Farm imports likely to stay amid spiraling prices

THE PHILIPPINES under President Ferdinand R. Marcos, Jr. is likely to rely on conventional ways of dealing with food security, including the bias for imports, amid spiraling global prices, political analysts said.

“It will be a huge challenge to reverse our food import dependence given the decades-old neglect of the agriculture sector and continued conversion of agricultural lands,” Joseph M. Purugganan, program coordinator at policy think tank Focus on the Global South, said in Facebook Messenger chat.

He also cited land grabbing, incomplete agrarian reform implementation and attacks against land rights defenders.

“The economic policies that are being put in place, the managers tasked to lead the implementation and the bias for private sector partnerships underscore the reliance on conventional ways to address agriculture problems,” he added.

Mr. Marcos at the start of his six-year presidency in June took the helm of the Agriculture department, vowing to fix decades-old problems that constrain farm output growth. He vowed to boost food security efforts, which experts said should be prioritized amid Russia’s invasion of Ukraine that worsened supply chain disruptions and pushed inflation higher.

The president had promised to boost his government’s food self-sufficiency campaign after the war pushed the prices of some farm inputs such as oil and fertilizer to record high.

“Those bearing no blame for provoking it, [yet they] face the biggest risk of starvation,” Mr. Marcos said in his inaugural address. “If financial aid is poured into them, though it never is, there is nothing to buy,” he said of the poor, adding that the agriculture sector “cries for the urgent attention that its neglect and misdirection now demands.”

Observers initially described Mr. Marcos’ agriculture policy as protectionist after he vowed to limit imports “as much as possible.” He had shown willingness to veer away from the food policy of former Philippine presidents, including his predecessor Rodrigo R. Duterte, who extended until the end of 2022 an executive order that slashed the most favored nation tariff rates on pork, corn, rice and coal.

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

“Unlimited importation across agriculture commodities and smuggling have remained unabated,” Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, said via Viber. “It might worsen.”

“Equally regrettable is the continuing mindset of the economic team of this government to rely on imports as the only measure to fight inflation,” he said. “These actors, together with the importers, are the main drivers to further lower the tariffs on rice, corn, pork and mechanically deboned chicken.”

Mr. Cainglet, whose group has been lobbying against plans to import more, said local agriculture players seem to have lost the battle to “groups that try to maintain the status quo.”

The Philippines imports much of its food and farm inputs, making the Southeast Asian nation vulnerable to imported inflation. The government expects inflation to somehow start easing in 2023.

“We will continue to work for a permanent shift in the agriculture and food strategy of the country, where food self-sufficiency, much localized and diversified agriculture production and significant rural livelihood opportunities are the explicit starting points,” Mr. Cainglet said.

“No country has ever developed, without first developing its agriculture sector to produce staples and the necessary raw materials beyond what the country needs,” he added. “Importation should only be a last resort and not a governmental policy.”

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

“For many years, we have been aiming for self-sufficiency, and we have realized how costly it 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 sustain this food security process.”

The Philippine peso plunged to a record P59 level against the dollar in September, which naturally favors exports and local consumption, though it has eased to the P55 level amid dollar inflows from migrant Filipinos and the central bank’s hawkish view on future interest rate increases.

The government should push the “mechanization” of the agriculture sector to boost export revenue,  Mr. Lanzona said. “By this day and age, our agriculture sector should by now be mechanized. Workers have moved out of agriculture into mainly services and the land devoted to agriculture has been reduced.”

But this should be complemented with efforts to increase farmers’ productivity, he said. “To increase productivity, investments in innovation and training are necessary.”

Agriculture contributes about a tenth to Philippine economic output. Farm output value rose by 1.8% in the third quarter after declining by 0.6% a quarter earlier and by 2.6% a year ago, according to data from the local statistics agency.

Mr. Lanzona said the government should help the agriculture sector diversify its crops to increase export revenue and sustain imports. “Moving toward more trade, we can link industry more to agriculture,” he added.

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

AGRI INFRASTRUCTURE
The National Government should work closely with local governments, whose share in national taxes has risen, to ensure that a big chunk of their increased budgets are used to boost local agriculture output, said Michael Henry Ll. Yusingco, a policy analyst.

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

“There is no question that local government units with agriculture as their primary economic driver should utilize the increase in the national tax allotment to put more resources in the agriculture sector,” he said.

“But it’s not just about devoting a huge chunk of their budgets for agriculture activities in their respective localities. It’s also about aligning these with the National Government in boosting agriculture for the rest of the country,” he said. “It’s critical that there is a comprehensive and coordinated plan to reform the agriculture sector.”

Mr. Yusingco said Mr. Marcos should appoint an Agriculture secretary who will focus on harnessing the potential of local governments’ bigger tax share for rural productivity and agriculture reforms.

“The cooperation and collaboration between the national and local governments are the only way to ensure the elevation of our agriculture sector,” he said. “The leadership of the Department of Agriculture is absolutely crucial in making sure this cooperation and collaboration happen.”

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch, said the government should “consider agriculture infrastructure as integral to 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 agriculture budget for 2023 is insufficient to make farming infrastructure resilient to strong typhoons.

“It is insufficient to undertake game-changing strides in infrastructure-building and self-sufficiency,” he said.

The Philippines lies along the typhoon belt in the Pacific and experiences about 20 storms each year. It also lies in the so-called Pacific Ring of Fire, a belt of volcanoes around the Pacific Ocean where most of the world’s earthquakes strike.

“The main problem relating to agriculture infrastructure damage during typhoons has been the government’s failure to upgrade, retool and retrofit existing infrastructure to deal with a changing climate,” Mr. Ridon said.

“This might require changes in infrastructure priorities at the local and regional levels, with less emphasis on public-facing projects and more on projects that can improve agriculture outcomes in the countryside,” he added. — Kyle Aristophere T. Atienza

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