Advertisement

Let them eat cake?

Font Size
Marvin A. Tort

Static

Let them eat cake?

A quote incorrectly attributed to the infamous French royalty Marie Antoinette, “Let them eat cake,” is said to be more fiction than fact; invented, the offspring of a fertile imagination. But its context cannot be discounted. There are situations when food might be plenty, but not within the reach of common folks. Thus, the forced “trade” of cheap bread for more expensive cake.

Looking back at 2018, and noting what should matter to candidates and voters in May 2019, I believe that food should be the priority. Above anything else. One senatorial candidate correctly emphasizes the economy. However, he should focus more on food. For an economy might be growing on the back of infrastructure and services growth, but its people are still hungry.

In the third quarter and onto the fourth quarter, food supply has remained problematic, with supply bottlenecks driving up the price particularly of rice. While higher taxes and rising fuel prices also contributed to inflation, the increase in consumer prices, the impact of food shortages was just as significant. We thus need to address the problem with long-term solutions.

In October, the trade deficit was reported to have hit $4.21 billion as the country spent a lot more on imported items and earned less from exports, its sale of locally made goods to buyers abroad. This brought the excess of import spending over export earnings for January-October 2018 to $33.92 billion, from $20.13 billion in the same period last year.

The culprit? According to government statisticians, more than half of the imports in October were raw materials and intermediate goods, as well as capital goods used as inputs for production. However, the main imported commodity groups included cereals and cereal preparations; mineral fuels, lubricants and related materials; and, other food and live animals.

The Philippines, which cannot produce its own wheat for bread and noodles, regularly imports a big amount of wheat and cereals for food production. And with instant noodles, in particular, having become a cheap source of daily sustenance for the poor, the country’s import bill for bread and noodles production has also been going up. In 2018, wheat prices rallied.




Then, to address seasonal shortages in food supply caused by poor harvest or the closure of fishing areas to allow for breeding, the country had to import rice as well as frozen fish; chicken, pork, and beef; as it continues to import vegetables and fruits, dairy products and cheese products, processed food, and other food items.

With a growing population, I am deeply concerned that we are unprepared to continue producing sufficient food for our people. It is not always that we can import what we need, like when the government’s attempts to buy rice from abroad had all been rejected in numerous biddings because of low price offers. Importing food requires that (1) there is food to import; and, (2) there is money to pay for imported food.

But there are instances when other countries need to prioritize their own domestic market, especially when harvest or food supply is affected by weather disturbances or other factors. The Philippines might have money to buy imported food, but if nobody is willing to sell to us, then we would be in trouble. Shortages result in price surges and, ultimately, hunger. Above anything else, we need to focus on policies and programs that improve food production.

Take the case of China, which according to the South China Morning Post (SCMP), is struggling “to contain the spread of African swine fever, which has now reached the southwest of the country — one of its major pig-producing areas.” To date, according to SCMP.com, 18 of China’s 31 provinces and regions have been affected by the disease and more than 100,000 pigs have been culled in an effort to stop the virus from spreading.

If I am not mistaken, we import pork from China. Although I am not certain from which part of China in particular, I believe any disruption in China supply will also have an impact on us. Worse, that African swine fever actually hits us, and forces us to cull local pigs to fight the virus. SCMP notes that there is no vaccine or cure for the virus, and the mortality rate can hit 100%.

In 2018, imported wheat also became expensive. A report by Bloomberg noted that the price rally was the result of “drought across Europe and the Black Sea region, which bolstered worries over exports. Russia, the world’s top seller, collected a smaller crop for the first time in six seasons. The weather concerns helped push prices to a three-year high in August.”

This coming year, however, a glut, as well as a price drop, is seen, which should be good for wheat importers like the Philippines. Bloomberg.com noted that as wheat’s “price proves to be more attractive than competing crops, there are signs that farmers across the globe are sowing more acres for the first time in four years. The increased plantings are expected to swell global supplies at a time when demand remains tepid.”

In the US, CNBC reported recently that in fall 2019, major retailing giant Costco would open its own chicken farming operation in eastern Nebraska that would provide the Costco chain with 100 million chickens, or 40% of its yearly chicken needs. Costco wants to mitigate the “chicken monopoly run by the likes of [US food producers] Tyson, Pilgrim’s Pride and Perdue.”

And in Vietnam, according to vietnamnews.vn, a government program with a $4.3-billion fund targets to create 15,000 agriculture cooperatives by 2020, with 1,500 cooperatives expected to make use of advanced technologies in daily farming. The program also aims to improve the efficiency of 4,400 cooperatives, while “weak” cooperatives will be dissolved or changed.

Almost everybody around the world is now either grappling with food supply issues or is working to mitigate supply problems by initiating projects and programs that can boost food production and supply. We should do the same here, if not more extensively, considering our over 100 million population. We need long-term solutions to feeding problems.

Instead, we have had to penalized banks reportedly with over P6 billion in fines in the last two years for not lending to agriculture and agrarian reform ventures at levels required by law. And, while the fines raised more money for the government, the punitive action has not actually helped improve food production.

Also, even as most of the fines go to the Philippine Crop Insurance Corp. (PCIC) as well as the agriculture guarantee fund pool managed by the state-run Land Bank of the Philippines, and only a small portion goes to the Bangko Sentral ng Pilipinas, these funds do not directly or actively promote food production.

Under Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009, 15% of bank loans should go to agriculture and 10% should go to agrarian reform to beneficiaries. At present, however, it appears that banks would rather pay penalties than lend to farmers, who are normally seen as poor credit. Farmers thus rely more on traders, than banks, for credit.

In terms of directly boosting agriculture, particularly food production, it is obvious that the Agri-Agra credit law does not work. So, while there is little chance that Congress will choose to amend or repeal the law in an election year, 2019, there should still be moves to produce and circulate research, data, and studies that can pave the way for draft remedial legislation.

We need more farm- and food-related programs that actually work. Programs, projects, and policies that will actually boost food supply and keep food prices down. After all, what would be the point in improving the supply of expensive rather than affordable food items. Fancy sweet cake over cheap but filling bread should not be a choice that we are forced to make.

Top 10 Philippine Imports from all countries

 

Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com

Advertisement