The Philippines, with a population of 116 million people, is an extremely important market for U.S. wheat. The demand for high quality hard red spring wheat represents a critical component of the overall demand base for one of Montana’s largest crops. PNW exporters rely heavily upon this relatively steady and consistent demand.
The Philippines Economy
The Philippines economy is dynamic and one of the most diverse in the Pacific region. Income levels are increasing, and the country is steadily moving from lower middle-income to an upper middle-income country. The economy features strong consumer demand and a healthy labor market. A large, young population, along with growing urbanization and a growing middle class, are robust economic drivers. Poverty is an issue, but poverty rates have been on the decline in recent years. The private sector is strong, and the country’s GDP has been growing steadily over the past decade.
Stiff Competition
While the U.S. dominates milling wheat imports, U.S. market share has dropped from 96% in 2020-21 to 72% in 2022-23. Canada and Australia have been able to chip away at US market share due to lower prices. Total wheat imports for 2023-24 are projected to reach 6.5 million metric tons (239 million bushels). Hard wheats are used to produce bread and pasta while soft wheats are key components of crackers, cakes and noodles. Noodles, which are readily cooked at home, and fast-food related demand for bread are driving consumption trends.
Challenges
There are 22 mills operating in the Philippines and utilization rates are hovering at just over 50%. The most successful milling companies have been diversifying their product mix to meet changing consumer demand. Low consumer purchasing power, minimal growth in flour consumption and increasing wheat prices are adding challenges for the flour milling industry.
Strong Trading Relationships
With Montana’s 2023 hard wheat crops projected to yield approximately 4.6 million metric tons (170 million bushels), the Philippines will remain a vitally important customer for the overall health of the state’s grain industry. Montana remains a consistent and stable supplier of high-quality milling wheat and we are grateful for the strong trading relationships that have been developed over the years with our customers in the Philippines.