Philippine farm sector growth likely weakens in Q3 as weather, costs strain output

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Philippine farm sector Q3 slowdown

Highlights

Department of Agriculture reports total weather-related farm damage at P12.95 billion in Q3, with El Niño affecting 288,058 farmers and 291,154 hectares by late October.
Middle East conflict-driven higher fuel and fertilizer costs, plus pork imports and climate-linked marine degradation, strain crop, hog, and fisheries output while pushing the hog sector to lose P350 million.
Economic experts expect tight domestic supply and weak peso to sustain upward pressure on food prices through year-end, especially during the holiday season.

Weather damage and input costs pressure production

As reported by BusinessWorld Online, former Agriculture Secretary William D. Dar says production of crops, fisheries and hogs is expected to weaken in the July to September period, citing erratic weather and what he describes as a lack of early government action.

He says the third quarter is one of the most difficult periods of the year for agriculture, with strong typhoons, the southwest monsoon and flooding disrupting output. In August, damage from tropical cyclones Luis, Maymay, Neneng and Pilandok, along with the enhanced southwest monsoon, reaches P4.38 billion, based on the final bulletin from the Department of Agriculture's Disaster Risk Reduction and Management Operations Center.

Dar also says El Niño, which emerges in June, is already affecting the sector. In an Oct. 21 report, the Department of Agriculture estimates damage and losses from El Niño at P8.57 billion so far, affecting 288,058 farmers and 291,154 hectares of agricultural land, while the state weather bureau says a strong to very strong El Niño is active in the Tropical Pacific and is expected to peak before year-end and last until the first quarter of 2027.

Crops including palay, corn and vegetables are expected to show the effects of flooding and the early phase of El Niño. Higher fuel and fertilizer costs, which Dar links mainly to the Middle East war, are also likely to show up in third-quarter data as farmers use less fertilizer and fisherfolk reduce fishing trips.

Holiday food prices face upward pressure

Dar says heavy pork imports are also weighing on hog raisers, who likely scale back operations amid competition from imported meat and lower farmgate prices, slowing recovery from African Swine Fever. He estimates the hog industry is losing P350 million under current market conditions, while adding that fisheries productivity is also constrained by marine degradation tied to climate change and mining pollution.

He describes poultry as relatively resilient despite high feed costs, and says production in that segment may continue or even rise. Even so, he expects food prices to climb during the holiday period as supply constraints across the broader farm sector converge.

Ateneo de Manila economics lecturer Robert Lance C. Chua also says farm production likely slows in the third quarter because of weak farmer sentiment, high distribution costs, irrigation challenges and elevated oil prices. He notes that continuous rains trigger landslides affecting farmers in Bulacan, flooding submerges rice fields in Zambales, and growers in Antipolo struggle with irrigation because of higher pump operating costs.

Chua says poultry should remain relatively resilient as avian influenza is contained, although higher oil prices may still lift feed and transport expenses. He adds that food imports can partly offset weak domestic production, but the peso's weakness may reduce that buffer, keeping upward pressure on food prices through the end of the year as households continue buying essentials in smaller quantities.

In our earlier article on the spike in oil shipping costs, we explained how conflict-related risks on key tanker routes are driving freight and insurance rates sharply higher, making transport a much larger share of crude prices. We also noted that import-dependent markets can feel the impact quickly as higher fuel costs ripple through logistics and, ultimately, consumer prices for essentials.

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