Agribusiness to the Philippines
Trends and opportunities
The Philippines has a young consumer base of over 104 million people (Source:
CIA World Fact Book
, July 2017),
with an estimated 20 million consumers enjoying rising income levels
(average annual income of A$16,510), spending power and a growing appetite
for quality and premium imported products (Source: US Gain Report, May 2017). Strong population growth
alongside rising per capita consumption of cereal, meat and horticulture
products are resulting in increased dependency on agricultural commodity
Australian agribusiness exporters represent a growing percentage of the
market and are seen as a reliable source of major commodities and products.
Increasingly, Australia is also seen as a provider of innovative
agricultural technologies and services that contribute to enhanced
productivity. Australia is also seen as a strategic partner in helping the
Philippines improve food security and strengthen supply chains throughout
the country. Australian agricultural exports to the Philippines increased
by 16 per cent, from A$ 618 million in 2015 to A$ 717 million in 2016.
The key agriculture exports in 2016 were: (Source: ABS Data on Global Trade Atlas 2016)
wheat (A$ 300 million)
meat (A$ 149 million)
dairy products (A$ 74 million)
fruits and nuts (A$ 22 million)
One of the factors driving growth is the change in how Filipinos buy
agrifood products. Private consumption of imported products is growing as
supermarket chains challenge the dominance of local wet markets, with the
former providing broader accessibility and variety of products
traditionally offered merely in the latter.
Moreover, a lack of government and private financing, inadequate
infrastructure and adverse weather events in recent years have affected
local supply chains and hampered efforts to increase productivity.
Lastly, the retail and food service sectors are enjoying a growing healthy
and quality-conscious consumer base. The widespread use of digital
technology is also creating digitally-informed and up-to-date consumers who
are deemed by retail and food service sectors as key target markets for
imported agrifood products.
These trends present multiple opportunities for Australian companies
interested in supplying premium food and agrifood commodities.
Wheat and other grains
The Philippines milling wheat demand is forecast to grow amidst an
expanding middle class and sustained economic growth. Feed wheat imports
are likely to further increase fueled by the country’s rising livestock
and poultry industries. The US continues to dominate the local milling
wheat market. At nearly 2.05 MMT (A$ 688 million), the Philippines ranks as
the US’s third largest export market for milling wheat (Source: USDA Gain Report, March 2016).
New supply opportunities exist in the food milling industry with new mills
coming online (four in the last two years) and a new generation of
management who are more open to exploring wheat varieties from different
countries of origin, outside the traditional US wheat suppliers.
The local baking industry is also undergoing adjustments. Consolidation and
increase in the market share of large and sophisticated bakery operations
are noticeable, as they displace the small traditional ‘mom and pop’ bakeries. Growing demand for mass-produced yet high-quality baked products
is a trend which local industry contacts expect to continue in the
These recent developments indicate increasing and long-term wheat flour
demand in the future, thus providing trade and investment opportunities for
Australian grains and flour exporters.
The Philippines livestock industry is likewise flourishing and attracting
investments from large multinational companies, with Australia owning a
lion’s share of the feed wheat market in the Philippines due to quality and
consistency. Importation of feed wheat has been increasing in the last
three years with total volume reaching around 2.5 million tons in calendar
year (CY) 2016. Continued demand from the consolidating hog industry and
the growing broiler and layer operations is also evident.
Due to rising income as a result of the strong performance of the
Philippine economy, local industry contacts anticipate demand for milling
and feed-grade wheat to steadily grow.
Temperate fruits and other vegetables
The value of Australia’s fruit exports to the Philippines has grown from
A$ 500,000 in 2010 to more than A$ 22 million in 2016, due to improvements in
protocol for the importation of Australian fruits and the strength of our
relationship with key Filipino importers. The Now in Season Australia
retail promotions, which were conceptualised and piloted in the
Philippines, established Australia as a strong counter-seasonal supplier
for imported temperate fruits.
The Philippines has become an emerging market for Australian horticulture
exporters and will continue to be a key export destination for Australian
Opportunities exist to further increase volumes for key fresh fruit
commodities such as table grapes and citrus while the changing consumption
behaviour provides larger prospects for vegetables, stone fruits, apples,
pears and berries.
Reduced chipping potato tariffs in the Philippines opens opportunity for Australian exporters until 2020
In-quota tariffs for chipping potatoes under the Philippine Government’s
Minimum Access Volume (MAV) have been significantly reduced from 40% to 3%,
effective from 2017 to 2020. This is stipulated in
Executive Order No. 20
(EO 20), which expands the opportunities for increased imports for chipping
Australian chipping potato exporters stand to benefit if they work with
Philippine importers who apply for in-quota MAV, as tariffs under the ASEAN
Australia, New Zealand Free Trade Agreement (AANZFTA) still remain at 40%
tariff for both in-quota and out-of-quota chipping potato imports.
