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Thursday, April 18, 2024

‘Government failure to make farms competitive behind inflation’

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INFLATION is high in the Philippines not because of importation but because of the country’s failure to increase competition in the market and encourage greater productivity in the agriculture sector, according to a former Socioeconomic Planning Secretary.

In an interview, economist and Brain Trust Inc. chairperson Cielito F. Habito told BusinessMirror that prices of vegetables, such as white onion in other places in the Asean, are significantly lower than those recorded in the Philippines.

Based on data obtained by this newspaper from the Philippine Statistics Authority (PSA), prices of white onions soared 137.19 percent followed by red creole onion, with prices increasing by 47.15 percent and native onion prices growing 39.43 percent.

“This is why ‘imported inflation’ is incorrect. When we import, it’s cheaper. I was in Jakarta, Indonesia, I made it a point to visit the supermarket because the wet market was too far. I went to a high-end supermarket; the price of onions there was equivalent to P100 a kilo. Here, it’s almost P400. How can you say inflation is imported?” Habito said.

“If you only open it up and force ourselves to compete with the productivity of our neighbors, if we did that 30 years ago when we acceded to the WTO (World Trade Organization), instead of exempting, opting out, and waiving all these requirements to open up, our onions would have been as cheap as P100,” he explained.

Habito said vegetables that saw a spike in price increases in November were among those that continue to suffer from stringent import regulations. There were even times when importation of these vegetables such as onion and garlic were banned in the Philippines.

He said this ban was in place during his time as Director General of the National Economic and Development Authority (Neda). Habito said he has been advocating to remove these import restrictions to bring down food prices.

“For the longest time, I’ve been saying that that has been our biggest disservice to our farmers because we remove the pressure for our agriculture, and I’m talking about our government, to really do what is needed to increase productivity. They (government) thought it was enough to help them (farmers) by closing our markets and protecting them (farmers). We should help farmers by nurturing, not by protecting, because in the long term, it will come back to haunt us (through high prices),” Habito said.

Efforts to bring down prices would also require diversification in terms of budget allocation in the Department of Agriculture (DA). Habito said for the longest time, the DA’s other name was the “Department of Rice” because of its rice-centric policies.

These policies eat away funds that could also help develop and increase productivity in other crops, including vegetables. Habito added that funds could also be used to streamline the country’s importation regulations.

Part of these efforts could include simplifying the process of securing signatures when importing certain products. Habito noted that importing a popular brand of chocolate with nuts would require a permit from the National Dairy Authority because it contains milk and the Bureau of Plant Industry because it contains nuts.

Habito said this is just one example of the stringent importation rules of the Philippines. These must change in order to open the domestic market; encourage competition; and increase productivity.

Based on the PSA’s data, apart from the three kinds of onion, the highest increases in vegetable prices were observed in mustard, which saw prices increase 34.68 percent year on year and cucumber, 28.8 percent.

Other vegetables that saw high prices in November were chilli leaves at 28.47 percent; tomatoes, 25.95 percent; string beans, 22.83 percent; okra, 22.37 percent; and carrots, 21.44 percent.

Based on the data, all vegetables posted double-digit increases in price except for nine vegetables that posted single-digit increases and contractions.

Vegetables that posted single-digit increases in price were squash which posted an increase in price of 8.22 percent, followed by gabi leaves, 8.01 percent; pechay, 7.53 percent; garlic, 4.66 percent; camote tops, 1.71 percent; and monggo sprout, 0.98 percent.

Items that posted year-on-year price declines in November included Baguio pechay, the prices of which contracted 10.21 percent; cabbage, 6.27 percent; and lettuce, 3.9 percent.

The PSA said the uptick in the food inflation was primarily influenced by the higher annual growth in the vegetables, tubers, plantains, cooking bananas and pulses index at 25.8 percent; and rice index at 3.1 percent.

Food inflation at the national level rose further to 10.3 percent in November 2022, from 9.8 percent in October 2022. In November 2021, food inflation stood at 2.3 percent.

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