February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Agricultural imports are likely to remain amid rising prices

TIM MOSSHOLDER-UNSPLASH

The PHILIPPINES under President Ferdinand R. Marcos, Jr. are likely to rely on conventional ways to deal with food security, including a bias towards imports, amid rising global prices, political analysts said.

“With decades of neglect of the agricultural sector and continued conversion of farmland, reversing our dependency on imported food will be a major challenge,” said Joseph M. Purugganan, program coordinator at policy think tank Focus on the Global South Facebook Messenger Chat.

He also cited land grabs, incomplete implementation of agrarian reform and attacks on land rights defenders.

“The economic policies that are being introduced, the managers tasked with guiding implementation, and the trend towards partnerships with the private sector underscore the reliance on conventional ways of tackling agricultural problems,” he added.

Mr. Marcos took over the helm of the agriculture department at the start of his six-year presidency in June, vowing to solve decades-old problems limiting agricultural output growth. He pledged to step up food security efforts, which experts say should be a priority amid the Russian invasion of Ukraine, which has exacerbated supply chain disruptions and pushed up inflation.

The president had promised to step up his administration’s food self-sufficiency campaign after the war drove the prices of some agricultural inputs, such as oil and fertilizers, to record highs.

“Those who are not to blame for provoking it, [yet they] at greatest risk of hunger,” said Mr. Marcos in his inaugural address. “When financial aid flows into them, when it never does, there is nothing to buy,” he said of the poor, adding that the agricultural sector “cries out for the urgent attention that its neglect and misdirection now demands.”

Observers initially described Mr Marcos’ agricultural policies as protectionist after he promised to limit imports “as much as possible”. He had shown a willingness to deviate from the food policies of former Philippine presidents, including his predecessor Rodrigo R. Duterte, who extended until the end of 2022 an executive order cutting most beneficiary nations’ tariffs on pork, corn, rice and coal.

But Mr Marcos’ pledge to cut, if not minimize, food imports has yet to materialize amid record inflation and tight supplies.

“Unlimited imports of agricultural commodities and smuggling have continued unabated,” Jayson H. Cainglet, CEO of Samahang Industriya ng Agrikultura, said of Viber. “It could get worse.”

“Equally unfortunate is the continued mindset of this government’s economic team to rely on imports as the sole anti-inflation measure,” he said. “These players, along with importers, are the main drivers to further reduce tariffs on rice, corn, pork and mechanically deboned chicken.”

Mr Cainglet, whose group has lobbied against plans to import more, said local farming stakeholders appear to have lost the battle to “groups trying to maintain the status quo”.

The Philippines imports much of its food and supplies, leaving the Southeast Asian nation vulnerable to imported inflation. The government expects inflation to somehow subside in 2023.

“We will continue to work towards a lasting change in the country’s agriculture and food strategy, where food self-sufficiency, highly localized and diversified agricultural production and significant rural livelihood opportunities are the explicit starting points,” Mr. Cainglet said.

“No country has ever developed without first developing its agricultural sector to produce staple foods and the necessary commodities in excess of the country’s needs,” he added. “Importation should only be a last resort and not a government policy.”

Leonardo A. Lanzona, who teaches economics at Ateneo de Manila University, said the Marcos government should seize the opportunity next year to boost local food production and exports.

“For many years we have strived for self-sufficiency and we have realized how costly that is,” he said in a Messenger chat. “Food security without self-sufficiency should be our goal. We should ensure that food imports are available when we need them. We need to generate exports to maintain this food safety process.”

The Philippine peso plummeted to a record 59p against the dollar in September, naturally supporting exports and local consumption, although it has fallen to the p55 level on dollar inflows from Filipino migrants and the central bank’s dovish view on future rate hikes is.

The government should push the “mechanization” of the agricultural sector to boost export earnings, Mr Lanzona said. “Our agriculture should have been mechanized by now. Workers have moved away from farming and focused mostly on services, and the land devoted to farming has been reduced.”

But this should be complemented by efforts to increase farmer productivity, he said. “Increasing productivity requires investment in innovation and training.”

Agriculture contributes about one tenth to the Philippine economy. Agricultural output value rose 1.8% in the third quarter after falling 0.6% in the previous quarter and 2.6% a year ago, according to data from the local statistics agency.

Mr Lanzona said the government should help the agricultural sector diversify its crops to boost export earnings and sustain imports. “By moving towards more trade, we can link industry more closely with agriculture,” he added.

Roy S. Kempis, a retired professor at Pampanga State Agricultural University, said public and private actors should prioritize local demand over foreign markets to counter inflationary pressures. He expects the Marcos government to seek more intergovernmental deals to secure inputs such as oil and fertilizers for Filipino farmers.

AGRICULTURAL INFRASTRUCTURE
The national government should work closely with local governments, whose share of national taxes has increased, to ensure a large part of their increased budgets is used to increase local agricultural production, said Michael Henry Ll. Yusingco, a political analyst.

The government should also draw up a comprehensive agriculture plan that should involve local governments, he said in a Messenger chat.

“There is no question that local government entities with agriculture as the main economic engine should use the increase in the national tax allocation to allocate more resources to the agricultural sector,” he said.

“But it’s not just about devoting a large part of their budget to farming activities in their respective places. It’s also about aligning these with national government to encourage agriculture for the rest of the country,” he said. “It is crucial that there is a comprehensive and coordinated plan to reform the agricultural sector.”

Mr Yusingco said Mr Marcos should appoint an agriculture minister who will focus on harnessing the potential of greater local government tax share for rural productivity and farm reforms.

“Cooperation and cooperation between national and local governments is the only way to ensure upgrading of our agricultural sector,” he said. “The leadership of the Department of Agriculture is absolutely critical to ensuring that this collaboration and collaboration takes place.”

Terry L. Ridon, public investment analyst and head of think tank InfraWatch, said the government should “look at agricultural infrastructure as an integral part of the overall infrastructure push.”

“It should have the same priority and national impact as the need to build more roads, bridges and rails,” he said in a Messenger chat, noting that the 2023 agriculture budget is insufficient to make agricultural infrastructure resilient to strong to make typhoons.

“It’s not enough to take breakthrough steps in infrastructure building and self-sufficiency,” he said.

Located along the typhoon belt in the Pacific, the Philippines experiences about 20 storms each year. It is also in what is known as the Pacific Ring of Fire, a belt of volcanoes around the Pacific Ocean where most of the world’s earthquakes occur.

“The main problem related to damage to agricultural infrastructure during typhoons has been the government’s failure to modernize, retool and retrofit existing infrastructure to cope with the changing climate,” Mr Ridon said.

“This may require changes in infrastructure priorities at local and regional levels, with less focus on projects open to the public and more on projects that can improve agricultural outcomes in the countryside,” he added. — Kyle Aristophere T. Atienza