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Philippines
Thursday, March 28, 2024

From electoral tsunami to a perfect storm

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By Angelito Banayo

“How shall we confront a food crisis like no other?”

Despite all the petitions filed in the Supreme Court seeking to disqualify Ferdinand Marcos Jr., there is an inevitable political reality that we all have to accept: the people have spoken, and sed lex notwithstanding, the high tribunal is likely to invoke political doctrine.

The election of the FM Jr. tandem with Inday Sara Duterte by a whopping majority of the popular vote has been described by many as an electoral tsunami, the first time since elections held under the 1987 Constitution elicited a majority vote for the president and vice president.

Even the hugely popular Erap Estrada in 1998 received only 39.86 percent of the vote and PNoy Aquino after the death of his mother President Cory managed to get less than a majority, at 42.08 percent of the total vote.

58.74 percent of the electorate is indeed a political tsunami, which gives the incoming president an opportunity he should not waste. Except for Vice-President Leni Robredo, his major opponents have conceded and wish him well, for the sake of the benighted land.

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Early days though, there is an on-rushing storm. It is a problem that the incoming president, and a supportive Congress will have to immediately address.

I refer to the affordability, nay, even the availability of food for a teeming population of 109 million, some 25 percent of whom are in hand-to-mouth survival conditions.

The looming food crisis comes as a combination of many factors, the immediate trigger of which is the Russia-Ukraine conflict in Eastern Europe, which has brought the price of oil and gas to stratospheric levels. Ominously, it has also created a supply bottleneck on food, principally wheat (one-fourth of total world supply comes from these two war-stricken nations), cooking oil (Europe and North Africa are heavy consumers of sunflower oil, of which Ukraine and Russia produce 75 percent of total production), corn, potatoes and barley.

Some 90 million tons of grain are stuck in the Black Sea ports of Odessa and Mariupol. The nearest available port, Constanza in Romania, is incapable of handling such huge supplies and the landline to the Ukraine is largely impassable.

But even if Russia had not invaded Ukraine, climate change and the resulting unpredictable weather patterns have wrought havoc on the production of staple food, whether in Brazil or the USA plagued by droughts, or in China with incessant rains and flooding of its plains. To all these, add the lingering effects of a mutating coronavirus, which has disrupted supply chains, locked down work forces, and created logistical nightmares throughout the world.

Now, the average Filipino might say: so what if pan de sal becomes smaller, and tasty (pan Americano) becomes more expensive? There’s always good old rice, the price of which has been relatively stable in the past two years because of heavy importation.

Well, imports of our staple food will become more expensive, as consumers, used to bread as their staple, start substituting rice for their daily diet. Many may think that is far from reality, but hunger finds substitute carbohydrates.

Unfortunately, rice is a grass that grows well only in a few countries, within a certain latitude close enough to the equator. And it requires a lot of water which is increasingly becoming scarce. It takes 3,000 to 5,000 liters of water to grow a kilo of rice, depending on variety and soil conditions. And the world’s top producers of rice, principally Thailand, India, Vietnam, Pakistan, Myanmar, even Cambodia, are heavy consumers of rice as well.

It is only their surplus production that they export to nearby countries like the Philippines, Indonesia, Malaysia, and China, and to far-away Middle Eastern and African consumers. That surplus, or what we call “tradeable” supply of rice, amounts to just about 8 percent of total production, a very thin volume to support regular consumption of importing countries such as ours, plus the substitute demand as a result of wheat scarcity.

Other than the impact of huge imports of rice, our palay farmers are saddled with the prohibitive cost of fertilizers. A year ago, one sack of the input cost P900; today it has tripled to P2,800 per bag. Inorganic fertilizers are derivatives of petroleum, so there.

Environmentalists may say we should go organic, but it’s too late for that. The Rajapaksas of Sri Lanka prohibited chemical fertilizers, going green, they claimed. The result, apart from a huge foreign debt? Food shortages and high prices drove them out of office very recently.

Because input costs have increased, our small palay farmers, mostly agrarian reform beneficiaries, have reduced the use of fertilizers, so output per hectare will substantially drop. Unless the government saves agriculture through good programs and hefty subsidies properly implemented, the farming sector will be in extremis.

