Philippine Farm Output Eases, Threatening Economy

By Francisco Alcuaz Jr.

Aug. 14 (Bloomberg) -- Growth in Philippine agricultural production faltered in the second quarter as corn harvests fell, threatening an economy that’s already expanding at the slowest pace in a decade.

Farm output rose 0.87 percent last quarter from a year earlier, after gaining 2.27 percent in the first three months of 2009, the Department of Agriculture said in a statement in Manila today. Total output expanded 1.5 percent in the first six months of the year.

Agriculture employs more than a third of the Southeast Asian nation’s workforce. Economic growth slowed to 0.4 percent in the first quarter as the global recession slashed exports, prompting the government to cut its full-year forecast a third time and predict a 2009 expansion of as little as 0.8 percent.

“When you see a marked slowdown in agricultural output, you’ll likely see numbers pulled down in other sectors,” said Song Seng Wun, an economist at CIMB-GK Securities Pte in Singapore. “It has a multiplier effect on other industries.”

Sales growth at SM Prime Holdings Inc., the nation’s biggest shopping-mall operator, slowed to 14 percent in the second quarter from 18 percent in the first. Revenue at Jollibee Foods Corp., the nation’s biggest fast-food company, rose 11 percent in the second quarter compared with a 13.5 percent gain in the previous three months.

Along with falling exports and “patchy” remittances from overseas Filipinos, slower agricultural gains may limit second- quarter gross domestic product growth to about 0.1 percent, Song said. A “step up in government spending might be the only thing to keep GDP growth positive,” he said.

Crop production, the biggest part of total farm output, fell 3.61 percent in the second quarter as corn output shrank 0.52 percent and sugar cane slid 9.85 percent. Rice production rose 1.87 percent from a year earlier. For the first six months, crops declined 1.3 percent, countering gains in livestock, poultry and fisheries.

To contact the reporter on this story: Francisco Alcuaz Jr. in Manila at falcuaz@bloomberg.net