‘Weak Peso deals agri double-edged result’

THE continuous weakening of the peso against the greenback would be a double-edged sword for the agricultural sectors, with exports benefiting from such while imported food items become more expensive.

Economists, officials and industry leaders interviewed by the BusinessMirror pointed out that a weaker peso will be beneficial to the country’s agricultural exports but will be a bane to Filipino consumers as prices of imported food items increase.

Philippine Institute for Development Studies senior research fellow Roehlano M. Briones said the depreciation of the Philippine peso “will boost all exports,” including agricultural products, but will make “all imports more expensive.”

Briones pointed out that imported pork products will experience a “double whammy” as tariffs on the commodity are expected to return to their higher level next week coupled with the weaker peso. He noted that this could be a “source of inflationary pressure,” since the country is still not yet out of the woods from low pork supply and high retail prices of the commodity.

Philippine Chamber of Agriculture and Food Inc. (PCAFI) President Danilo V. Fausto said the detrimental impact of a weaker peso would be felt more by the country since it is a net food importer, more than the benefits it could bring to exports.

“We have a trade deficit, we have a huge trade imbalance. Our raw materials are dependent on imports because of government policies. And since we are import dependent, our food processors and producers would surely suffer,” Fausto told the BusinessMirror.

Fertilizer and Pesticide Authority (FPA) Executive Director Wilfredo Roldan said Filipino farmers may further suffer from a possible uptick in fertilizer prices should the Philippine peso continue to weaken against the US dollar.

Roldan noted that the movement in the foreign exchange rate is accounted for by fertilizer importers in their total costs, with increases being passed on to retailers and eventually the buyers, who are farmers.

“If the price of imported fertilizer increases by 5 percent due to the dollar exchange, then its retail price will increase by 5 percent,” Roldan told the BusinessMirror.

The price of urea (prilled) continues to increase every week, with latest FPA data showing that the average price of the planting input reached P2,959.16 per 50-kilogram bag in the week of April 25 to 29. The average price of urea (prilled) in the same week of last year was only P1,139.7 per 50-kilogram bag.

Banana exports

Pilipino Banana Growers and Exporters Association (PBGEA) Executive Director Stephen Antig said for banana exporters, the weakening of the peso cushions the increase in production costs due to more expensive imported planting inputs, including fertilizers.

“We are hoping to have natural heads like the depreciation of peso. Even if it will not cover everything, at least it somehow helps the industry,” Antig told the BusinessMirror.

The country’s agricultural exports in the first quarter grew by 37.5 percent to $1.574 billion from $1.145 billion recorded in the same period of last year, based on latest Philippine Statistics Authority (PSA) data.

For the first quarter, the country’s top agricultural exports were coconut oil at $599 million, bananas at $268.27 million, seafoods at $88.54 million, among others, PSA data showed.

The country’s key agricultural imports during the first quarter were wheat at $136.57 million, dairy products at $124.87 million, rice at $113.92 million, fruits and vegetables at $91.92 million, urea at $11.95 million, and fertilizer excluding urea at $36 million, among others, based on PSA data.

In April, the average Philippine peso-US Dollar exchange rate was at P52.158, which was 7.78 percent weaker than the P48.39 recorded in the same month of last year, based on central bank data. Banker Association of the Philippines (BAP) data showed that the peso fell to P52.5 to a dollar last May 6.