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October 10, 2022

The United States Department of Agriculture (USDA) expects the Philippines’ food service sector to grow 12 percent to $9.36 billion this year.

In a report dated October 3, the agency said the main contributor to the growth was the increase in consumer mobility resulting in higher foot traffic in restaurants and hotels.

The USDA said that sales of the country’s food sector last year increased by 5 percent to $8.37 billion from $7.97 billion in 2020.

However, the report also said that despite gaining a foothold and starting to rebuild last year, the Philippine food service industry will remain below pre-pandemic levels.

The restaurant chain is said to be continuing its expansion as food sales increase with foot traffic returning, while hotels have also started to experience more event bookings as local and international tourism picks up.

The report said some local consumers still prefer the convenience and safety of online delivery, drive-throughs and curbside pickups and the threat of inflation and higher logistics costs increasing operational costs and difficulty hiring employees.

Besides the expected increase in food service sales, consumer-oriented agricultural exports from the US to the Philippines are seen to further grow by 15 percent this year as much as $4.1 billion from last year’s record of $3.55 billion.

The Philippines last year ranked as the seventh largest US agricultural export market, and the US remains the largest single country exporter to the Philippines.

Meanwhile, the USDA adjusted its forecast of the Philippines’ raw sugar production for the 2022-2023 crop year to 1.85 million metric tons (MT), 7.5 percent lower than the previous projection of 2 million MT.

In its October 5 report, the agency said weather disturbances and low fertilizer application due to soaring prices continue to affect sugarcane production in the Philippines.

Earlier, the Sugar Regulatory Administration (SRA) estimated local sugar production for the current crop year to increase by 5 percent to 1.88 million MT from 1.79 million MT previously. Local agency projects for higher periods than USDA.

Despite the decline in production, the USDA said the sugarcane area is expected to be 397,000 hectares (ha), up 1.8 percent from the previous 390,000 ha, as the prevailing high price will encourage farmers to plant sugarcane again instead of shifting to other crops.

The report said that sugar consumption in the Philippines for the period may drop by 4 percent to 2.2 million MT from the original forecast of 2.3 million MT, as high prices in the first quarter of the crop year will lead to a decrease in consumption.

The USDA added that sugar consumption in the Philippines remains divided into three main segments, with industrial users accounting for the lion’s share at 50 percent, followed by households at 32 percent and institutional, 18 percent.

Among industrial users, the agency stated that beverages, preserved fruits and the confectionery industry are the most important users.

As for SRA, it projected lower local demand for the period at 2.03 million MT.

The USDA report also stated that the Philippines is likely to import additional sugar supplies for the crop year to further support the initial approval of 150,000 MT of refined sugar imports on or before November 15 this year.

The USDA forecasts Philippine sugar imports for the 2022-2023 crop year to be at 75,000 MT of raw sugar and 275,000 MT of processed sugar to achieve a comfortable stock and provide more grade sugar.

Based on the Department of Agriculture’s monitoring of 13 public markets in the National Capital Region, the retail prices prevailing on Friday are P100 per kg of refined sugar, P90 per kg of washed sugar and P85 per kg of brown sugar.

SRA’s smillsite monitoring showed the composite price of raw sugar as of September 25 at P3,734.94 per 50 kg bag, up 6.6 percent from September18 at P3,503.73 per 50 kg bag.