Overview
The Philippines is the seventh-largest market for U.S. agricultural exports and the top market in Southeast Asia. Already a longstanding and reliable trading partner, the Philippines continues to offer many opportunities for exporters because of its young and growing population and rising household income. The Philippine food and beverage sector has grown significantly over the past decade. While the usual consumption patterns have been forced to accommodate pandemic restrictions in recent years, the sector has been resilient. The United States saw a record year in 2021 for agricultural exports to the Philippines. Still, the path to achieving annual records will likely be through diversification, especially in consumer-oriented products. The strong trade relationship and consumer trust in U.S. products built over decades can be important for exporters.
Agricultural Trade
The Philippines was the seventh largest market for U.S. agricultural exports in 2021, reaching a record $3.5 billion.
Exports increased 11 percent over 2020, surpassing Vietnam and making the Philippines the top market for U.S. products in Southeast Asia for the first time since 2015. Despite tariff and logistical disadvantages, the United States has long been the top supplier of agricultural products to the Philippines, compared to neighboring suppliers in Asia. In 2021, imports from the United States, with 21 percent of the market, were nearly double those from Indonesia, the next largest supplier.
Consumer-oriented products were the largest category of U.S. agricultural products exported to the Philippines in 2021 at $1.4 billion, a 23-percent increase over 2020. The Philippines has been the top Southeast Asian destination for U.S. consumer-oriented products since 2006. Top products in this category include dairy products ($437 million), pork and pork products ($204 million), and poultry meat and products ($147 million, excluding eggs). Year-over-year growth was particularly strong for U.S. meat and poultry products, with pork exports growing by $90 million and poultry exports growing by $83 million. Meat and poultry product exports have increased significantly in recent years to make up for shortfalls in domestic pork production related to African swine fever. Pork exports benefitted from temporarily lower tariffs and larger quota volumes, while demand increased for substitute proteins like poultry.
Intermediate products were the second-largest category of U.S. agricultural products exported to the Philippines in 2021 at $1.2 billion, a 4-percent increase over 2020. Top products in this category include soybean meal ($960 million); miscellaneous feeds, meals, and fodders ($86 million); and ethanol ($51 million). As soybean meal is a large proportion of intermediate products exported, its $60 million year-over-year growth accounts for much of the category’s overall growth in 2021.
Bulk products were the third-largest category of U.S. agricultural products exported to the Philippines in 2021 at $1 billion, a 4-percent increase over 2020. Top products in this category include wheat ($871 million), soybeans ($65 million), and pulses ($10 million). More than 90 percent of bulk exports to the Philippines in 2021 were wheat, which increased by $44 million from 2020. Around half of the Philippines’ wheat demand is for bread production, making them an outlier in Southeast Asia, where wheat is more commonly used to make noodles. United States exports hold more than 90 percent market share for milling wheat in the Philippines, although other countries supply significant volumes of feed wheat.
Market Sectors
Food Processing Sector
With boosted capacity and production of food and beverage manufacturers, USDA-FAS Manila forecasts a 3 percent growth for the food processing sector in 2022. Continued household spending and purchasing by manufacturers will further propel the industry this year.
Food Service Sector
After dramatic declines in food service sales due to COVID-related policies, Post expects the sector to partially rebound in 2022 together with the easing of restrictions. Headwinds remain from the shift to home-cooking, operational and supply chain disruptions, and other issues.
Retail Food Sector
Post estimates improved retail sales in convenience stores, groceries, hypermarkets, and warehouse clubs in 2022 through increased consumer mobility, spending, and higher employment rates. Enhanced online services and continued pantry-loading are expected to boost retail sales.
Resources
USDA-FAS Manila publishes market and commodity reports available through the Global Agricultural Information Network (GAIN) at https://gain.fas.usda.gov including:
