El Nino Negative Growth Effects on Philippine Farming

Philippine Farm Sector May Post Negative Growth Q1 Due To El Nino

Due to the extent of the effect of the El Niño weather phenomenon, the Department of Agriculture (DA) said there is a possibility that farm growth could contract in the first quarter of the year.

Agriculture Sec. Berni Fondevilla said there are unverified reports that damage to the agriculture sector has reached between P7 billion and a little over P11 billion. If these reports are found to be accurate, a negative growth in the sector will be possible in the January-to-March period.

“We’re still verifying reports of the damage due to the El Niño. If this proves accurate, there will be a contraction in the first quarter,” Fondevilla told reporters at the sidelines of the Year-End Economic Briefing at the Dusit Hotel in Makati City.

However, National Economic and Development Authority (Neda) Deputy Director General for National Development Margarita Songco said this may not have a big impact on full-year growth, especially if mitigation measures pull through from various departments like the DA.

Songco said if measures to address the effects of the El Niño on energy supply prove positive, there is a possibility that the country’s economic growth will be higher this year.

“If we will be able to address the problem of El Niño, which impacts on the supply of energy, then we can expect higher growth in 2010. The impact of the El Niño was already incorporated to the 2.6-percent to 3.6 percent GDP [gross domestic product] target for the year. The impact is 0.4 percentage point,” Songco said.

Neda National Planning and Policy Staff (NPPS) Assistant Director Myrna Asuncion explained that the measures cited by Santos could increase the low-end of the 2.6-percent to 3.6-percent growth target for 2010.

She said that given that the impact is 0.4 percentage point, the low-end could be increased to 3 percent. This will result in a possible new growth target of 3 percent to 3.6 percent this year.

Meanwhile, Fondevilla said the DA is also open to revising its growth forecasts for the year to include the effects of the dry spell on the entire agriculture sector.

Based on the Feb. 22 report of the DA Central Action Center, damage to crops due to the dry spell has reached some P7 billion.

However, reports recently showed that damage could have already breached the forecast of P9 billion under a mild El Niño episode. As of March 1, unverified reports showed P11 billion in damage to palay, corn and high-value commercial crops.

Fondevilla said the DA expects P11 billion in damage under a moderate El Niño and said a severe episode would destroy as much as P20 billion worth of crops until May.

A severe dry spell could lead to losses of 816,372 metric tons (MT) of rice worth P12.24 billion; 440,429 MT of corn worth P5.2 billion; 42,362 MT of marine catch worth P2.54 billion; and 3.08 million MT of high-value crops worth P443 million.

However, Fondevilla was quick to note that a severe El Niño, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa), is far from turning into reality in the country.

Fondevilla said Pagasa even expects the rains to come early, around May. “El Niño, according to Pagasa, is still in the moderate effect. Pagasa is not expecting that it could go severe. In fact, just yesterday, Pagasa said rains might start to come in May, which is good news for us,” Fondevilla said.

Earlier, economists said the government still has to deal with a bigger problem brought by El Niño, which is increasing poverty. With all the developments that happened in the past two years and the El Niño this year, Southeast Asian Regional Centre for Graduate Study and Research in Agriculture director Dr. Arsenio Balisacan believes millions could fall into poverty this year.

Balisacan said even if the 2009 poverty statistics will not include the effects of the Niño, poverty will likely increase by around 2 percentage points to 35 percent from 2006’s 33 percent. But, when the effects of El Niño are included, poverty could increase by 3 to 5 percentage points or up to 38 percent this year.

Balisacan said El Niño may cause agriculture growth to contract by as much as 5 percent this year. However, this may not have a big impact on growth since, he said, agriculture only accounts for around 17 percent of GDP.

He said that even as early as February, there are indications that El Niño will continue to have worse effects, especially since it is expected to last until May 2010. This will not bode well for agriculture growth in the first half. Balisacan expects delayed planting to possibly extend until the second half.

By Business Mirror

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