‘Sensitivities’ could block PHL’s agri strengths

THAILAND’S food and agriculture sectors may stand to benefit the most from regional integration, but investing in the Philippines’ strengths and dropping some protectionist barriers may allow the latter country to bridge the gap, Rabobank said on Tuesday.

“Thailand is currently better-placed than other countries, especially in the rice, sugar, and animal protein sectors,” Pawan Kumar, Rabobank director of food and agribusiness research and advisory, was quoted saying in a statement from the Dutch multinational lender.

“As AEC (ASEAN Economic Community) integration continues, to remain competitive, some countries will need to address issues such as non-tariff barriers to trade, effective infrastructure, and agricultural skills shortages,” Mr. Kumar said.

“While it’s understandable that countries want to protect their local industries, it could also be argued that these sensitivities should be dropped in the longer run to allow commodities to flow from the most efficient producers and reduce the overall cost in the region’s supply chain,” he continued.

In a report released with the statement, the Philippines’ “sensitivities” were in rice and sugar — two of the sectors where Thailand would excel. The Philippines was shown, though, to have about the same strengths as Thailand in food and agriculture labor costs, infrastructure, ease of doing business, food safety standards, and manpower skills.

Rabobank said the Philippines “with the right support and investment… could easily bridge the gap going forward.”

The bank also noted the growth rates of Southeast Asia’s packaged food and meat under regional integration are expected to surpass those of the world.

It predicted in the statement that “packaged food and meat are the food and agriculture (F&A) sectors that will gain the most from ASEAN Economic Community (AEC) integration — growing by 5% and 4% per annum respectively by 2020, outpacing global growth.”

In comparison, Rabobank noted, global annual growth of these sectors by 2020 will be 3% for packaged food and 2% for meat.

Southeast Asian demand for packaged food may exceed 52 million metric tons while that for meat might surpass 20 million MT.

Rabobank cited higher average incomes making protein diets more affordable, as well as increasing urbanization in turn boosting demand for packaged food.