Concurrent agri chief’s quandary

The Philippines, like the rest of the world, is facing a food crisis in terms of supply and pricing, one that hangs on a precarious ledge these days as countries scramble to ensure that their constituents don’t run out of food supplies while at the same time are not too burdened by high prices.

A food crisis exposes the worst of ugliness. Malnutrition. Hunger. Poverty. Greed. Heartless profiteering. Societal unrest. Civil strife. Deaths.

We have the faces of different middlemen, who minute by minute stay alert to taking advantage of trading conditions, from the amount of harvest in farms to the changes in fuel pump prices that now significantly factor in the cost of produce that finds its way to consumers. Their main preoccupation is to cash in on the abnormal situation and make a killing in profits.

Unfortunately, many households are also swept into the eye of this crisis. Panic brings them to hoard supplies in quantities that quickly result in shortages that could take weeks for suppliers to replenish back to normal levels. Supply shortages cause steep price hikes that benefit black market manipulators.

The extreme end belongs to the poor who find high food prices increasingly beyond their reach, forcing them to ration whatever they still have to last for more days. At worse, they start to cut down the number of meals they take a day or simply sleep off hunger.

Beyond his control

Taking on the leadership of the Department of Agriculture and highlighting the food crisis as the central platform of governance by the incoming administration is a risky gamble by the president-elect simply because the root of the problem is beyond his ken, thus there is very little he can do to correct it.

The world was the midst of a supply chain upheaval struggling to mend deficiencies in commodity supplies while reopening economies after two years of lockdowns, only to be stumped by the complications evolving from the prolonged Russian-Ukraine conflict.

Now entering its fifth month, the effects of these two warring countries’ significant supply of wheat, corn, oils, fertilizers, and other metals in the world market has already led to disruptions in many economies’ post-pandemic recovery.

The biggest setback has been in the price of crude oil, which now is on a prolonged run averaging at over $100 per barrel since Russia invaded Ukraine last February 24. With Europe bent on cutting its supply of natural gas from Russia within the next two to five years, this only forebodes of elevated crude prices beyond $80 a barrel for the medium-term.

Before countries started to reopen their economies starting in late 2021, crude prices had never risen beyond $80 a barrel, averaging about $60 over eight years. Any outlook statements for the next eight years to 2030 now are rare as the Russian-Ukraine conflict continues.

How oil prices will be in the next few years will depend on how quickly advanced economies shift to renewables or other energy sources, except oil, coal, and gas. The pace of growth by countries, including China and emerging economies, also matters. Climate change may also play a decisive role.

Ironing out supply kinks

At best, the presumptive president may be able to iron out supply kinks to ensure that the Philippines gets the commodities it needs, which would mean securing importations from alternative sources and bringing up to speed the supply of local food products.

Ensuring the continuous supply of wheat flour, which is the main ingredient of breads that Filipinos love, can be achieved with the cooperation of flour millers who know the world market only too well, as well as enhanced diplomatic relations with governments that can spare the Philippines with part of their produce.

The same applies to other imported products like fertilizers, corn, pork, chicken, beef, fish, vegetables, and even rice. Now is not the time to quibble about being too dependent on importation, and consequently neglecting local capability. This crisis is about keeping food on the table, and it matters little where they come from.

A bigger challenge will be in streamlining our local food chain, which includes ensuring that should another global supply crisis happen, the Philippines will be able to maintain a certain degree of self-reliance of essential produce from local farms.

Thankfully, the current shortage of local pork seems to be at its end, with growers more competently managing the spread of the African swine flu through improved biosecurity measures, as well as the restocking of pig farms after culling all of their heads during the epidemic’s height.

Battling high prices

While supply problems seem to have a more manageable and earlier resolution, the high price of food commodities will most likely persist for a longer time or for as long as oil prices remain at elevated levels.

The outgoing economic team has laid out a fairly comprehensive plan of action, of which most parts are now in effect, although this was premised on crude not going beyond $100 a barrel. Additional measures will have to be outlined by the incoming economic team.

The successive adjustments of basic wages mandated recently and the ongoing increases in transportation fares are two important developments that will exert additional inflationary forces on the Filipinos’ cost of daily living.

This will be a tough cookie for the president-elect even if he employs a whole-of-government approach while being the concurrent agriculture chief. Battling prolonged inflation or high prices could severely weaken the popularity of a head of state, even one that has been elected with a majority vote.

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