Agriculture Industry

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An Industry that is keeping our numbers up.

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Ronnel W. Domingo
Inquirer News Service


THE COUNTRY'S biggest business group is pushing for the increased production of carabao milk to help reduce the country's dependence on imported dairy products.

Donald G. Dee, president of the Philippine Chamber of Commerce and Industry, said the group was looking at successful milk production campaigns in India, Pakistan and China that can be replicated in the country.

"The continued rise of our import bill against export earnings is expected considering the minimal resources government has in promoting export businesses," Dee said.

"We must increase our exports to or step up production of items that take up significant parts of imports such as dairy products," he said.

The PCCI chief said some P497 million worth of milk was shipped in from abroad in 2004.

Government data show that in the past decade, imports of fresh milk was growing at a rate of 28 percent a year while domestic production was generally declining, although there was growth of up to 6 percent yearly in certain years.

Dee said the private sector was also pushing for the establishment of a body that would facilitate lending to small and medium businesses by maximizing a lending fund that has grown to P5.5 billion.

He said the government has shown that there were ample supply of funds for small businesses but that the problem was how to make it easy for entrepreneurs to secure loans.

Dee said efforts were under way to put up a Micro, Small and Medium Enterprises Surety Fund with an initial P1 billion from the World Bank's Industrial Guarantee and Loan Fund.

He said the government, through the IGLF, could work with a public sector-initiated SME Development Center, which would manage the P1-billion MSME Surety Fund.

"The objective is to increase availability and effectiveness of risk capital to SMEs," he said. "The fund will provide guarantee for SMEs with little or no collateral but have strong cash flows."

According to the Institute for Development and Econometric Analysis Inc., an Asian Development Bank study made in 2003 showed that the biggest constraint in existing lending programs for SMEs was that loan decisions depended on collateral such as land.

Cayetano Paderanga, who heads IDEA Inc., added that other past studies suggest that SMEs could not avail of available funds because loan requirements were too difficult to comply with.

"With the MSME Surety Fund, we can make it easy for prospective milk producers to secure loans for buying carabaos that are bred to yield more milk than the average cattle," Dee said.

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By Rocel C. Felix
The Philippine Star

GENERAL SANTOS CITY – The Philippines’ $400-million tuna industry is being threatened anew by determined moves in the European Union (EU) to reduce the maximum allowable lead content in tuna and other fishery exports.

At the 7th National Tuna Congress here, Food Development Center director Dr. Alicia O. Lustre who represents the Philippine government in the Codex Committee on Food Additives and Contaminants (CCFAC) of the World Trade Organization’s Codex Alementarius Commission (CAC) said EU’s move will displace the Philippine tuna industry, the bulk of which is located in Southern Mindanao.

CAC is the international body tasked with developing a food code known as the Codex Alimentarius, the global reference point for harmonized or uniform food standards to ensure the protection of public health and fair practices in food trade.

Currently, tuna catch here is about 1,000 metric tons (MT) daily and earns export revenues of about $400 million annually. It is the leading supplier of canned tuna, high value sashimi tuna and tuna steaks to the Japanese, European and American markets. Six out of eight tuna canneries nationwide are located in this city.

The EU and US markets account for about 75 percent of world tuna consumption. The EU market accounts for 42 percent of the country’s tuna exports and comprises 49 percent of canned tuna exports.

The EU has been pressuring the CCFAC to impose by 2006, a new maximum allowable lead content of 0.02 parts per million (ppm) from 0.05 ppm.

This is not feasible at this point for Philippine tuna which contains an average lead content of 0.05 ppm. The same level is present in tuna exports from Thailand and other ASEAN countries.

"The government and the private sector should work together to stop the development of a standard for a maximum lead content for tuna and other fishery products. We should continue efforts to change the proposed level to 0.05 ppm," said Lustre.

She stressed that keeping the maximum lead content to 0.05 ppm is important to prevent the rejection of 11 percent of tuna in the international trade.

