By Luisa Maria Jacinta C. Jocson, Reporter
India’s ban on wheat exports may cause wheat-dependent countries to shift to rice, with the resulting demand threatening to pressure rice prices upwards, a Department of Agriculture (DA) official said.
“One of the medium-term impacts is if they cannot access wheat, they might switch their demand to rice, and the problem is that if there’s going to be a rush to buy rice, that will lead to increase in demand and increase in prices,” Undersecretary Fermin D. Adriano said in an e-mail.
“Russia and Ukraine combined produce about 30% of all the wheat in the world. Any further tightening of the supply will definitely aggravate (the situation). There are quite a number of countries in the Middle East and sub-Saharan areas that are wheat-eating. A lot of things will worsen because of access, especially in wheat-eating countries,” according to Mr. Adriano, who is the undersecretary for Policy, Planning and Research.
On May 14, India announced that it was banning wheat exports due to the heat waves which have suppressed crop yields, sending domestic prices upwards.
Earlier in the year, India set a preliminary estimate for exports of as much as 12 million tons in 2022-2023.
“The country’s main (wheat import) source was Ukraine, and since the Russian invasion, our country’s biggest source is India,” Feedmix Specialist II, Inc. Vice-President Norberto O. Chingcuanco said in a Viber message.
“The export ban will definitely pressure global wheat prices. The use of wheat is not all replaceable by corn,” he added.
Samahang Industriya ng Agrikultura Executive Director Jayson H. Cainglet said that global wheat prices have increased by 20% due to the Ukraine crisis.
“The impact (of the ban) is already being felt because we haven’t found any alternative suppliers,” he said.
Cooking oils, cereals and meats hit all-time highs as a result of the Ukraine invasion, pointing to key food commodities becoming 30% more expensive year on year, Mr. Cainglet said, citing a report by the United Nations.
“We have been saying this for a long time. We cannot rely on the vagaries of the international market,” he added.
Mr. Adriano also said that the ban will affect the livestock industry, as inferior grades of wheat are primarily used to make animal feed.
“About three million metric tons (MT) of wheat feed is being produced annually to fill the gap. If wheat feed supply is not enough, we would only be able to access it at a very high rate,” Mr. Adriano said.
“In other words, the animal feeds sector will be badly affected by it, from hogs, poultry, and aquaculture. If the animal inputs rise, it will affect the final output price. That’s the reason why we are saying there’s a looming food crisis in the second half of the year,” he added.
Mr. Cainglet said the way to mitigate the effects of the global crisis is to support local production, subsidize farm inputs and help farmers across the whole production chain.
“All countries will naturally protect their own domestic markets first. It is truly tragic that in the Philippines, we import first and lower tariffs,” he said.
“Up to their final days at the DA, they are still pushing the reduction of tariffs on pork, rice and corn; instead of doubling their efforts in helping local farmers cope with the increasing cost of production,” he added.
Economists said that the struggle to procure wheat heralds possible inflation pressures.
“With India being a major supplier of wheat, a ban on wheat exports would hurt the Philippines, which is already struggling to source the staple after the Ukraine war. The Philippines used to import wheat from Ukraine,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.
He said that energy shortages will also likely drive up the cost of basic commodities.
“Domestic inflation has moved well past its target and is threatening to surge to multi-year highs as food items related to wheat will edge higher. Meanwhile, substitutes for these food items will also become more pricey as Filipinos seek alternatives. This will crimp consumption and slow overall economic activity. With how constrained supply chains are at the moment, we could very well have to brace for faster inflation,” Mr. Mapa added.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said Philippine firms might also look elsewhere for wheat supply.
“They can continue to import for their inputs and bear the higher cost that can compress their margins to keep their market share especially at a time when demand is recovering, which I think is what is happening to many producers because of these supply-chain challenges,” he said in an e-mail.