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Business

Threat of ‘stagflation’ is real

BIZLINKS - Rey Gamboa - The Philippine Star

Filipinos will not be able to take any more suffering if higher prices of basic food items like chicken, pork, and vegetables will continue throughout the year while their sources of income under the “new normal” conditions remains curtailed.

Thus, keeping pork and chicken prices in check within the next few months will need to be a major undertaking by government if inflation, which went up to a higher-than-projected 4.2 percent in January, is to be kept within bounds.

“Stagnation,” the coming together of a stagnant economy (lost or reduced productivity) and inflation (high prices of basic commodities and services), is a threat that is too real today.

Carefully crafted measures will need to be put in place to tackle the serious spread of the African swine fever (ASF) that has decimated already a third of the country’s pig stocks, creating a pork supply problem and higher market prices for a country that can’t live without pork.

Similarly, attention must be given to the poultry industry where hundreds of chicken growers were chased out of business because of depressed market demand caused by the pandemic. Chicken prices, as a result, likewise significantly rose.

Full-scale slaughter

By far, the ASF epidemic is the biggest problem and will require a more flexible policy of pork importation for the longer term. Even then, higher prices can be expected in the latter part of the year.

The Philippines is the 10th largest pork consumer in the world and major hog suppliers like the US and even China are monitoring how we will handle the ASF outbreak. Currently, we are the seventh largest importer of hogs in the world.

Within this global supply-demand dynamics, industry watchers are already warning that the current glut in pork supply will eventually give way to a shortfall as global demand for the meat normalizes and vaccinations in developed countries get underway.

Domestic pork supply, on the other hand, will continue to dwindle. Current measures being outlined by the Department of Agriculture will be unable to prevent the full-scale slaughter of pigs in our farms.

Brutal virus

We give way to the observations and views of a veterinarian on the ground about the ASF outbreaks. Here are parts of what Joel F. Mangalindan DVM wrote:

“China, Vietnam, and other Asian countries similarly affected by the ASF virus are now in the process of mopping up their remaining few pockets of infection.

“On the other hand, the Philippines, infected around May 2019, is still in the first wave of infection, infecting the whole of Luzon, and spreading steadily to the south, in Visayas and Mindanao. It is ironic that a similar viral infection – COVID 19 – was responsible for slowing the spread in the south, by effectively restricting the movement of fomites, animals, including people.

“DA reports a little over 400,000 heads have so far been killed/depopulated when actually over six million heads had died/depopulated in commercial farms (by industry estimates). A specific example: from over 140 commercial pig farms in Tarlac, only two farms remain unaffected. That’s how brutal and virulent the virus is.

“The choice of 1-7-10 control strategy is appropriate, but the implementation details fail miserably:

• The DA takes five to 12 days from initial report of infection to actual implementation of quarantine; the cat is already out of the bag, the disease has spread out by that time;

• The commercial farms are not included in the indemnity program. That’s why they have not fully cooperated with quarantine efforts, and that’s where the major quarantine failure falls. Because pigs from commercial farms are consumed hundreds of kilometers from production site, their potential to spread disease to a farther, wider territory is exponentially higher, compared to backyard/small scale pigs that are locally consumed, and thus spread disease only locally;

• The quarantine effort is, at best, porous. Quoting a pig biyahero, ‘All you need is a non-descript truck and a guy with a motorcycle and cellphone to scout the route’ in order get a shipment from one province to another. This is evidenced by the rapid spread to seven provinces in Luzon in just six months, the fastest ever recorded. Perhaps this situation results from the fact that the DA has no administrative control over LGU quarantine personnel.

“The DA’s insistence on blaming ‘swill feeding’ as a major cause of spread is ridiculous (swill is, by practice, re-cooked, so no virus/infectious organisms remain alive). It is a subtle ‘blame the farmer, not us’ thing.

“By all indications, absent the availability of a vaccine, it’s too late to hope for a reasonable eradication effort. In common parlance, we will live with the disease. It can be reasonably projected, that the Philippines will lose over 70 percent of its pork supply by December 2021.

“ASF is here to stay. Infected farms cannot safely repopulate within at least two years (or as long as the disease is present). Several farms have already attempted to repopulate one year post infection, and experienced recurrence.

“History accurately documents that whenever and wherever epidemics are downplayed, they invariably result to more severe, more widespread, more catastrophic infections. The COVID-19 situation in the US, and ASF in the Philippines, are prime examples.

“DA’s actions are definitely consequential to a P230-billion industry, and more so to the economy. What took a painstaking 50 years to develop is undone in so short a time.

“We don’t need a more aggressive response. We need an appropriate response.”

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We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

CHICKEN

NEW NORMAL

PORK

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