"Over the long-term, countries such as the Philippines opposing the EU initiative should ensure that maximum levels for contaminants in fish are derived from agreed science-based procedures for their establishment and that these levels are not developed for use as a barrier to trade," added Lustre.

Lustre noted that at this point, there is no internationally validated method of lead testing in fish.

In the next CCFAC meeting on April 6, 2006, the Philippines and other nations such as China, Korea, Japan, Thailand, Singapore, Malaysia, Morrocco and India will be presenting findings by the Joint Food and Agriculture Organization/World Health Organization Committee on Food Additives and Contaminants (JECFA) that show the current maximum level for lead in tuna and other fishery products do not pose risks to human health.

JECFA already issued its opinion and said that the "levels of lead that are found currently in foods would have negligible effects on the neurobehavioral development of infants and children.

Lustre noted that despite the JECFA findings, the CCFAC failed to consider this fact in Codex deliberations for the current proposed maximum lead content in tuna.

"EU is emotional about this measure because it affects infants and children but there is a process and insisting on imposing a maximum lead content in tuna that is even lower than established standards will prove to be discriminatory to countries that can‚t implement it," said Lustre.

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BusinessWorld
Jun P. Tagalog

Cebu City - Sugar production in Cebu decreased 11% in the latest crop year as planters either abandoned their farms or shifted to other crops due to high production costs.

Fred Monares, officer-in-charge of the Sugar Regulatory Agency enforcement department in Central and Eastern Visayas, said there were only a little over 600 planters in the last crop year from Sept. 1, 2004 to Aug. 31, 2005. There used to be over 800 planters in the province.

The two sugar millers in Cebu - Bogo-Medellin Milling Company, Inc. and Durano III and Sons, Inc. - had a combined production of 34,572.89 metric tons of raw sugar in the last crop year. This was 11% lower than the 39,032.44 metric tons in 2003-2004 crop year.

Joselito C. Caputulan, sugar mill district officer in Northern Cebu, said the land area dedicated to sugarcane has been reduced to 7,000 hectares in the last crop year from about 11,000 hectares two years ago. "In Bogo, many sugar planters are now shifting to growing bananas."

He said sugar planters started to shift to other crops when the price of fertilizers went up. A fertilizer that used to cost only P800 per sack now costs P1,200. But the price of raw sugar has not increased. A bag of raw sugar is priced at only P970.

Because of higher input cost, Mr. Caputulan said a sugar planter needs at least P50,000 to maintain a one-hectare farm.

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By Inquirer News Service


SORSOGON CITY—The National Food Authority is planning to increase the price of rice it is selling to the public amid the continuing increase in prices of basic commodities as a result of the increase in oil prices.

This was learned from an unnumbered memorandum of Trade Undersecretary Zenaida Maglaya to acting Trade Secretary Peter Favila dated Aug. 30, 2005, which was discussed during the meeting of the provincial Local Price Coordinating Council here.

In her memorandum, Maglaya said the proposal was made by NFA Administrator Gregorio Tan during the meeting of the NFA Council presided over by Agriculture Secretary Domingo Panganiban and attended by Finance Secretary Margarito Teves, among other members.
Based on the proposal of the NFA administrator, regular milled rice, which is currently being sold at P16 per kilo, would eventually be sold at P18.50 or an increase of 15.6 percent, while well-milled rice will be sold at P19.50 from its current price of P18 or an increase of 8.3 percent.

The NFA official’s argument for proposing the increase was to reduce NFA’s trading losses being incurred in the sale of rice.

According to NFA, the break-even cost for local rice is P20.40 per kilo and P16.02 for imported rice without tariff, and P24.73 with tariff.

The NFA said it would incur this year a trading loss of P900 million to P1.1 billion for local rice and P620 million to P6.97 billion for imported rice.

The agency also argued that increasing the price of government rice would minimize irregularities in its trading, like stock diversion.

Some members of the NFA Council, however, argued that raising the prices would cause increases in prices of commercial rice.

