The notable growth in 2000 and 2004 were largely driven by the expansion of
area harvested, rehabilitation of unused ponds, availability of good quality
fry/fingerlings and continuous support from government organizations.
Figure 5.11.1. MILKFISH: Volume of Production, 1993-2004
300,000
Quantity (tons)
250,000
200,000
150,000
100,000
50,000
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.11.4 In 2004, volume of production is 84 percent higher than in 1993.
Production from 1999 to 2004 grew faster with more investments compared to
the output during 1993 to 1998.
5- 75
Figure 5.11.2. MILKFISH: Production Index, 1993-2004
200
Production index
(1993=100)
150
100
50
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5.11.5 The regions with the highest surplus production include Western Visayas,
Central Luzon and Ilocos Region. The top four producing regions accounting for
at least 70% of production from 1993 to 2004 are Western Visayas, Central
Luzon, Ilocos Region and Southern Tagalog. Regional shares have been
relatively at the same level in since 1993 for Western Visayas and Central Luzon.
Meanwhile, Ilocos Region has been increasing its slice of the output at the
expense of Southern Tagalog.
Figure 5.11.3. MILKFISH: Regional Distribution of Production, 1993, 1998
and 2004
1993
Total: 148,965 tons
Dav ao
Others
Region
18%
1998
Total: 165,458 tons
Southern
Tagalog
Central
23%
Visay as
6%
Western
19%
Visay as
27%
4%
Ilocos
Ilocos
Region
8%
Others
Western
Region
Central
Visay as
11%
Luzon
24%
21%
Central
Southern
Luzon
Tagalog
19%
20%
5- 76
2004
Total: 274,151 tons
Western
Others
SOCCSK-
Visay as
19%
24%
SARGEN
5%
Southern
Tagalog
Central
Ilocos
13%
Luzon
Region
21%
18%
Source of basic data: BAS
Trade
5.11.6 The country exports milkfish in the following forms: frozen, fresh/chilled,
dried, smoked, whole or in pieces, in airtight containers (ex. canned, bottled,
vacuum packed), or whole or in pieces, not in airtight containers. Total exports
grew by about 20% per year to US$ 3.4 million in 2004 from US$ 1.2 million in
1993. Total export trend was worrisome during 1993 to 1998 as it declined by 6%
per year. The trend was reversed thereafter when milkfish exports especially
whole and smoked forms gained growth from 1999 to 2004. The biggest total
export was in 2004 with USA as the largest market where Filipino immigrants are
believed to be the buyers.
5.11.7 By product form, exports have performed differently from 1993 to 2004.
Over the period, export volume of frozen milkfish was erratic while fresh/chilled
was relatively stable. On the contrary, whole milkfish increased noticeably over
the period from a low base in 1993. Since 2000, as production improved the
country increasingly shifted exports to whole milkfish.
Figure 5.11.4. MILKFISH: Production and Export Volume Index by Product
Type, 1993-2004
Volume index
(1993=100)
700
600
Production
Frozen ex ports
500
Whole ex ports
Fresh ex ports
400
300
200
100
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
5- 77
Benchmarking with Relevant Asian Countries
5.11.8 In 2004, the Philippines produced 273,590 tons of milkfish making it the
largest producer in the world. It was followed by Indonesia at 241,440 tons. The
two countries accounted for about 90% of the total output. Moreover, both mainly
cultured milkfish in brackish water.
Table 5.11.1. MILKFISH: Comparative Production of Selected Asian
Countries, 1993, 1998 and 2004
Production (ton)
Country
1993
1998
2004
Indonesia
164,448
158,666
241,438
Philippines
148,965
162,458
273,592
Source: FAO
Competitiveness Analysis
5.11.9 Despite being the world’s largest producer, the Philippines lags behind
other major producers like Indonesia and Taiwan in technological advancement.
Nonetheless, it remains to be a viable venture because of high the local market
demand (To, 2003).
5.11.10 Local consumers still prefer fresh/chilled milkfish in wet markets and fish
port complexes as prices are cheaper. They tend to be discriminating on frozen
fish. Moreover, services such as gutting or cleaning of milkfish are offered in
most local public markets and large supermarkets to attract buyers.
