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Economists warn of farm output dip due to El Niño

February 24, 2010

FARM OUTPUT MAY FLATTEN OUT OR EVEN CONTRACT THIS QUARTER AS THE EL NIÑO-INDUCED DRY SPELL DESTROYS BILLIONS OF PESOS WORTH OF SOFT COMMODITIES, ECONOMISTS WARNED ON TUESDAY.
“Output for the first quarter [may decline by] 2.5-7.5 percent due to the combined effects of typhoons Ondoy and Pepeng [last year] and the adverse impact of the El Niño weather phenomenon,” former Budget Secretary and University of the Philippines economist Benjamin Diokno said.
Agriculture Undersecretary Bernie Fondevilla earlier said production losses under a mild El Niño scenario could reach P8.09 billion, while a severe dry spell could result in losses worth P20.46 billion.
About 264,940 metric tons (MT) of rice worth close to P4 billion and 174,224 MT of corn valued at P2.26 billion are expected to be lost during a mild El Niño spell.
Rolando Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agribusiness, said production losses might lead to “flat to negative growth” for the farm sector.
“Since the palay (paddy rice) subsector accounts for a quarter of total farm production, the losses could take a toll on the performance of the sector in January to March,” he said.
Meanwhile, Strive Foundation, a research group specializing in agriculture, cited “substantial damages” on crops in rain-fed areas, especially in Central and North Luzon.
“If the situation is the same in the Visayas and Mindanao, agriculture might post [a contraction] in the first quarter,” foundation President Leonardo Gonzales said.
The Bureau of Agricultural Statistics (BAS) recently published a revised production projection, citing a decline of 1.72 percent in total paddy rice output to 7.25 million metric tons for January to June this year from 7.38 MMT a year earlier.
The agency traced the expected decline to the smaller harvest area —2.36 percent or 46,000 hectares smaller from 1.95 million hectares in the first half of last year.
“Probable contraction in harvest area was reported in Western Visayas, Cagayan Valley and Caraga due to insufficient rain, late release of irrigation water and early dry spell,” it said.
Meanwhile, flash floods in Northern Mindanao and damaged irrigation coupled with the expected dry spell in SOCCSARGEN (South Cotabato, Cotabato, Sultan Kudarat,Sarangani and General Santos City) may cut the harvest area, the BAS said in a report.
Corn output in the first half may also decline by 0.29 percent to 3.21 million metric tons.
The agency said smaller harvest area may be observed in Cagayan Valley, Western Visayas and the SOCCSKSARGEN region due to seed availability constraints and lack of interest to plant corn due to El Niño.