Agri, logistics deemed next Philippines growth drivers

CEBU, Philippines — Agribusiness and logistics are poised to become the next “stars of the show” in the Philippine economy as investors increasingly shift capital toward food production, rural infrastructure and supply-chain networks, according to economist Bernardo Villegas.

Speaking during an economic briefing, the founder of the University of Asia and the Pacific (UA&P) said the country’s long-term growth story is moving beyond its traditional reliance on consumption, overseas remittances and business-process outsourcing, with agriculture and logistics emerging as sectors capable of generating more inclusive and sustainable economic expansion.

“We are beginning to see the foundations being laid,” Villegas said. “Agriculture and agribusiness will become lead sectors of the economy.”

The veteran economist argued that decades of underinvestment in agriculture left the Philippines trailing regional peers such as Vietnam and Thailand, even as those countries transformed their rural economies into export powerhouses.

Vietnam, for example, now generates about $60 billion annually from agricultural exports, including coffee, cacao, fruits and other high-value crops, compared with roughly $8 billion for the Philippines, Villegas said.

The gap highlights what he described as a historic policy mistake that prioritized inward-looking industrialization while neglecting farm productivity, irrigation, farm-to-market roads and post-harvest facilities.

That trend is beginning to reverse.

Villegas pointed to rising private-sector investments in livestock, coconut, palm oil and other high-value agricultural ventures as evidence that large conglomerates are taking a longer-term view of food production. Companies are increasingly acquiring land, expanding production capacity and building supply chains aimed at both domestic and export markets.

The shift is expected to create new demand for logistics infrastructure, ranging from cold-storage facilities and warehouses to ports, transport networks and distribution hubs.

“Agribusiness cannot succeed without logistics,” Villegas said, noting that the movement of agricultural products from farms to domestic and international markets will require significant investments in transportation and supply-chain efficiency.

The economist said infrastructure spending remains a critical component of the country’s growth strategy. The Philippines continues to lag regional competitors in transport and logistics networks despite improvements in recent years.

Foreign direct investment (FDI) inflows into infrastructure, logistics and related sectors could accelerate following reforms that opened key industries to full foreign ownership, including airports, railways and other transport services.

Villegas said attracting between $15 billion and $20 billion in annual foreign direct investment should remain a national priority if the Philippines hopes to match the growth trajectory of its Southeast Asian neighbors.

He expects agriculture to eventually expand by at least 3 percent annually, roughly in line with the long-term performance of leading agricultural economies in the region.

While that target remains challenging amid weather disruptions and food security concerns, he said current investments suggest the sector is entering a new growth cycle.

The transformation could have implications far beyond farming.

A stronger agribusiness sector would stimulate demand for logistics providers, warehousing operators, shipping companies, cold-chain facilities and food processors, creating employment opportunities across both urban and rural areas.

For regions such as Central Visayas and Mindanao, where agricultural production remains a major economic activity, the trend could unlock new investment opportunities and help reduce development disparities between Metro Manila and the countryside.

Villegas acknowledged that the Philippine economy faces near-term challenges, including slowing growth, elevated poverty levels and weaker consumer confidence.

Yet he said the country’s longer-term prospects remain intact if policymakers sustain infrastructure investments, attract more foreign capital and continue rebuilding the agricultural sector.

“The next phase of Philippine growth will not come from consumption alone,” he said. “It will come from producing more, moving goods more efficiently, and connecting the countryside to markets.”

If that transition succeeds, agribusiness and logistics may emerge as the country’s most important growth drivers over the next decade, reshaping an economy that has long depended on remittances and services for expansion.