Brace for agriculture supply disruptions post Yolanda, say risk and financial analysts

Supply disruptions involving key agriculture commodities loom over the coming months, as Central Philippines reels from the damage to life and property caused by Super Typhoon Yolanda, risk and financial consultants said Wednesday.

 

“As the Philippines counts the cost of Typhoon Haiyan (Yolanda), companies with agricultural supply chains located in the region also face serious risks of disruption,” global risk analytics company Maplecroft said in a note posted on its website. 

 

According to Maplecroft estimates, some 120,000 metric tons (MT) of sugar and 131,600 MT of rice were damaged, affecting supply in the “medium term.” 

 

In its weekly research note, listed Metropolitan Bank & Trust Co. (Metrobank) said damage sustained by the region from Typhoon Yolanda will hurt the agriculture sector. 

 

“While Visayas has the least contribution to total agricultural production at 18.12 percent, expect the production of commodities to make its dent on the overall performance of the sector,” said Mabellene Reynaldo, Metrobank research analyst.

 

Both Maplecroft and Metrobank sounded the alarm on the supply of coconuts, but the Philippine lender said the situation isn't likely to give the price of the commodity a significant stoke. 

 

“Eastern Visayas, the first and hardest hit region by the typhoon, is the leading producer of coconut, supplying 21.46 percent of output in 2012,” Reynaldo noted. 

 

“While we expect upward pressure on coconut prices, the probability of a steep increase in the commodity is minimal given that global demand is weak,” she added. 

 

Metrobank said adequate supply of rice and sugar coupled with price caps will cushion the pressures on costs against these commodity. 

 

Maplecroft, meanwhile, pointed out potential delays in exports of agro-commodities to major markets – Japan, United States, Russia and the Middle East – as many Central Philippine ports were damaged by winds of over 300 kph and storm surges.

 

The agriculture sector alone sustained P3.7 billion in damage from the Category 5 typhoon, initial government estimates show, but the Department of Agriculture said supplies of rice and chicken were so far stable.

 

Typhoon Yolanda barreled through Central Philippines last Friday, destroying coastal cities and towns. – VS, GMA News