They also stressed that it would also cause upward inflation as rice constitutes 28 percent of Filipinos’ food expenditures.

Maglaya recommended to Favila that, if ever the government decides to effect an increase, it should be done during harvest time when prices are usually low and it should be limited to well-milled rice at P20 per kilo.

Meanwhile, NFA announced that it will soon start buying palay from farmers at a slightly higher price.

NFA provincial manager Cesar Barcelona said NFA will be buying palay at P10 per kilo plus an additional 15 centavos as drying fee, 10 centavos for transportation and 25 centavos as cooperative development fee.

Barcelona said they have P1.4 million standby fund and the NFA plans to purchase some 15,000 bags of palay during the coming harvest season.

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By Rocel C. Felix
The Philippine Star

The local seaweed industry is getting a big boost with the recent approval by the United States Trade Representative Office (USTRO) of the inclusion this year of carrageenan in the list of products given tariff perks under the US generalized system of preferences (GSP) program.

The inclusion of carrageenan in the GSP list is expected to generate bigger exports of refined and semi-refined carrrageenan which last year reached $141 million.

Bureau of International Trade Relations Director Ramon Vicente T. Kabigting in a letter to Seaweeds Industry Association of the Philippines (SIAP) president Benson Dakay said the GSP review committee has accepted the Philippine petition to designate carrageenan as eligible article under the US GSP.

Kabigting urged the industry to prepare for public hearings next week which he said are crucial to the overall review.

With carrageenan in the GSP list, seaweed processors and exporters will enjoy tariff-free exports of their products to the US. Currently, a three-to five-percent tariff is imposed on carrageenan.

The duty-free entry of carrageenan in one of SIAP’s biggest markets will benefit thousands of seaweed farmers, especially in Mindanao which is currently the biggest raw seaweed producer in the country.

"This is certainly good news for the industry which last year was unable to qualify for the GSP.

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THE National Coffee Development Board said it will encourage coffee farmers to shift to organic fertilizer to cut production cost after oil-based fertilizers shot up.

Guillermo Luz, a member of the Philippine coffee board, said use of organic fertilizer will begin next year at the start of the new cropping season.

“We are trying to retain the remaining 72,000 hectares of coffee areas in the country, since our coffee demand is still far behind our coffee production. By encouraging farmers to use organic fertilizer, we hope we can sustain current production,” Luz said.

The price of inorganic fertilizer, particularly urea, has increased by at least 30 percent to P1,200 a bag, Luz said. Organic fertilizer, on the other hand, only costs P250 a bag.

The board’s initiative will not only encourage farmers to buy cheaper organic fertilizers, but also to produce it for themselves.

Luz said that if the Philippines could produce enough coffee to fill domestic demand, it can save billions of pesos spent on importing coffee, mainly from Vietnam.

“Our coffee demand has an annual growth of 2 percent to 5 percent, and we expect our demand this year to be at 56,000 metric tons [MT],” he said.
--Angelo S. Samonte

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THE Philippines offered to allow the entry of Canadian deboned turkey meat, canola oil, and peas and a hike in Australian rice imports in exchange for both countries’ support for an extension of Manila’s rice import ban until 2012.

In an interview, Gregorio Tan Jr., administrator of the National Food Authority and a member of the panel negotiating for the extension, said they have sent the offer to Ottawa and Canberra after having consultations with local agricultural sectors.

While the entry of Canadian canola oil would require parity arrangements with the United States, which already exports soybean oil to the Philippines, Tan said that Canadian turkey meat and peas, which are not locally produced, would not harm any sector.

However, Manila has rejected Ottawa’s demand to open further its markets for pork by lowering duties from 35 percent to 5 percent.

“The local hog industry opposed the demand and they even wanted to recalibrate the tariff since we have the lowest tariff compared with other Asian countries,” Tan said.

He also said that Manila offered to increase Australia’s rice imports to the Philippines to 15,000 metric tons (MT), even as government negotiators have already sealed rice import agreements with the US and Thailand.