SWOT Analysis
5.11.11 Milkfish is an important commodity in the country. The industry has
several strengths such as improving farming technology, expansion of utilized
areas and growing market demand. It is, however, still confronted with
constraints such as inadequate fry supply, high cost of farm inputs, lack of
technology for value-added and multi-layered marketing system.
5.11.12 The following are the strengths, weaknesses, opportunities and threats
of the milkfish industry.
5- 78
Table 5.11.2. MILKFISH INDUSTRY: SWOT Analysis
STRENGTHS
Inputs
1. Available aquatic resources
Production
2. Improving farming technology
3. Expansion of utilized areas
Processing
WEAKNESSES
1. Insufficient supply of fry
2. High cost of feeds
3. Poor quality feeds
4. Inadequate extension services
5. Low farm gate prices
6. Lack pf post harvest facilities for
value-adding
Marketing
4. Growing local demand
OPPORTUNITIES
4. Expanding export market
5. Value addition potential
Source: Lopez, 2005
7. Presence of several marketing
layers
THREATS
4. Overproduction
5- 79
5.12
TILAPIA
Production
5.12.1 Production of farmed tilapia grew by about 5% per year from 96,339 tons
in 1993 to 145,868 in 2004. The bulk of tilapia production is from aquaculture
with little contribution from municipal fishing. For aquaculture, freshwater
fishpond and fishcages account for about 90% of total production.
5.12.2 From 1993 to 1996, tilapia production continually declined. This was due
to water pollution, scarcity of good quality fry and typhoons in North and South
Luzon. By 1997, output managed to bounce due to favorable weather condition
and rehabilitation of pens and cages. However, the El Niño phenomenon in the
following year again caused decline in production.
5.12.3 By contrast, production steadily increased by 12% per year during 1999 to
2004. The increasing supply was driven by an increase in area harvested,
availability of better quality fingerlings, increase stocking rate using Genetically
Improved Farm Tilapia (GIFT) strain fingerlings, support of the Bureau of
Fisheries and Aquatic Resources (BFAR), favorable weather conditions and
rising consumer demand.
Figure 5.12.1. TILAPIA: Volume of Production, 1993-2004
160,000
Quantity (tons)
140,000
120,000
100,000
80,000
60,000
40,000
20,000
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.12.4 In 2004, volume of production was 51 percent higher than in 1993.
Production grew by 12% per year from 1999 to 2004 while it was relatively
stagnant during 1993 to 1997.
5- 80
Figure 5.12.2. TILAPIA: Production Index, 1993-2004
160
Production index
(1993=100)
140
120
100
80
60
40
20
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5.12.5 The major producers are located in the provinces of Pampanga (Central
Luzon) and Batangas (Southern Tagalog). Central Luzon contributes an average
of more than 40% of the country’s production. Meanwhile, Southern Tagalog
increased its contribution from 24% in 1993 to 35% in 1998 but fell to 33% in
2004.
Figure 5.12.3.TILAPIA: Regional Distribution of Production, 1993, 1998 and
2004
1993
Total: 96,339 tons
Ilocos
Region
Dav ao
3%
1998
Total: 72,023 tons
SOCCSK-
Others
15%
Central
Ilocos
SARGEN Region
3%
4%
Others
6%
Central
Region
Luzon
Bicol
Luzon
7%
40%
Region
44%
8%
Bicol
Region
11%
Southern
Southern
Tagalog
Tagalog
24%
35%
5- 81
2004
Total: 145,868 tons
Bicol
Region
4%
Cagay an
Region
3%
SOCCSK-
Others
8%
Central
Luzon
SARGEN
45%
7%
Southern
Tagalog
33%
Source of basic data: BAS
Trade
5.12.6 Tilapia products (fresh and frozen fillets, whole and gutted fish) have
become important commodities in the global seafood trade. The country,
however, ships insignificant volumes abroad. At present, there are no particular
trade data for tilapia as it is lumped with other fishes and not classified
separately.
