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Agriculture is most watched among typhoons’ damage tally

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By Lala Rimando, abs-cbnNEWS.com/Newsbreak | 10/14/2009 1:27 AM

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MANILA - When a supertyphoon batters a country, observers usually follow the tally of damages and focus on one or two that hints where the general economy is headed.

For neighbor Japan, it’s the damage update on their ports. For New Orleans, the blow on the oil and gas production and gambling activities are followed. For Thailand, most keep an eye on tourist count, among others.

Here in the Philippines, one of the most watched is the typhoons’ impact on agriculture, especially on rice crops.

Analysts, economists, and investors follow agricultural damage for 3 reasons:

First, the need to augment lost domestic supply sends a message to the world commodity market that the purchases of the world’s biggest rice importer would create spikes again. Last year, when the Philippines panicked and inked a government-to-government rice trade deal with Vietnam to assure rice supply at home, the world price for the crop shot up. (Read portion on RP as icon of 2008 world food situation here)

Then there’s also politics. Self-sufficiency in rice supply is a populist goal to a nation that considers rice as a staple. Rice supply and price have dictated the political careers of many personalities in the past, including former President Diosdado Macapagal, President Arroyo's father, who lost when there were spikes in rice prices during the run-up to the presidential elections. ((Read: Short-term solution to food crisis)

The next presidential election is slated for May 2010, a few months away.

Lastly, analysts and economists watch the pace of growth of the agriculture sector. It traditionally dictated the pace of the overall economic growth of the country, too. In fact, it was not long ago that the lack or presence of weather disturbances—tropical storms, El Nino, El Nina—became a good gauge of where the general economy is headed.

For example, in mid-2006 top economic planning agency officials were walking around with PowerPoint presentations boasting a 5.5-6.2% projected growth rate for the year. The slides were convincing. Prior to the supertyphoons, observers were saying that the economy was on the rise as the stock market was in an all-time high, exports were growing double digits, tax collection was increasing, investments were breaching the $1-billion mark, and the government deficit has been improving significantly from more than 4% of GDP to about 2%.

Then the tropical storms came one after another:Milenyo (international code name Xangsane) came in late September, Neneng (Bebinca) and Paeng (Cimaron) in October, and Reming (Durian) in December.

When the skies finally cleared, the Philippine economy still grew by a respectable 5.4%, higher than the 5% growth recorded in 2005, but lower than previous targets. Then Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director-General Romulo L. Neri said that 2006 economy could have ended better had it not been for the series of typhoons that battered the country in the last quarter.

He stressed that the typhoons deducted about 0.4 percentage points off the GDP growth expectations for 2006.

The agriculture sector, which used to account for almost half of total domestic production, currently accounts for just a fifth. In previous years, the services and industry sectors have also expanded.

Typhoons’ impact on agriculture is also crucial since the sector employs a third of the national work force.

Weather disturbances in the past have affected the purchasing power of crops and livestock farmers. This, in turn, stifled general consumer spending, which is equivalent to two-thirds of the Philippine economy.

The National Statistics Office provides a good reason. Results of the 2008 Informal Sector Survey showed that 48.4% of the informal sector operators were engaged in agriculture.

This shows that the direct cost of damage wrought by typhoons on the agriculture sector is grossly understated.

“Agriculture has a lot of ripple effects,” noted Rolando Dy, an agriculture economy expert.

As of October 13, the direct damage to agriculture by Typhoon Ondoy (international name Ketsana) has climbed to P6.77 billion, while Typhoon Pepeng (Parma) damaged P6.53 billion.

The back-to-back typhoons have hit areas considered as the country’s major producer of agricultural products.