By Vonn Andrei E. Villamiel, Reporter

FOOD PRICE GROWTH is expected to accelerate in the second quarter, as higher oil prices begin to flow through into the prices paid by consumers via elevated transport and farm production costs, analysts said.

Danilo V. Fausto, president of the Philippine Chamber of Agriculture and Food, Inc., said prices and supply of food and agricultural commodities are likely to remain steady in the first quarter but could accelerate afterward.

“This will pose a problem in the second quarter. Prices will be affected because of transport costs brought about by increases in oil prices and fertilizer costs,” he told BusinessWorld via Viber.

Mr. Fausto said the surge in agricultural production costs, coupled with a weaker peso, will result in upward pressure on food retail prices beginning next month.

Raul Q. Montemayor, national manager of the Federation of Free Farmers, said the impact of rising input costs will have a bigger impact on the next harvest season, but consumers may already be feeling price pressures earlier due to market speculation.

“We will see the impact in the next harvest later this year, although prices will start to creep up before that due to speculation about lower output and higher costs of production,” he told BusinessWorld via Viber.

The Philippine Statistics Authority reported price increases in various key food commodities in early March. Prices of well-milled rice and regular-milled rice rose 3.8% and 2% year on year, respectively.

It also reported higher prices for fish, including galunggong (round scad, 3.4%), tilapia (5.1%), and bangus (milkfish, 10%).

BMI, a unit of Fitch Solutions, said the Asia-Pacific region faces risks from food supply disruptions in the coming months.

“Asia-Pacific economies now confront rising risks of physical shortages of not just energy in the form of oil and gas, but also of fertilizers and — by extension — food possibly later in the year,” it said.

BMI said fertilizer costs are already rising, with urea prices increasing roughly 25% since the onset of the war in the Middle East, and further increases are likely if the conflict grinds on.

The Gulf Cooperation Council is a key supplier of fuel-derived nitrogen fertilizers. BMI said as much as a third of the global nitrogen fertilizer trade could be disrupted by prolonged gas supply issues.

Such disruptions come at a critical time, as the Philippines, Vietnam, Pakistan, and Sri Lanka enter key planting seasons for rice and corn in April and May.

“The disruption coincides with key planting and fertilizer application periods across the region, potentially affecting yields if shortages persist through the growing season,” BMI said.

Mr. Montemayor said the Philippines has to prepare starting midyear, particularly during the July to September period, when there will be minimal harvests.

“During this lean period, we have no choice but to rely on imports, and it will be influenced both by the availability and price of imports that could be affected by the Iran war,” he told BusinessWorld via Viber.

Mr. Montemayor said higher fuel and input costs could either raise production expenses or force farmers to cut back on key inputs such as irrigation and fertilizer, which in turn could lead to lower output and tighter food supplies.

Apart from crop-based commodities, the Department of Agriculture (DA) has said it expects tighter supply and higher prices for fishery products by midyear due to rising fuel costs and the upcoming lean season.

“Right now, our fishermen are still earning. But if fuel prices remain high by May or June, our fishermen may not be able to fish, which could lead to a shortage,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said.

As a contingency measure, the DA is prioritizing aquaculture, particularly tilapia and bangus, to help stabilize supply.

“We are pushing our aquaculture industry to seed more fingerlings this summer so that  by May or June, we will have an ample supply of fish,” Mr. Laurel said.

He also cited imports as a fallback option, with the DA recently approving imports of up to 250,000 metric tons of fish starting August.

THE PHILIPPINES can tap adequate supplies of rice from its source markets overseas after rice farmers planted less last year due to low farmgate prices, Agriculture Secretary Francisco P. Tiu Laurel, Jr. said.

“Many farmers did not plant late last year due to low palay (unmilled rice) prices,” he told BusinessWorld via WhatsApp, adding that the Philippines is “lucky” that the expected decline in first quarter output is not as severe.

The Philippine Statistics Authority (PSA) forecast palay production to decline 7.1% year on year to 4.36 million metric tons (MT) in the first quarter, based on the standing crops as of Feb. 1.

The area to be harvested is estimated to drop 6.2% year on year to 1.08 million hectares, the PSA said.

Mr. Laurel said rice supply remains sufficient in major suppliers such as Vietnam, India, and Myanmar, but added that freight costs will be the main component affecting the price paid by consumers due to the Middle East crisis.

Meanwhile, Mr. Laurel said rice imports this month could slightly exceed the initial projection of 150,000 MT per month in March and April.

“It might exceed a bit. There is no real cap — it is just a sort of gentlemen’s agreement (between the DA and importers) to help farmers during the peak of the harvest,” he said.

As of March 12, rice imports topped 103,000 MT, according to the Bureau of Plant Industry. — Vonn Andrei E. Villamiel