5.12.7 Based on USA import data, the Philippines is a small player and supplied
mostly frozen whole tilapia with minimal amounts of frozen fillet during 1993 to
2004. Exports were irregular and totaled only 24 tons (US $44,000) from 1993 to
1998. The biggest shipment was about 80 tons (US $93,000) in 1999. The
country continually supplied USA from then on but in decreasing volumes.
Aggregate tilapia export to USA amounted 224 tons (US $274,000) from 1999 to
2004.
Benchmarking with Relevant Asian Countries
5.12.8 Tilapia, one of the promising aquaculture species, is farmed in at least 85
countries. It is one of the fastest growing aquaculture products because it can
consume a wide extent of food and tolerant to poor water quality. The largest
producers of the world are in Asia, namely, China, Philippines, Indonesia and
Thailand.
5.12.9 China is the biggest producer accounted for about 50% of the total output
in 2004. Its tilapia farming practices include semi-intensive culture in fertilized
ponds with polyculture system, intensive culture in tanks with monoculture and
intensive culture in reservoirs.
5- 82
5.12.10 Meanwhile, the Philippines is far second contributed 8% of the
production. Tilapia culture is mainly in freshwater ponds and cages with semiintensive and intensive systems. It pioneered for commercial tilapia cage culture,
application of hormonal sex reversal and use of net enclosures for breeding of
tilapias in the region.
5.12.11 The next top producers were by Indonesia and Thailand with about 8%
and 5% of the total output, respectively. Farming practices of tilapia in Indonesia
are semi-intensive culture with polyculture, intensive cage culture in rivers,
canals, lakes and reservoirs and semi-intensive in brackishwater ponds. On the
other hand, Thailand’s farming practices are extensive culture in rice paddies,
semi-intensive freshwater pond culture with polyculture, intensive culture in
ponds and pond culture of tilapia in polyculture system with chicken/duck/pig
farming.
Table 5.12.1. TILAPIA: Comparative Production of Selected Asian
Countries, 1993, 1998 and 2004
Production (ton)
Country
1993
1998
2004
China
191,257
525,926
897,276
Indonesia
61,896
65,894
139,651
Malaysia
6,611
12,625
25,642
Philippines
96,339
72,023
145,869
Thailand
54,114
73,809
97,653
Source: FAO
Competitiveness Analysis
5.12.12 Production is mainly absorbed by the domestic market. Export is
reported to be not competitive at P35 and P40 exchange rates. It can be
competitive at P45 exchange rate if there is adequate volume and exceptional
quality. In the domestic market, tilapia is competitive as its wholesale price is
lower than the derived import price at varying exchange rates i.e. P35, P40 and
P45. Domestic resource cost analysis indicates that tilapia is generally
competitive at P35, P40 and P45 exchange rates (UA&P Foundation, 2000).
5.12.13 At present, the US is the world’s largest importer. The Philippines has
been a small player in this market since the late 90s. Exports were mainly frozen
whole tilapia. From 1999 to 2003, exports have declined and none were recorded
in 2002. The unsteady supply of the country is due to the jittery price in the local
wet market. Moreover, domestic small growers who compose bulk of the tilapia
industry are disposed to pole-vault when wet market price is higher.
5- 83
SWOT Analysis
5.12.14 The major strengths of the tilapia industry include the availability of the
production areas, availability of quality fingerlings and skills of the people. While
the country is one of the top producers, the potential of the industry especially in
the international trade is not fully tapped. The developing market of China and
huge markets for tilapia product forms and by-products are opportunities for the
industry.
5.12.15 By contrast, among main constraints are the high cost of inputs i.e.
feeds, poor marketing infrastructure and stringent safety and quality
requirements on processed fish enforced by the major markets such as USA and
EU.