While Manila earlier agreed to import rice from the US under a food-aid program, payable after 20 years at 1-percent interest, Thailand, on the other hand, was given increased rice quota allocation similar to what was offered to Australia.

Tan also said a bidding for the initial rice shipment under the program was completed in the US, with around 60,000 MT of rice arriving in February or March next year.

“We will just wait for their [Canada and Australia] response but we are hopeful that they would accept the final offer,” Tan said.

Although negotiators are optimistic about securing a rice import ban extension, he said the Philippines could still maintain the restriction even without an outside nod because it is allowed under domestic laws.

Nevertheless, the negotiators recognize that failing to seal agreements with other countries might encourage them to block or cut Philippine exports, which could hurt the economy.
--With a report from Angelo S. Samonte

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By Angelo S. Samonte, Researcher

THE United States Department of Agriculture (USDA) announced the one-tenth increase of the Philippines’ sugar export quota allocation this year.

While the country was able to fill up its allocated quota of 137,353 metric tons last year, the USDA has confirmed that Philippine sugar exports to the US will be hiked to 151,667 MT beginning October.

With its sugar exports comprising 13.5 percent of the total US quota, the Philippines, the third largest sugar quota holder, ships the product under a program that offers higher prices than the world market price.

In response to the increase, the Sugar Regulatory Administration (SRA) announced a hike in its allocation for “A” US export sugar from last year’s four percent to seven percent for calendar year 2005-2006.

James Ledesma, SRA administrator, said the move will benefit all sugar producers, particularly the small planters since the “A” sugar commands much higher premium over other sugar classifications.

With an estimated production level of 2.018 million MT, the SRA sees a balanced supply given domestic demand, although incurring a sugar surplus may not be feasible.

With this production volume, farm-gate prices should be at levels profitable to the farmers.

The SRA expects a sugar production upswing by 2007, by which time any production excess will be made available for the production of ethanol, a sugar-based biofuel intended for blending with gasoline.

Ethanol production, the SRA said, would ensure the stability and sustainability of sugar prices and production, which are expected to benefit sugar farmers.

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AGRICULTURE, which contributes a fifth of the Philippines’ economic output, may weaken in the second half of the year owing to delayed planting and poor irrigation, according to economists.

“Our first semester was very bad and it doesn’t look like the second semester is going to be better,” Arsenio M. Balisacan, director of the Southeast Asian Regional Center for Graduate Study and Reseach in Agriculture, told The Manila Times. “So far, I don’t think we will have a good year for agriculture [in 2005].” Farm output in the first half of this year grew 1.26 percent, slower than last year’s 6.43 percent.

On a quarterly basis, agriculture in the three-month period ending June, however, rose 1.84 percent, faster than the 0.6-percent rise seen in the first quarter.

Department of Agriculture data showed the crop subsector registered a 1.66-percent decline in output compared with last year’s level, even as the livestock, poultry and fishery subsectors posted gains.

The crop subsector accounted for about 47 percent of Philippine farm output. Given this, the government should invest more in irrigation facilities, Balisacan said.

Rolando Dy, an economist at the University of Asia and the Pacific, said the delay in planting may also have an impact on farm output in the second half of this year until the first half of 2006.

Dy estimates that farm output is likely to grow between 2 percent to 2.5 percent.

“We’re lucky to hit 3 percent [farm output growth] for this year,” he told The Times.

“[The] second half [agriculture performance] is better than first half, but there will be a pressure on the higher cost of fertilizer,” he added.

The economist said a recovery in rice and corn output in the second half may happen owing to good weather.

Following a weaker first-half performance, the government revised downward its forecast for farm output growth this year to 3 percent from 4 percent earlier. The agriculture sector rose 5.1 percent last year.

Since the farm sector accounts for one out of every P5 worth of goods and services produced in the domestic economy, the government said a slowdown is imminent, especially with the contractionary impact of rising oil prices.

In second quarter of the year, the Philippine economy grew 4.8 percent year on year owing to soaring oil prices, weak exports and farm output, and a rickety political atmosphere.

