EDITORIAL - Easing food importation

With food-fueled inflation accelerating for the second straight month in March, and the latest surveys showing rising prices still the top concern of Filipinos, the government’s has once again opted for its go-to response: increased importation.

The 3.7 percent increase in the consumer price index last month from the 3.4 percent in February was within the 3.4 to 4.2 percent forecast of the Bangko Sentral ng Pilipinas. Food, however, accounted for the biggest component of the CPI increase, at 5.7 percent – its highest since November last year. And prices of rice – a sensitive commodity for the Marcos administration – registered their steepest hike at 24.4 percent, accounting for nearly half of the headline inflation. This was the sharpest increase in rice prices since the 24.6 percent in February 2009.

Last week, as rice retail prices rose by P2 per kilo according to government monitoring, President Marcos ordered the easing of non-tariff barriers and procedures for the importation of agricultural commodities. These barriers include licensing systems, quotas and regulations. The President’s Administrative Order No. 20 dated April 18 also directed the Bureau of Customs to speed up the processing and release of agricultural imports.

Timely importation, when domestic production is low, can stabilize supply and prices of agricultural commodities, as the nation learned during the onion crisis of 2022. Sometimes, however, even massive importations fail to bring down prices of farm products, which has been the case with white refined sugar. As sugar prices surged into the stratosphere, food-fueled inflation also jumped, with confectionery and other sweetened food products accounting for the biggest component. There was the usual talk about pursuing hoarders, price manipulators and technical smugglers, with speculation swirling about a well-connected cabal raking in billions from the dizzying retail prices. If any serious probe was conducted, however, the outcome is unclear. Sugar prices began softening from exorbitant highs only in mid-2023.

The President’s order to relax food importation barriers must be balanced with the need to raise the productivity and competitiveness of the domestic agriculture sector. Even before the order came out, domestic producers of certain agricultural commodities were already complaining about a flood of imports pulling farmgate prices so low it was endangering the livelihoods of small-scale farmers and livestock breeders.

Easing farm import barriers is meant to tame food inflation. This quick fix must be employed without further weakening domestic agricultural production, which could pose long-term risks to the nation’s food security.