But enough of the problems, which also affects all kinds of food items, whether meat and poultry dependent on corn and soybean meal for feeds, or fish where fishermen have to shell out double the cost of petrol for their motorboats, or even vegetables reeling also from fertilizer costs and everything else saddled by higher transport costs. So much has been written about the problems.

The issue is, what can be done, and soon?

If there are strong typhoons in the latter half of this year, flooding our central Luzon plains, destroying soon to be harvested palay and other crops, we will be facing a massive food crisis very, very soon. In fact, even if the weather cooperates, the food crisis will be upon us.

In September of 2017, alarmed by reports that NFA’s rice inventory was down to 8 days of the national consumption, this writer was asked by Pres. Duterte to write an instant memorandum on what measures should be done. I advised him to do an immediate government-to-government import of the staple, and if he could not trust his appointed bureaucrats to do it right, he could always call the Prime Ministers of Vietnam and Thailand and seek immediate relief. He was at the time also the chair of the ASEAN.

In 2008, Pres. Gloria Macapagal Arroyo’s government was faced by a similar crisis, and Metro Manilans were lining up for meager supplies of rice, the result of a steep rise in world prices, abetted by our government’s miscalculations.

Frantic calls to Vietnam officialdom saved the day, as they even sold part of their reserves to a rice-strapped ASEAN brother.

I informed Pres. Duterte that if we were beset by strong typhoons during the harvest season in 2017 which was about to begin, rice prices would shoot up by November, and we may even have a dire shortage of the staple. Fortunately, there were no strong typhoons in 2017, but the yawning gap in government-held inventory remained till 2018, which was when rice prices spiked considerably.

The economic managers saw this as an opportunity to get Congress to pass the Rice Tarrification Law, which substituted 35 percent tariffs for quantitative restrictions, castrated the National Food Authority, and left the market completely to the private sector. There will be time to discuss the RTL later, as our farmers blame it for the drop in the farmgate price of their palay output, and their losing out to imported rice. To be sure, food inflation has somehow been tamed by stable rice prices in the market.

Still, it is never the right policy to sacrifice the production sector to favor the consumers. Food security is national security, and relying on food imports is fraught with external dangers, such as the storm we now face.
But for now, how shall we confront a food crisis like no other?

Let me give my two cents worth of proposals.

Firstly, Congress, at the instance of the incoming Speaker, should study giving the Chief Executive “emergency powers” to deal with the looming crisis. There is no time to tarry. The opposition and even the strict guardians of the usual procurement processes will quibble about this proposal, and say these powers may be abused, but hey, food is very basic. No matter our misgivings, we have to deal with a paramount necessity.

There is an ASEAN plus Three (APTERR) mechanism forged in our time among the ASEAN countries plus China, Japan and Korea, to help each other, but the mechanisms are intended for calamity response. Efforts outside the APTERR agreement must be done on a bilateral government-to-government basis.

Congress gave then-Pres. Fidel V. Ramos emergency powers to deal with the brownouts brought about by the lack of foresight of his predecessor, and whatever questions there may have been, with stranded costs and alleged short-cuts, the lights went on.

We can do no less with food.

We are a food insecure country, with some 12 percent of our people or three million of them, experiencing involuntary hunger, a number that is growing as we write this article due to food price inflation. And high malnutrition levels among our children have resulted in stunting and worse, breeding a nation of morons.

We cannot produce an abundance of food overnight. As we write, we are importing 15 percent of our rice consumption requirements. We import corn, soybeans, pork, beef, even galunggong, on top of garlic, onions and vegetables.

Emergency powers should address the situation where the market is completely in the hands of the private sector, while NFA has been reduced to a public warehouse, buying from local farmers and keeping the same as reserves for disaster relief. And what authority will cover rice must likewise be adopted for corn, fertilizers, and feeds, all of which impact on the price of pork and poultry. Of fresh incidence was how our hog industry was ravaged by ASF, and the dangers of avian flu. We must always be prepared, yet unfortunately, the government has always been reactive even when it comes to as basic a necessity as food supply.

Congress can institute the necessary safeguards, and regardless of our doubts on the incoming administration, we need to prioritize food security.

Secondly, local government units in tandem with the agriculture department must be allowed to come up with immediate food security programs such as planting of vegetables and legumes in suitable public land and with idle private land within their territorial jurisdictions.