For the whole year, the government expects the economy to grow 5.3 percent.
--Darwin G. Amojelar

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by Rocel C. Felix
The Philippine Star

The Japanese Ministry of Health, Labor and Welfare (MHLW) allowed the resumption of fresh mango exports by Marsman Drysdale Food Corp. whose recent shipments were discovered to have exceeded prescribed maximum residue limits (MRL) for the chemical pesticide The Department of Agriculture (DA) was informed by MHLW that it already lifted its requirement to impose a 100 percent inspection order for all Marsman’s fresh mango exports to Japan.

The order was also applied to other mango exporters from the Philippines.

The order was scrapped after the Bureau of Plant Industry placed corrective measures in its detection procedures. "This is a welcome development," DA Secretary Domingo F. Panganiban said, adding that lifting of the 100 percent inspection order on Marsman mangoes will enable the company to increase its production, especially in Mindanao where the bulk of its supply is sourced.

Last June, Japan detected Chlorpyrifos chemical residue exceeding the limit from fresh mangoes exported by Marsman Drysdale. The detection prompted Japan to issue an order imposing 100 percent inspection of mangoes coming from the said company.

The order lengthened the processing and clearance of mango to one week. This resulted in shorter life of mango and loss of revenues from the producers. Panganiban ordered the BPI to trace the cause of Chlorpyrifos detection.

A team of expert residue analysts was sent to Japan to compare the procedures being conducted by both countries to further improve the detection procedures.

"A series of field investigation followed that resulted in putting up of corrective measures to prevent similar incidents," Panganiban.

The corrective measures include voluntary pre-harvest residue analysis, increasing the quality control inspectors in the fields and farmer seminars, among others.

Panganiban urged mango growers to follow strictly the mango export protocol agreed by the Philippines and Japan on March 8, 2005 to avoid similar problems in the future. In a recent development Philippine agriculture attaché to Japan Joseph Sison warned that mango exporters could face another ban if they fail to comply with Japan’s new MRL for another pesticide chemical, Cypermethrine.

Sison said that Cypermethrine is among toxic chemicals that could be banned as tougher food safety standards will be implemented in 2006 by Japan’s Food Safety Commission (FSC) which sets new MRLs for imported fresh agricultural produce.

"Philippine mango producers should take this matter seriously or they could face an outright ban of their products in the same manner that the Japanese Ministry of Agriculture, Fishery and Forestry (MAFF) banned mangoes exceeding the MRL set for the pesticide Chlorpyrifos," said Sison.

Sison said the new MRL for Cypermethrine is just as stringent as the Chlorpyrifos MRL at 0.03 parts per million. An initial positive list of MRLs for more than 700 compounds prepared by the FSC and MHLW will be revealed to the World Trade Organization (WTO) by 2006.

Japan is the country’s biggest buyer of fresh mango and processed mango products.

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By Rocel C. Felix
The Philippine Star

Filipino-owned Smith Bell Group of Companies and Danish firm Global Renewable Energy Partners will raise $110 million for the second phase of its San Carlos Wind Farm project in Negros Occidental.

Smith Bell and Global Renewable Energy Partners earlier put up the Carlos Wind Power Corp. in 2003 to undertake the development and implementation of the 30-megawatt (Phase I) San Carlos wind farm project.

Smith Bell president Ruth-Yu Owen said that as the company is nearing financial closure for Phase I of its San Carlos wind farm project, it now wants to develop a bigger 60-MW wind farm facility, also in Negros Occidental

"We’re eyeing phase two in another town but it will be bigger, twice the size of our current facility," Owen said. She said Phase II of San Carlos will start either in 2008 or 2009.

Owen said the company expects to close financing for Phase I by 2006.

It is tapping the Danish International Development Agency (Danida) by next year for the bulk of its financing requirements for Phase I which will cost a total of $55 million.

Danida is the same agency that bankrolled the construction of the country’s first wind farm in Bangui Bay, Ilocos Norte.

