Strong dollar sinks US agri exports to PHL

THE United States continued to be the country’s number one supplier of agricultural products in 2015 although the value of its exports fell, the US Department of Agriculture said.

According to a report by the USDA’s Global Agricultural Information Network ( GAIN) shows that US agricultural exports to the Philippines fell 15% to $2.3 billion in 2015 due to the strong dollar, distribution challenges due to infrastructure obstacles including high power costs, inadequate post-harvest facilities, and ineff icient distribution networks, and intense competition.

The top five US exports by value were soybeans & soybean meal amounting to $682 million; wheat, $ 516 million; dairy products, $ 251 million; prepared food, $84 million; and pork & pork products, $80 million.

The report added that the Philippines is the 10th largest global market for US agricultural products.

For this year, the report forecast export sales to jump 5% to $2.4 billion amid “increased consumer confidence in the overall state of the Philippine economy.”

In 2015, Philippine GDP grew 5.8% with the main driver coming from the services sector which accounted for 57%, followed by industry at 33%, and agriculture at 10%.

In the third quarter, GDP grew year on year by 7.1% amid robust domestic demand. The International Monetary Fund forecasts a GDP growth rate of 6.4% for 2016.

Despite the 19% decline in export sales of top products including dairy, pork and prepared food, the report noted that traders remain optimistic and expect sales of US food and beverage (F&B) products to the Philippines to reach $1 billion by year’s end.

“Consumer- oriented food & beverage products remain the best prospects for future export growth fueled by consumer familiarity with American brands and the steady expansion of the country’s retail, food service and food processing sectors,” according to the GAIN report posted on USDA’s Web site, adding that the Philippines continues to be the largest US market in Southeast Asia for consumeroriented F&B products.

GAIN cited local optimism that President Rodrigo R. Duterte has “enhanced the overall business environment and boosted investor confidence.”

Export sales of US F& B products to the Philippines dropped to $ 898 million in 2015 after a record $ 1.1 billion in 2014.

Also, the Philippines’ rapidly expanding production of processed F& B presents opportunities for US exporters of agricultural raw materials and high- value ingredients, GAIN said.

Last year, the F&B processing industry’s gross value-added output increased 3% over the previous year to $ 27.8 billion.

Roughly 90% of the Philippine F&B processing industry’s output is consumed domestically, with growth prospects stemming from the country’s resilient economy and strong consumer base.

The Philippine market has an annual GDP per capita estimated at $ 3,0421; twotenths of the population earn an average annual income of $ 12,5102.

“Consumption growth in the coming years is underscored by the country’s robust economy and a young, fast- growing, highly urbanized population with increasingly sophisticated tastes and ever-growing access to supermarkets,” the report added.

The GAIN report also cited the expanding Philippine food retail sector and rapid growth in retails stores as opening opportunities for imported food & beverage products, with many US brands already widely recognized by Philippine consumers.

“As quality and efficiency continue to improve, the Philippines will be in a position to exploit export opportunities due to its strategic location and membership in various free trade agreements, such as the ASEAN Free Trade Area and the EFTA Philippines Free Trade,” the report added.

The report, in addition, encouraged US exporters to maintain close contact with their Philippine importers by means of regular market visits. —