Table 5.12.2. TILAPIA INDUSTRY: SWOT Analysis
STRENGTHS
Inputs
2. Available aquatic resources
3. Accessible genetically improved
strains
Production
4. Technological innovation and
advancements
WEAKNESSES
1. High cost of inputs (feeds and fuel)
2. Inadequate extension services
3. Limited credit assistance
Marketing
2. Strong consumer demand
4. Lack of market information and
assistance
5. Stringent requirements of export
markets
OPPORTUNITIES
THREATS
6. Export prospect
5. Negative environmental impacts of
intensive culture systems
7. Value addition potential
6. Agricultural conversion to fishponds
8. Saline tilapia culture
7. Unregulated use of water supply
from aquifers
Source: Tilapia Industry Master Plan, 2002 and Guerrero III, R., 2006
5- 84
5.13
TUNA
Production
5.13.1 Total production from commercial and municipal fishing expanded by 8%
per year from 238,128 tons in 1993 to 525,679 tons in 2004. Over the period,
commercial catch accounted for 64% of the total; the rest came from municipal
fishing. Production from commercial fishing grew by 10% per year while output
from municipal fishing increased by 5% per year.
5.13.2 The use of efficient gears and favorable weather condition enhanced
production from 1993 to 1998. However, the unfavorable weather condition that
decreased the number of fishing trips caused production to decline in 1995 and
1996. The more rapid growth during 1999 to 2004 was largely due to the good
weather condition increasing the number of fishing days and operation of newly
repaired fishing vessels.
Figure 5.13.1. TUNA: Volume of Production, 1993-2004
600,000
Quantity (tons)
500,000
400,000
300,000
200,000
100,000
0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.13.3 In 2004, volume of production was 121 percent higher than in 1993. Tuna
output grew faster from 1999 to 2004 than during 1993 to 1998.
Figure 5.13.2. TUNA: Production Index, 1993-2004
250
Production index
(1993=100)
200
150
100
50
0
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS
5- 85
5.13.4 In 1993, Zamboanga Peninsula and Metro Manila posted the highest tuna
production (19% each) followed by Southern Tagalong (14%) and Davao Region
(11%). By 1998, Zamboanga Peninsula remained the biggest producer
accounting for 26% of total output. The other major producing regions accounting
for 40% of production were Southern Tagalog, NCR and Davao Region. In 2004,
SOCCSKSARGEN emerged has the biggest producer resulting from increasing
tuna catch since 2003. It was followed by Zamboanga Peninsula and Southern
Tagalog.
Figure 5.13.3. TUNA: Regional Distribution of Production, 1993, 1998 and
2004
1993
Total: 238,128 tons
Others
24%
1998
Total: 326,745 tons
Zamboanga
Central
7%
Peninsula
27%
19%
Visay as
Zamboanga
Others
Peninsula
NCR
Western
19%
Visay as
26%
Southern
Southern
Dav ao
7%
Tagalog
Region
Region
14%
17%
11%
Dav ao
NCR
Tagalog
13%
16%
2004
Total: 525,679 tons
Others
SOCCSK-
24%
SARGEN
36%
NCR
5%
ARMM
7%
Southern
Zamboanga
Tagalog
Peninsula
12%
16%
Source of basic data: BAS
5- 86
Trade
5.13.5 Total export earnings increased by 2% per year from US$ 150.2 million
FOB in 1993 to US$ 154 million FOB in 2004. The bulk of exports are canned
tuna. Others are in the form of fresh/chilled, frozen and smoked tuna. During
1993 to 1997, total receipts posted a moderate growth. It peaked in 1998 due to
surplus catches. However, a sharp decline in 1999 reduced export earnings by
33% mainly due to weak consumer demand especially those from USA. This was
aggravated by high freight costs, inadequate infrastructure and weak market
access. Subsequently, total exports grew by 3% per year from 1999 to 2004.
5.13.6 Meanwhile, imports were mostly in frozen form. Total import value rose by
12% per year during 1993 to 1998. It amounted to US$ 42 million CIF in 1998,
the highest over the six year period. From 1999 to 2004, total import slowed
down and value increased by only 2% per year.
5.13.7 In terms of volume, exports grew more rapidly for frozen tuna than canned
tuna from 1993 to 2004. (Caveat: Official statistics for canned tuna exports are
too low compared to industry estimates.) In addition, frozen tuna exports
significantly fell in 2001 when canneries shifted to local catch in raw material use
which was a good thing. Since then more of the local production was used as an
input for the canning industry.