Reduced tariffs at 32% under the AANZFTA will take effect only in 2020
MFN - EO No. 20
June 2017 - 2020
2017 - 2019
2020 and subsequent years
Potatoes, fresh or chilled
Chipping Potatoes In-Quota
- Chipping Potatoes Out-quota
Filipinos indulge in snacking, both of sweet and savoury foods. The savoury
snack industry is expected to reach a retail value growth CAGR of 4%
reaching A$2.4 billion in 2023. Potato chips will continue to be the key
growth driver with a 10% forecast growth in 2018, mostly due to local
manufacturing with multiple flavour innovations led by both local and
imported brands, such as Universal Robina Corporation, Liwayway Marketing
Corporation, Frito-Lay Corp., and Leslie Corporation.
In 2017, the Philippines imported 20,500 tonnes valued at A$11.6M of fresh
or chilled potatoes, the bulk of which was used exclusively for chips
manufacturing. Top potato suppliers are the United States valued at A$7.7M
(66.8%) and China at A$3.4M (29.5%).
The Philippine government’s initiative to raise productivity levels and meet food demand presents an opportunity to supply livestock genetics, equipment and services. The government aims to provide modern and inclusive agriculture such as in irrigation, farm-to-market roads and the establishment of modern post-harvest facilities to minimize production losses.
Australia faces competition from the US, Canada, Ukraine, India, China and
Argentina. Because of previous economic ties with the US, they are the
dominant player and preferred market of choice. The US Wheat Associates
have a very strong presence in-market and continue their aggressive
marketing programs to sustain their position.
The implementation of the ASEAN Australia New Zealand Free Trade Agreement
(AANZFTA) in 2010 has given Australia a competitive edge it did not
formerly have against other international producers, including established
exporters to the Philippines like the US, China, Chile and South Africa.
Tariffs, regulations and customs
The implementation of the AANZFTA is helping to strengthen Australia’s
commercial ties with the Philippines. In particular, the reduction or
elimination of existing tariffs has resulted in substantial new markets for
Australian producers. For example, before the agreement was forged, the
Philippines had just one agricultural line (of 1,407) with a zero tariff.
As a result of the agreement, 75 per cent of all agricultural lines are now
eligible for zero tariffs.
Significant gains include the elimination of:
- 10 per cent tariff for citrus and seven per cent for grapes and citrus
- 7 per cent tariff for most stone fruits and apples
- 3 per cent tariff of wheat exports to the Philippines
- 3 per cent tariff of rolled or flaked oat grain
AANZFTA Tariff Finder
for more information on applicable tariffs.
Marketing your products and services
The Philippines’ retail sector is continuing to expand and modernise, with
several multi-national retailing groups now entering the market. This
evolution is providing Australian producers with more avenues for the
distribution of their products.
While some companies are beginning to import directly, most still rely on
traders and agents to supply their produce.
When dealing with importers, Australian agribusiness companies should note
that the Philippines is a price sensitive market and at times Filipino
importers will look at price over quality. This often happens in the trade
of commodities like grains, dairy and fresh produce.
Australian livestock exporters will often deal with a trader or breeder who
sells to other farms, or purchases on behalf of the government. Co-load or
co-shipment arrangements are also common for larger shipments of cattle.
Air-freight shipment of thoroughbred horses and small ruminants, like goats
and sheep, are also becoming more common.
There are various channels for exporting agribusiness products to the
Philippines. For agribusiness commodities such as grains, exporters can
either sell to traders or directly to food or feed millers.
Industry associations, which represent the majority of the feed millers and
processors, also import wheat in bulk.
The channel for fresh produce exports is normally through wholesalers or
traditional importers who sell to distributors and/or supermarket
concessioners. There are a small group of importers who are also
distributors and supermarket concessionaires themselves.
Sea freight to the Philippines from Australia takes approximately two weeks
(14-28 days), with transshipment points in Singapore or Hong Kong. Manila is
the main port, followed by Cebu (Visayas) and Davao (Mindanao). Sea freight
is generally used by most exporters.
Airfreight takes eight to twelve hours and is the only option for perishables,
but available space on flights is at a premium.
Links and industry contacts
Bureau of Animal and Industry
Bureau of Plant and Industries
Department of Agriculture
Federation of Goat and Sheep Producers Associations of the Philippines Inc.
National Dairy Authority
Tariff Commission of the Philippines, Executive Order No. 20 of 2017
 Euromonitor: Savoury Snacks in the Philippines, 2018
 Trade Map Data, 2017
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