Agricultural output in the first quarter of 2008 rose 4.0 percent from a year earlier, a performance that will provide only limited support for the overall economy as exports slow.

The farm sector accounts for around a fifth of economic output.

"There may be some support, though it is worth noting that at 4 percent we cannot expect any ‘lift’ effect," said Vishnu Varathan, an economist at Forecast Pte., after Tuesday’s data.

"Given that manufacturing is going to look weak on the back of the anaemic exports, especially the electronics sector, the farm output is really no reason to be overly optimistic."

The government has a target of raising agricultural output by 4.5-5.5 percent this year.

In 2007, agricultural output grew 4.68 percent for the full year, while overall gross domestic product growth reached a 31-year high of 7.3 percent.

Export growth in 2007 reached 6.05 percent but in the first quarter this year it dropped to an annual 2.7 percent.

The government will announce first-quarter economic growth figures later this month.

Officials have not given any estimate for first-quarter growth but have said said they may revise the full-year growth target to 6-6.7 percent from 6.3-7 percent because of the economic slowdown in the West.

Rice production was on course to reach a record 17.3 million tons in 2008 despite problems in production in the first quarter, Agriculture Secretary Arthur Yap said.

And with about 1.7 million tons of imported rice already contracted by the government, the Philippines did not need to hastily import more of the national staple, he said.

"When we go back to the market, we will go back with a lot of flexibility," Yap told reporters.

The Philippines, the world’s biggest rice importer, cancelled a tender earlier this month for 675,000 tons of the grain but has said it may need to buy a total of 2.2 million tons this year to boost its buffer stock.

International rice prices have surged this year because of curbs by exporting nations and global worries about supply. Governments across the world, including in the Philippines, have taken steps to ensure stability is not affected by food prices.

The Department of Agriculture said unmilled rice output reached 3.75 million tons in the first quarter, up 1.96 percent over the year-earlier figure, despite flooding in some rice-growing regions.

Production should reach 7.1-7.3 million tons in the first half and the full-year goal should be easily reached, Yap said.

Corn production was up 16.93 percent in the first quarter at 1.99 million tons, the department said. Output should rise to 3.29 million tons in the first half of the year, an annual gain of almost 20 percent, it said. – Reuters