Figure 5.13.4. TUNA: Production and Trade Volume Index by Product Type,
1993-2004
Production
Canned ex ports
500
Frozen ex ports
Frozen imports
Volume index
(1993=100)
400
300
200
100
0
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
Benchmarking with Relevant Asian Countries
5.13.8 Tuna is a major industry that accounts for about 12% of the total
Philippine fish production. The country is among the top producers of tuna in the
world. Japan and Taiwan supplied bulk of the world’s production. In 2004, the
Philippines contributed 7% or 278,000 tons (FAO) to total. However, based on
BAS records the country’s tuna catch was over 500,000 tons in the same year.
5- 87
Table 5.13.1. TUNA: Comparative Production of Selected Asian Countries,
1993, 1998 and 2004
Production (ton)
Country
1993
1998
2004
China
6,629
8,130
64,410
India
16,487
3,799
5,872
Indonesia
226,130
390,356
341,948
Philippines
106,280
199,889
278,000
Source: FAO
Competitiveness Analysis
5.13.9 The Philippines is competitive in tuna. It is mainly export driven. In terms
of price, the Philippines tuna (skipjack) price is close to Thailand. The country
has at best a US$50/ton advantage over Thailand due to transport advantage
from the Pacific.
5.13.10 On the other hand, the Philippines is competitive in most of the fishing
cost items such as crew wage, parts and repairs. Although cost competitive, the
country’s fishing fleets are known to suffer inefficiencies due to outmoded
facilities causing price and supply uncertainties. According to a study, the fishing
industry is competitive with resource cost ratios of less than one (Gonzales,
1998).
SWOT Analysis
5.13.11 The performance of the tuna industry is influenced by many factors.
Some of the advantages are the proximity to fishing ground and the presence of
canneries. Meanwhile, the factors that offset the country’s advantages include
high fuel costs, discriminatory tariffs and increasing competition from other
countries.
Table 5.13.2. TUNA INDUSTRY: SWOT Analysis
STRENGTHS
WEAKNESSES
Inputs
1. Proximity to Pacific fishing grounds
1. High fuel cost
2. Small fleets
Production
3. Limited capacity of fishports
4. Gaps in facilities (cold storage)
5. Inadequate long-term finance
Logistics
2. Established infrastructure in
General Santos
5- 88
Processing
3. Presence of canneries
Marketing
4. Established marketing system
OPPORTUNITIES
1. Growing global market
2. Improving catching technologies
5. No brand identity
1.
2.
3.
4.
5.
6.
THREATS
Depletion of fish resources
Uncontrolled illegal fishing
Limited access to rich exclusive
economic zones
Discriminatory tariffs in EU
Technical barriers to trade
Competition to other countries
Source: Dy, 2000
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5.14
SEAWEEDS
Production
5.14.1 Production posted double digit growth throughout 1993-1997, with
average of 13.3% from 402,000 tons to 657,000 tons in 1997. The expansion
was driven by the increasing demand in the global market. The primary reasons
were the discovery of new applications and the improved quality of local
seaweed as a result of improved farming habits/techniques of local farmers.
Growth decelerated to by 1.5% in 1999 and 2000 as a result of the El Niño
weather disturbance in 1998. Production recovered in 2001 with 11.1% growth.
From 1999-2004, output expanded by 11.8%, pulled down by the sharp
contraction 1.6% in 1999 and 2000. Output peaked in 2004 at 1.2 million tons
due to favorable weather conditions and increasing demand for dried seaweeds
in the export market.
Quantity ('000 tons)
Figure 5.14.1. SEAWEEDS: Volume of Production, 1993-2004
1400
1200
1000
800
600
400
200
0
93
94
95
96
97
98
99
00
01
02
03
04
Source: BAS
5.14.2 Relative to 1993 levels, production was up by 200% in 2004. Production
gains were higher by 127-percentage points during 1999-2004 as against 19931998.
Production index (1993=100)
Figure 5.14.2. SEAWEEDS: Production Index, 1993-2004
350
300
250
200
150
100
50
93
94
95
96 97
98
99
00 01
02
03
04
Source of basis data: BAS
5- 90
5.14.3 Production is highly concentrated in the ARMM region particularly in the
provinces of Sulu and Tawi-tawi. ARMM contributed 68% of total seaweeds
production in 1993. The region share dropped to 40% in 2004 as more and more
areas opened up for seaweeds production.
