Enough

On paper, we have more vaccines than we need. But that is on paper.

Finance Secretary Carlos Dominguez announced that the Philippine government, a consortium of private companies and local government units are expecting to receive about 178 million COVID-19 vaccine doses. That is enough to inoculate 92 million Filipinos.

Since 40 million Filipinos are below the age of 18, we need to inoculate 70 million to achieve total coverage. At about 50 million, we should have achieved herd immunity. But since teeners, tweeners, adolescents and toddlers also get infected and circulate the virus, it should be a useful target to have all adults vaccinated.

A total of P82.5 billion is being readied for vaccine procurement. Government is targeting $1.30 billion in loan financing from multilateral banks to buying vaccines. This includes the Asian Development Bank (ADB), the World Bank (WB) and the Asian Infrastructure Investment Bank (AIIB). The private sector and some LGUs are putting together their own financing. From the loan financing, we expect to purchase 106 million doses.

The Philippines contributed $84 million to the COVAX facility. This facility was put together at the initiative of the World Health Organization (WHO) to ensure that poorer countries will get the vaccines. They will purchase in bulk and distribute the vaccine to the participating countries.

For our contribution, we will be receiving 40 million doses of vaccine from COVAX. These doses will probably be the first ones available for our people.

Last week, Johnson & Johnson released results of its trials. Its single dose vaccine is acceptably efficacious.

This week, Russia’s Sputnik vaccine was found to be 91 percent effective. If this vaccine is cheaper, and if we decide to avail of it, we will have more than enough funding ready. According to preliminary reports, Sputnik appears most benign in terms of side effects.

The reason we have funding for more doses than we require is to create a margin for possible slippages or delays in delivery. The demand for the vaccine is far larger than the potential supply at the moment. We do expect mass production of the vaccines in India and China farther down the road. But we are not betting supply will be sufficient until much later.

Vaccination will be the real challenge from hereon. Inoculating 70 million Filipinos will be the largest logistics operation we will undertake. We see in the case of the US that vaccination lagged behind the delivery of the vaccines despite a much more robust logistics system.

Our LGUs have started dry runs for the massive vaccination program. This whole operation will put a great strain on our cold chains and health systems. Hopefully, we can get the vaccinations done in less than the three years originally estimated to complete this.

Capped

Imposing a price cap on vital commodities is the easiest thing to do – and it wins the most popularity points. But most usually, capping prices produces shortages and creates a worse situation for consumers.

Last week, President Duterte issued Executive Order 124 that imposed price ceilings on pork and chicken products. Immediately, the Department of Agriculture pleaded to delay implementation of the price caps for a week to prepare both the producers and retailers.

When the price caps take effect next week, we could see pork and poultry products simply disappear. Vendors in the wet markets are now threatening to stop selling pork and poultry. If farm gate prices remain the same, they will lose money because of the retail price caps.

At the same time, hog and poultry producers are now threatening to stop production if they are forced to bring down farm gate prices. They claim that the costs of production, especially of feed inputs, have escalated. They will lose money if they continue to produce, raising the specter of emptied hog and chicken farms. That will translate into longer term supply problems.

Hog raisers, in particular, are still recovering the costs of culling that happened when the African Swine Fever hit us. Food processing costs of meat products are also higher.

To make matter worse, several provinces are now trying to protect their own pork and chicken production by prohibiting egress. The supply chain could be cut because of this, aggravating the situation.

Price caps are arbitrary impositions on the retail end of the supply and value chains. They do not address the cost-push occurring through the length of these chains. Too often, price caps lead to disruption in production rather than encourage the growth of supply to meet demand.

Price caps are effective weapons when speculation is the cause of spiking prices. But if the cause of rising prices is escalating costs of production, price caps are often counterproductive.

There are a hundred reasons why pork and chicken prices have been rising. Some relate to losses due to culling or to flooding. Some relate to increased feed prices, especially their imported inputs. Because China culled millions of hogs last year, the supply problem here is region-wide. Transport and storage costs have risen. Processing and canning costs are up.

The 60-day price cap imposed by executive order will not solve all the reasons why prices are rising. It did not allow time to place orders and complete importation to address supply issues. There is no complete program to bring down production costs. It will penalize retailers but not wholesalers.

Therefore, it will be disruptive but not curative. The situation could be compounded if this thing ends up in the closure of piggeries and poultry farms.