Phase I of San Carlos project straddles the three peaks of Mount Malindog, Brgy. Prosperidad and Linubagan. Construction is slated early next year.

The wind farm will have 19 to 24 turbine generators each with a capacity of 1.5 to 2 Megawatts.

Owen said that once completed, the wind farm will enable the company to provide cheaper electricity to consumers. Currently, renewable energy projects such as wind power are not subject to the expanded value added tax (EVAT).

The company started to study wind speeds in San Carlos City, Negros Occidental in recent years. The study show expected gross generation of between 75-80 million kilowatthour per annum, which is equivalent to the consumption of around 150,000 households in the country.

The wind project is part of Smith Bell’s drive to develop renewable energy sources to reduce the country’s reliance on imported fossil fuels such as coal and oil.

At the same time, it will boost the country’s commitments under the Kyoto Protocol to reduce the emission of greenhouse gases.

The Philippines has a potential wind power of 76,600 MW which is even higher than known wind power producing countries like Germany (14,000 MW potential wind power), Spain and US (6,000 MW each), Denmark (3,000 MW) and India (2,100 MW).

As part of efforts to accelerate the development of renewable energy sources, the Department of Energy earlier announced plans to hold the second contracting round for 18 wind sites nationwide.

Energy Secretary Raphael M. Lotilla said the new wind sites being offered will have a total capacity of 500 MW.

The new wind sites are in Bani, Pangasinan (40 MW), Bolinao, Pangasinan (40 MW), Dinapigu, Isabela (10 MW), Cuyo Island, Palawan (30 MW), Tagaytay, Cavite (30 MW) Donsol-Jovellar, Sorsogon (70 MW), Donsol, Sorsogon (40 MW) Pilar, Sorsogon (40 MW), Matnog, Sorsogon (10 MW), Pandan, Catanduanes (30)MW, Dumangas, Iloilo (50 MW), Siquijor (10 MW), Carmen, Cebu (20 MW), Oslob, Cebu (30 MW), Allen-Lavezares, Northern Samar (10 MW) Tomas Oppus, Southern Leyte (10 MW) and Gigaquit, Surigao Del Norte (30 MW).

Currently, the country’s first and only wind farm to date was developed by Northwind Power Development Corp. in a 40 percent Danish, 60 percent Filipino partnership.

The 25-MW Northwind Bangui Bay Project is also a landmark development for our country since it became the first participant in the global carbon market. Another wind project in the pipeline is a 40-MW wind farm also in northern Luzon

The project financing was provided by Danida, the Danish government aid organization that granted $11.2 million in capital to jumpstart the project and another $8 million in grants for its completion.

An export credit facility of $29.35 million was arranged under a loan agreement bet-ween the Northwind Power, the Trade and Investment Development Corp. of the Philippines, ABN AMRO Bank NV and the Danish Export Agency.

Last year, the DOE launched 16 wind sites and the first contracting round was held last March of which five were already issued pre-commercial contract. Several companies have also expressed interest for the next 11 sites.

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By Elaine Ruzul S. Ramos

Local mango producers may file an unfair trade practices suit against entities selling the fruit under the Manila Mangoes brand in the United States.

Intellectual Property Office director general Adrian Cristobal Jr. said yesterday that no trademark on Manila Mangoes has been registered either with the US Patents Office or its Mexican counterparts, and local producers can sue whoever is using the brand name.

“Local producers could also file unfair trade practices against the one selling under Manila Mangoes brand if enough evidence is gathered. Whoever is selling under that brand name is misleading consumers since the mangoes in question did not come from Manila,” Cristobal added.

He said that the case may be filed in the country where the said mangoes are being sold, in this case the United States.

It was reported earlier that mangoes bearing the Manila Mangoes brand are being sold in Southern California.

Cristobal said that while it is only the private sector that could file such a case against those who are selling Manila Mangoes, government can provide legal advice to the local industry should they be able to gather enough evidence to support the charges.