Agri trade deficit widens in 2021

A VENDOR arranges vegetables at a public market in Manila. – PHILIPPINE STAR / RUSSELL PALMA

Town Luisa Maria Jacinta C. Jocson

THE agricultural trade deficit widened 40% year on year to $ 8.92 billion in 2021, as the country imported more agricultural products to address increased consumer demand after the economy reopened.

Data from the Philippine Statistics Authority released on Monday showed that total agricultural imports jumped by an annual 25% to $ 15.71 billion.

Exports also increased by 9.4% to $ 6.79 billion in 2021.

Total trade in agricultural goods – or the sum of exports and imports – went up by 19.8% to $ 22.491 billion. In 2020, total trade in agricultural goods contracted by 7.1%.

Agricultural imports accounted for 13.3% of the country’s total imports in 2021.

Among the commodity groups, cereals accounted for the largest share or 20% of agricultural imports by value at $ 3.15 billion in 2021. This was followed by imports of residues and waste from food industries and prepared animal fodder with a value of $ 1.86 billion and miscellaneous edible preparations worth $ 1.76 billion.

Imports from the Association of Southeast Asian Nations (ASEAN) member countries stood at $ 5.44 billion or 16.8% of the total.

Indonesia was the top source of agricultural products from ASEAN with $ 1.65 billion or 30.3% of the total, followed by Vietnam ($ 1.4 billion) and Malaysia ($ 973.7 million).

Animal or vegetable fat and oils and other related products were the top agricultural imports from ASEAN.

The Philippines imported $ 1.62 billion worth of agricultural products from the European Union (EU), with imports from Spain reaching $ 333.49 million.

Meanwhile, agricultural exports accounted for 9.1% of the country’s total exports in 2021.

By commodity group, the value of exports of edible fruits and nuts and the peel of citrus fruits and melons was at $ 1.93 billion, accounting for 28.5% of the total.

The Philippines’ agricultural exports to ASEAN stood at $ 767.01 million, with Malaysia as the top destination of farm goods at $ 247.95 million.

Tobacco and manufactured tobacco substitutes were the top agricultural exports to ASEAN countries, with the total value at $ 253.85 million.

The Philippines’ agricultural exports to EU countries reached $ 1.39 billion in 2021, with the Netherlands accounting for half or $ 698.11 million.

ECONOMIC REOPENING
Analysts attributed the higher imports of agricultural products to the gradual reopening of the economy in the last quarter as pandemic restrictions eased.

“The wider agricultural external trade deficit of the country in 2021 may be largely attributed to the further reopening of the economy that fundamentally increased agricultural imports, as well as the higher prices of global agricultural commodities amid improved economic recovery prospects vis-a-vis some disruptions in the global supply chains due to the pandemic from 2020 to 2021 that reduced production activities while demand picked up, ”Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Pampanga State Agricultural University Professor Roy S. Kempis said a string of typhoons disrupted domestic agricultural output, particularly exports of fruits.

“The reason for this poor performance in the biggest segment of our agricultural exports could be attributed to losses in the production of fruits brought about by weather disturbances in 2021… Fruits are affected from flowering up to fruiting, and many of these follow a duration of six to nine months. Therefore, weather disturbances can strike, from flowering to fruiting. This was punctuated by Typhoon Odette (international name: Rai), ”Mr. Kempis said in a Viber message.

Mr. Ricafort said that the trade deficit could further widen this year due to the Russia-Ukraine crisis, which has destabilized the prices of global commodities.

Furthermore, non-monetary measures in terms of the increase in the imports of pork or meat, fish, and other food products at lower tariffs in an effort to increase local food supply and help mitigate inflationary pressures especially on food prices that account for the biggest share of the (consumer price index) basket have also partly widened the country’s agricultural trade deficit in recent months and could still be widened by these non-monetary measures in the coming months as higher global commodity prices could still bloat the country’s agricultural imports, “Mr. Ricafort added.

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