Figure 5.14.3. SEAWEEDS: Regional Distribution of Production, 1993, 1998
and 2004
1993
Total: 400,707 tons
ARMM
ARMM
68%
52%
Others
1%
1998
Total: 685,336 tons
Western Zamboanga Southern
Visay as Peninsula Tagalog
0.3%
6%
6%
Central
Others
Visay as
2%
19%
Southern
Tagalog
Western
Central
Visay as Visay as
2%
6%
Zamboanga
21%
Peninsula
17%
2004
Total: 1,204,808 tons
ARMM
40%
Southern
Tagalog
29%
Others
7%
Western
Central
Zamboanga
Visay as
Visay as
Peninsula
4%
7%
13%
Source of basic data: BAS
Trade
5- 91
5.14.4
The country is a net exporter of seaweeds. Total export receipts
increased by 29% per year from US$18.1 million in 1993 to US$89.6 million in
2004. About 40% of the total value of exports in 2004 were dried seaweeds
and the rest are in carrageenan form. Exports of dried seaweeds increased
by 15.7% per year from 1993-1998 but experienced a drastic decline of 8% in
1988 and further declined by 3% per annum in 1999-2004. Declines in
exports were due to low production in 1997 and 1998 brought about by the El
Niño and the La Niña. The Asian financial crisis also hit some of the
exporters which resulted to reduction in business operations.
5.14.5 Considering the country’s export of dried seaweeds and carrageenan
the volume indices relative to 1993 levels were generally increasing. In 2000,
dried seaweeds exports increased while carrageenan exports decreased.
This could imply that more production were exported as dried seaweeds
instead of processed carrageenan.
Volume index (1993=100)
Figure 5.14.4. SEAWEEDS AND CARRAGEENAN: Production and Export
Volume Index by Product Type, 1993-2004
Seaw eeds
350
Production
Carrageenan
300
250
200
150
100
50
93
94
95
96
97
98
99
00
01
02
03
04
Source of basic data: BAS and NSO
Benchmarking with Relevant Asian Countries
5.14.6 Benchmarking production levels among selected Asian countries indicated
that the Philippines is the leading producer of red seaweeds followed by China.
Except for the Philippines, China had overtaken other major producer countries
in Asia in 2004. Philippine yield performance from 1993-1998 was higher at 74%
but experienced a slower performance at 49.9% growth from 1999-2004.
Table 5.14.1. RED SEAWEEDS: Comparative Production of Selected Asian
Countries, 1993, 1998 and 2004
Country
Production in Ton
1993
1998
2003
China
201,211
379,233
739,948
Indonesia
228,395
164,725
288,170
Japan
369,750
400,104
339,527
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Korea
240,002
Philippines
377,523
Viet Nam
5,000
Source of basic data: FAO
194,882
657,049
12,000
194,853
985,176
30,000
Competitiveness Analysis
5.14.7 Results of the analysis showed that locally produced dried seaweeds
were generally export competitive at exchange rate of P40 and P45. While at the
exchange rate of P35:US$1, prices were not export competitive owing to the fact
that local demand is unlimited. In general, demand is always greater than
supply.
5.14.8 All the computed RCRs were very much less than one implying that the
Philippines is highly competitive as an exporter of seaweed. RCR under import
trade scenario indicated a very high competitive advantage of Philippine
seaweed. The Philippines remains as the major supplier of dried seaweeds in
the world.
5.14.9 Carrageenan produced in the country were mainly for exports. It is highly
competitive as manifested in the increasing exports.
5.14.10 The Philippines has a high competitive advantage in the export of
carrageenan. All the computed RCRs implied that even with the existing
distortions and interventions in the economy, the Philippines can compete in the
world market. Moreover, the Philippines is producing the low-priced carrageenan
SRC foodgrade or better known as PNG which is also acceptable for human
consumption.
SWOT Analysis
5.14.11 The Philippine seaweed-carrageenan industry faces a bright future
provided it plays its cards well. The gains can be protected if the industry
continues to improve itself. While international lobby for non-tariff barriers against
the Philippine carrageenan have quieted down, the industry must maintain
vigilance as lobby groups will continue to search for opportunistic gains. The
industry must continually assess itself. It must capitalize on its strengths. At the
same time, it must try to address its weaknesses. Benchmarking and sustained
search for best practices are imperative. These strengths and weaknesses
should always be calibrated with the opportunities and threats the industry faces.
5.14.12 The Philippines will remain as the leading and preferred supplier of raw
seaweeds and carrageenan in the world market. Over the past two decades, it
has laid a foundation, which if nurtured well, can sustain its growth.
5- 93
5.14.13 The industry’s weaknesses, if not addressed well, could cause a
long-term decline in competitiveness. Among the major factor to look into is
the high incidence of low farm productivity. This is attributed to poor quality of
seedlings in some areas, poor farming practices (i.e. early harvesting, use of
salt and stones to increase product weight) and inadequate technical services
and training on planting, harvesting and drying.
5.14.14 The future of the industry offers promise provided the strengths are
capitalized on and the weaknesses frontally addressed. There are still high
potentials for farm productivity enhancement and quality improvements.
Moreover, potentials for area expansion is still present to address increasing
market potentials i.e. new markets for new applications, market potential for
new varieties, expanding product applications.
5.14.15 The development and expansion of the industry are constrained by a
number of factors. Among these are pollution of some production areas,
observance of inadequate quality standards for raw seaweed that impacts on
carrageenan recovery and increasing competition in the global market.
Table 5.14.2. SEAWEED/CARRAGEENAN INDUSTRY: SWOT Analysis
Strengths
Weaknesses
Inputs
1. Availability of seedling nurseries in 1. Poor quality of seedlings in some
some areas
areas
2. Presence of established production
technology.
Farm Production
3. Ideal agro-climatic endowment
2. High incidence of low farm
(availability of good growing areas)
productivity
4. Available production areas and
3. Poor quality of seaweed in some
farmers are willing to farm and take
areas due to poor farming practices i.e.
risks.
early harvesting, use of salt and stones
to increase product weight, and other
malpractices
4. Lack of organized growers or
cooperatives
Logistics
5. Available infrastructure in some 5. High logistics costs
areas
6. Limited transport facilities
Processing
6. Available processing technologies
7. Inadequate technical services and
training on planting, harvesting and
drying
8. Lack of farm or village level postharvest and drying facilities
5- 94
Marketing
7. Established marketing and
distribution system.
8. Presence of many players in the
processing and export sectors.
Global:
9. Global presence
10. The Philippines Natural Grade
(PNG) carrageenan is competitive
with refined carrageenan from other
species.
11. Globally competitive cost
structures
Opportunities
1. High potential for farm area
expansion
2. High potentials for farm productivity
enhancement and quality
improvements
3. Entry of new investors in the
processing sector
4. Market potential for new varieties
5. New markets for new applications
6. High demand for technical services
Global:
7. Higher growth rate than the total
hydrocolloid market.
8. Expanding new product
applications.
9. Opening of markets for new
applications (e.g. China)
10. Acceptance of PNG as food
additive.
9. Lack of industry-wide quality
standards on raw seaweed
10. High marketing costs from the farm
to the processors
11. Limited competition at the farm
level marketing chain.
Global:
12. Weak government support in
international regulatory forums.
13. Limited access to global market
intelligence by many stakeholders.
14. Inadequate R&D budget on
processing and product applications
Threats
1. Increasing unit costs due to slow (or
unrealized) productivity gains.
2. Rising cost of doing business
(transport, purchased inputs, etc)
3. Inadequate supply of raw seaweeds
for SRC plants leading to low capacity
utilization or closures
4. Pollution of some farm production
areas
5. Inadequate observance/
implementation of quality standards for
raw seaweed that impacts on
carrageenan recovery
6. Peace and order concerns in some
parts of Mindanao
Global:
7. Increasing competition in
Eucheuma growing from Indonesia,
Malaysia and Africa
8. Establishment of carrageenan
plants in competitor countries
9. New lobbying and disinformation
tactics by competing firms overseas
10. Country specific regulatory
guidelines and their high rates of
change in the EU.
5- 95