THE PHILIPPINES is among the most vulnerable to food price shocks, and must enter into regional agreements to ensure supply and increase efficiency in domestic production, Moody’s Investors Service.

The Philippine consumer price index basket of goods is heavily weighted towards food and energy, making the indicator sensitive to price volatility in those commodities, Moody’s said.

“Food security has become a major concern for governments in Asia-Pacific as the Russia-Ukraine military conflict continues to disrupt the supply and raise the cost of agricultural products, especially cereals and vegetable oils, as well as fertilizers and other agricultural inputs,” Moody’s said.

Net food import dependence in key cereals consumed in Asia, such as rice and wheat, was found to be high in the Philippines based on trade data.

“Rising commodity prices may prompt governments in Asia-Pacific to invest in agricultural supply chains and crop yields to enhance domestic production, particularly in more vulnerable economies,” the report said.

“More targeted support to smaller farmers through agricultural reforms, such as access to rural financing and value-chain infrastructure, would be positive for agricultural employment, especially in economies with a large agrarian sector, and in enhancing overall food security,” it added.

According to the Food and Agriculture Organization, there were 768 million undernourished people globally in 2020, of which 54% were in Asia.

A number of economies in the region with the highest social risks, according to a Moody’s estimate of environmental, social and governance risks, are also low-income.

“Compensating for domestic food price increases will entail fiscal costs for governments or state-owned commodity companies. The pace of fiscal consolidation in some of these economies is likely to slow as spending pressures persist,” according to Moody’s.

“The economic slowdown, and job and income losses over the past two years, have also disproportionately affected vulnerable countries and communities, rendering them more susceptible to higher commodity prices,” it added. — Luisa Maria Jacinta C. Jocson