Third, some 4.5 million families are under the wings of the 4Ps, receiving cash subsidies through the DWSD. How they spend the cash is left to the better judgment of mothers or fathers who could abuse the benefits. Think of this: why not give rice instead of cash?

Our per capita rice consumption is about 110 kilos per annum, or about 10 kilos per month. If we give each pantawid beneficiary a 25 kilogram sack of rice each month instead, that will cost the government less than giving them cash. If we use the government to government importation for this, without duties, at the projected cost of $420-500 per ton CIF, that is around P650 per month plus distribution logistics which the LGUs can shoulder. If we give subsidies to local farmers and buy domestic rice, that would amount to roughly P800 per family. Rice is better than cash. If the government, through the NFA buys at P20 per kilo of palay, the 25-kilogram sack should cost the government about a thousand pesos in rice terms.

Fourth, on-the-ground assessment must be seriously made on how the Rice Competitiveness Enhancement Fund is being allocated. Farm mechanization, through the Philmech, promotion of hybrid seeds, and other such programmed spending may have to be re-aligned for immediate farmer needs, such as fertilizer and fuel subsidies.

Fifth, our legislators must look for ways and means to make our agrarian reform beneficiaries more productive through consolidation into land areas with economies of scale, allow the corporate sector to participate especially in farm management and marketing. Should we finally open up the economy to greater foreign participation even in agriculture, joint venture models could be pursued to improve farm technology.

Sixth, we need to ensure adequate rice reserves. The current government-held inventory, around seven (7) days, is woefully inadequate and exposes us to vagaries which exacerbate our food insecurity. While this may be comparing kalamansi to lemons, China’s rice reserve is good for an entire year, and still growing, in response to the situation. They are stockpiling further on wheat, corn and soybeans, buying whatever they can from the world market, especially since bad weather has affected their domestic output. Neighboring Taiwan as a rule has a 90-day rice reserve inventory, adjusted upwards again due to externalities. Indonesia’s Bulog has been stockpiling its rice inventory. India has stopped exporting wheat to ensure domestic food supply.

What happens when India stops exporting rice too, as it did in 2008 to 2011? Will Thailand and Vietnam likewise increase their reserves and thus reduce the already thin “tradeable” rice in the world market? Before the RTL law, government was mandated by Congress to have at least 15-days stockpile of rice, and 30 days during the lean season, which is the third quarter of the year.

In his father’s time, Executive Secretary Rafael Salas was assigned as the “rice czar” to implement a crash program on rice self-sufficiency. The template is there, except the incoming administration may have to multiply the responsibility beyond rice production to embrace all food necessities in short supply.

No less than the Philippine Chamber of Agriculture (PCAFI) has stated that it may take as long as eight years for our agriculture sector to recover from the effects of the pandemic, swine disease, and other maladies.

But while there are short, medium and long-term policies and programs underwritten by the present leadership of the department in coordination with the NEDA, it is the immediate impact on our people’s day-to-day living that worries most.

The incoming leadership of both houses of Congress must take the matter of addressing the crisis with utmost urgency, even as it reviews the budgetary requirements of a medium and long-term agricultural productivity enhancement vision. Improved post-harvest facilities and cold-chain storage, adequate research, crop insurance, and many other priorities long neglected for decades must be prioritized with crash-course urgency. Alongside this, structural changes need to be made in the Department of Agriculture. Separating Fisheries as another department can be done without necessarily bloating the bureaucracy. The top-heavy bureaucracy, with a dozen undersecretaries and even more asecs should be trimmed to lean and mean proportions, just as DILG must exhort LGUs to professionalize their agriculture field workers. So much needs to be done and we do not have the luxury of time.

The crisis stares us in the face. It likely will be the biggest challenge the incoming administration must perforce face.
As a former president was famously quoted —“Hungry stomachs know no law”. And his successor as mayor of the country’s capital, after conceding to the incoming president the day after the elections, exhorted the people to cooperate, stating that “iisang bangka, iisang bansa tayo.”

The writer, Angelito T. Banayo, was National Food Authority Administrator during the Aquino administration, and was MECO Chairman and Resident Representative to Taiwan of the Duterte administration.

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