Reaping greater value from Philippine agriculture

The Philippines has long been pining for an agricultural renaissance, but it remains far from reality – especially now with rising input costs hounding farmers.

While the Philippines is contributing well to Southeast Asia’s stature as the world’s growth leader, it must be mentioned that the heavy lifting is largely borne by the services sector.

At home, the tropical archipelago has been drawing economic strength from call centre and outsourcing services, wholesale and retail trade, and manufacturing. Meanwhile, the combination of cash remittances from Filipinos working abroad plus tourism receipts from foreign visitors are boosting dollar inflows. As for agriculture, the government continues to give attention and resources to the sector, but why is it still falling behind?

Agricultural no more

In seeking more funds for the sector, many local politicians and ranking government leaders would repeatedly claim that the Philippines remains to be an agricultural country. This has ceased to be true decades ago: agricultural value-added had peaked at a share of 32 per cent of GDP in 1946, while the last time the sector contributed at least one-fifth of national output was in 1973 – both are levels not seen since. Further, the sector barely grew over the past 10 years, with agriculture output growth averaging 0.8 per cent between 2016 to 2025 against industry at 4.1 per cent and services at 5.5 per cent.

To illustrate, Graph 1 shows how heavily reliant the Philippines is on imported agricultural products, with the gap between exports and imports widening in recent years. From a low of a USD 962.8-million deficit in agriculture trade in 2003, the Philippines is now netting USD 13 billion in agriculture imports yearly since 2022. Among the biggest imports are meat products, animal fat, and dairy, according to the Philippine Statistics Authority. The country also holds the title as the world’s biggest rice importer, showing that domestic producers are unable to meet demands the even for the staple crop – not to mention, rice from neighbouring Thailand and Vietnam are far cheaper than local harvests.

Data from the Organisation for Economic Co-operation and Development also shed light on the stagnation of the domestic sector: general support to agricultural producers has been on a decline, coming from a peak of 29 per cent of gross farm receipts in 2014 to a 19 per cent average between 2021 to 2023. This figure is likely to increase this year as a new government program extended a PHP 3,000-5,000 (USD 49-81) direct cash aid to farmers amid rising fertiliser and diesel prices, the latter a key input to farming machinery. Subsidies were previously given in the aftermath of Russia’s attack on Ukraine in 2022 which sent fertiliser prices soaring, and the effect of which has been exacerbated by the ongoing US-Iran conflict. In real terms, however, these cash handouts have done little to push farmers’ profits up and food prices down.

Taken together, these show that the Philippines’ days of being agriculture-driven are in the past. This is not to say that the country should stop all support towards the sector altogether; instead, resources can be better utilised if these are redirected towards supporting the cultivation of high-value crops beyond traditional farm goods. Graph 2 shows that agriculture accounts for 9 per cent of Philippine GDP, a relatively smaller share when compared to its ASEAN neighbours. Its peers Indonesia and Vietnam are at 13 per cent and 12 per cent, respectively.

A purple miracle?

Raising the productivity of Philippine agriculture – and, in turn, making the domestic sector more attractive to investors – requires efficiency during every planting cycle. A new opportunity has risen with the surge in global popularity of ube or purple yam, a root crop originating from the Philippines commonly used in sweet drinks and desserts. A close comparison would be matcha or green tea powder from Kyoto, Japan, which is gaining ground in the West. Demand for ube surged by 20 per cent in 2025, generating an estimated USD 3.2 million in Philippine exports for that year that mainly headed to the US, Canada, and the UK. This opens greater possibilities for Filipino farmers to make good money as the world gobbles up more of the bright, sweet starch.

A look at country data on Philippine crop production, however, tells a different story: rice paddy accounts for 20 per cent of total production as of end-March 2026, even as its farmgate prices are among the lowest across the board. Currently, cacao, coffee, tobacco, and mongo beans carry the biggest value among widely planted crops, but it would not be surprising to see ube rise from the ranks in both value and volume amid high global demand. However, whether it can transition from being just another culinary fad and into a global dessert staple rests on the ability of Filipino farms to sustain the production of quality ube at far greater volumes.

As things stand, investments into the Philippines gravitate mostly towards more mature segments like finance, insurance, retail, and real estate. New capital will surely find its way to a more efficient farm and food sector – that is, one that can satiate both the domestic and rapidly-rising international demand for crops. This may just be the secret ingredient to revitalise local agriculture and expand total exports, which could support stronger economic growth ahead.