Limited Losses From Haiyan Mean Small Output Downgrades

BMI View: The impact of November 2013's Typhoon Haiyan on the Philippines' agricultural production is likely to be moderate. We have revised down slightly our 2013/14 forecasts for rice and sugar output and note that coconut oil plantations and fisheries were also severely affected by the storm.

The impact of Typhoon Haiyan, which hit the Philippines in November 2013, on the country's agricultural production is likely to be moderate, as the affected areas - mostly the Eastern Visayas - are not key crop- or livestock-producing areas. Haiyan was one of the worst typhoons on record globally, and according to the latest official estimates it has led to the death of more than 5,500 people, with more than 4mn people displaced.

The Philippines' Department of Agriculture (DA) and the UN Food and Agriculture Organization (FAO) estimate that the damage to the country's agriculture is extensive. The DA stated in December 2013 that total damage resulting from the typhoon is estimated at PHP10.6bn (US$241mn). Of this, total agricultural production losses are projected to reach PHP8.6bn (US$195mn), while damage to agricultural infrastructure is estimated at PHP2.0bn (US$45mn). The FAO in November pegged the damage at US$110mn.

Visayas A Significant Producer
Philippines - Paddy (RHC) & Sugar Cane (LHC) Growing Regions (% of total production, 2012)

BMI View: The impact of November 2013's Typhoon Haiyan on the Philippines' agricultural production is likely to be moderate. We have revised down slightly our 2013/14 forecasts for rice and sugar output and note that coconut oil plantations and fisheries were also severely affected by the storm.

The impact of Typhoon Haiyan, which hit the Philippines in November 2013, on the country's agricultural production is likely to be moderate, as the affected areas - mostly the Eastern Visayas - are not key crop- or livestock-producing areas. Haiyan was one of the worst typhoons on record globally, and according to the latest official estimates it has led to the death of more than 5,500 people, with more than 4mn people displaced.

The Philippines' Department of Agriculture (DA) and the UN Food and Agriculture Organization (FAO) estimate that the damage to the country's agriculture is extensive. The DA stated in December 2013 that total damage resulting from the typhoon is estimated at PHP10.6bn (US$241mn). Of this, total agricultural production losses are projected to reach PHP8.6bn (US$195mn), while damage to agricultural infrastructure is estimated at PHP2.0bn (US$45mn). The FAO in November pegged the damage at US$110mn.

Philippines - Estimated Losses From Typhoon Haiyan
Commodity Area affected (hectare) Estimated production losses Total production (2012)
In value* In volume** In volume**
Rice 77,719 2,381 147.4 18,032
Corn 21,699 296 23.0 7,407
Cassava 6,238 93 13.3 2,234
Coconut 41,662 1,515 na 15,828
Vegetables 466 10 0.9 na
Livestock na 2,317 na 2,464
Fisheries na 1,493 29.9 2,316
na = not applicable/available; * in PHPmn; ** in '000 tonnes. Source: Philippines Department Of Agriculture

The typhoon did impact the rice sector the worst, with 77,700 hectares (ha) affected and 147,400 tonnes of rice lost (0.8% of total 2011/12 production). Few paddy crops were directly affected by the storm, however, as farmers in affected regions were between harvests. That said, the loss of infrastructure and the effect of the typhoon on farmland conditions jeopardised sowings of the secondary rice crop in the region, whose planting usually starts in December. Eastern Visayas accounts for more than 5% of the country's total paddy production, and this number jumps to 20% if all three Visayas regions are included.

As a result, we have revised down slightly our estimate for the Philippines' rice production in 2013/14. We now expect output of 11.6mn tonnes, compared with a previous forecast of 11.7mn tonnes. This will still represent a 1.6% year-on-year increase, as production in the rest of the country has benefited from strong yields. The country could be forced to ramp up rice imports in 2013/14 in order to supply its domestic market after trying in recent years to reach self-sufficiency by cutting down on imports. The DA has authorised import of an additional 500,000 tonnes of rice to reinforce buffer stocks; this is likely to bring total imports in 2013/14 to around 1.5mn tonnes, above the 2012/13 level.

Visayas A Significant Producer
Philippines - Paddy (RHC) & Sugar Cane (LHC) Growing Regions (% of total production, 2012)

For sugar, preliminary estimates by the Sugar Regulatory Administration indicate output will decline by 50,000 tonnes for the 2013/14 season, compared with 2.5mn tonnes produced in 2012/13. The Visayas archipelago accounts for more than 50% of the country's sugar cane output, but Eastern Visayas, the most badly hit region, only accounts for 2% of the total. Despite the loss of production, it is uncertain at this point if the Philippines will need to import sugar for the 2013/14 season, as the country has been recording production surpluses in the past three years and now enjoys relatively high stocks. We forecast 2013/14 sugar production of 2.46mn tonnes, which is down from a previous projection of 2.6mn tonnes.

Coconut And Fisheries Hardly Hit

Coconut oil trees have also been badly affected by the typhoon. This has sparked fears of a coconut oil shortage, as the Philippines is the largest producer of the oil, accounting for almost 50% of the world's total production. While sugar cane and rice fields have the potential to recover relatively well even if part of the harvest is lost this season, coconut trees start producing several years after being planted. Significant damage to the crop could tighten the global supply of coconut oil, ramping up the Philippines' and other major consumers' (such as the EU and the US) palm oil imports in the coming years, as palm oil is a direct substitute for coconut oil.

The aquaculture and fishery sector also was badly damaged by the typhoon. In 2012, marine and inland fisheries in typhoon-affected regions supplied 22% of the total output. The damages span the entire value chain, as the typhoon destroyed tens of thousands of fishing boats and gears and flattened crucial infrastructure including jetties and landing ports, onshore ice and cold storage facilities, boat repair and maintenance facilities, processing factories and markets.

Philippines Sugar Production & Consumption, 2013-2018
2013 2014f 2015f 2016f 2017f 2018f
Sugar Production, '000 tonnes 1 2,460.0 2,455.0 2,558.1 2,660.4 2,766.9 2,877.5
Sugar Consumption, '000 tonnes 1 2,195.1 e 2,247.8 2,292.8 2,338.6 2,385.4 2,433.1
Notes: e BMI estimates. f BMI forecasts. Sources: 1 USDA.
Philippines Rice Production & Consumption, 2013-2018
2013 2014f 2015f 2016f 2017f 2018f
Rice Production, '000 tonnes 1 11,420.0 11,600.0 11,774.0 11,903.5 12,100.0 12,233.1
Rice Consumption, '000 tonnes 1 12,850.0 12,888.5 13,004.5 13,108.6 13,226.6 13,332.4
Notes: f BMI forecasts. Sources: 1 USDA.

Read the full article

This article is tagged to:
Related sectors of this article: Agribusiness, Grains - Agribusiness, Rice, Sugar - Agribusiness, Oil Crops, Palm Oil - Agribusiness
Geography: Philippines
×

Enter your details to read the full article

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.