Pork, chicken price caps to stay in Metro Manila and there only
Meat stalls are empty at the Trabajo Market in Sampaloc, Manila as vendors take part in a pork holiday last February 8, the first day of a price ceiling imposition for pork and chicken in Metro Manila.
Edd Gumban

Pork, chicken price caps to stay in Metro Manila and there only

Ian Nicolas Cigaral (Philstar.com) - March 8, 2021 - 3:19pm

MANILA, Philippines — Price controls on chicken and pork will not be expanded beyond Metro Manila despite faster meat inflation outside the capital, the agriculture department said on Monday.

Agriculture Assistant Secretary Noel Reyes said in a text message there is no plan to impose price ceilings on pork and poultry in provinces, a measure in effect since February 8 in the National Capital Region to temper costly pork costs brought by tight supply from pigs killed by the African swine fever.

At the same time, Agriculture Secretary William Dar said price caps in the capital will not be dismantled, arguing for its supposed effectiveness to keep prices in check, at least partially. 

“Though the price ceiling may not ensure full compliance by the traders and retailers, it is still an effective deterrent against unscrupulous trading activities,” Dar said in a statement.

Indeed, pork prices have gone down in the Metro toward state-mandated levels between P270 per kilo and P300 per kilo, depending on type. That helped slow down meat inflation to a still-elevated 20.4% year-on-year in February from 21.6% in previous month.

But price checks were put into question by an inflation report last Friday that showed consumer prices, on average, still accelerated 4.7%. While this was not unexpected given the central bank’s forecast of 4% for the entire year, the strategy of dictating of the state retail prices of the country’s main protein source was largely seen ineffective especially with costs still ticking up at double-digit rates.

By law, the government may only exercise control over prices for up to 60 days, and in this case that ends on April 8, with little evidence it is creating a much bigger dent on food costs. Dar however was unfazed, indicating having controls is better than none at all.

“Lifting it will undeniably result in dramatic rise in prices of pork and chicken, given that the African Swine Fever (ASF) crisis is still raging and thus continues to impact on local production of hogs nationwide,” he said.

“That is why we need to augment the current shortfall... from ASF-free countries,” he pointed out.

Yet economists have long questioned the efficacy and therefore, reliance on direct controls to keep prices at bay. Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said the display of current ineffectiveness of price caps to battle inflation may have dire consequences on similar measures in the future.

Price controls are typically, and sometimes automatically, imposed in areas hit by calamities as a preventive measure against trade abuse. In fact, before Executive Order No. 24 issued by President Rodrigo Duterte for the latest price limits, he already enforced a price freeze late last year in select areas where crops were damaged by typhoons. That, as the current situation shows, appeared to have failed in keeping the status quo.

“The scarring can come from the loss of ‘teeth’ by these types of policies under a broken market system (where unscrupulous traders abound). A loss of confidence in policies may ensue and impact (much less than) what was intended to be fixed in the first place,” Asuncion said in an online exchange.

“It’s difficult to deal with supply shocks. Strong institutions exist to deal with them effectively,” he added.

Despite this, Dar said: “By maintaining it, the government will send a strong signal to Filipino consumers -- who suffer from lower incomes due to the adverse impact of the COVID-19 pandemic on our economy— that it does care about their welfare.”

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