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Tuesday, April 16, 2024

PBBM urged to issue EOon farm supply bottlenecks

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AS the inflation rate rose to 8 percent from 7.7 percent in October 2022, an economist-lawmaker on Tuesday urged President Ferdinand Marcos Jr. to issue an executive order ensuring that all supply bottlenecks for food and other farm producers are eased.

House Committee on Ways and Means Chairman Joey Sarte Salceda said there is an abundance of tools available to the President and his economic team to combat inflation.

“Immediate executive action may still take time to actually address fundamental drivers of inflation, but would be proper signaling for the public and private sectors. Inflation remains the toughest economic storm we must weather, and our ships must sail in the same direction,” he added.

Salceda said the primary driver of high inflation remains food prices, which have increased by 10 percent year-on-year.

“That is in part due to our rigid food trade regime in crops in short supply, such as sugar and onions. We already know what happens when we open up our food markets: Because of rice tariffication, rice inflation is the lowest among all major food items in the CPI,” he added.

He added that the role of logistics and transport costs in food prices can be addressed.

“I recommend that President Marcos issue an executive order ensuring that all supply bottlenecks for food and other farm producers are eased. Local Government Units may be directed to lift all hindrances and blockages across farm-to-market routes,” he said.

“The Department of Transportation may be directed to ensure the proper flow of traffic feeding into inter-island nautical routes. As much as 48 percent of prices of certain food staples are logistics costs. We can make an impact on food prices by reducing transport bottlenecks,” he added.

In August, Salceda said the inflation could peak to 8.5 percent this year and end up with an annual average of 6 percent, saying “we are on track to meet that number.”

“As I also emphasized then, the problem is food, feed, and fuel. That remains the case now. Even as the Bangko Sentral ng Pilipinas has already hiked rates to meet the US Fed’s actions, that is no substitute for supply solutions, especially since we are an economy in rapid recovery momentum,” he added.

According to Salceda, the government should reconsider ways to protect farmers in ways other than strict protectionism in the country’s agricultural trade regime.

“The 38-percent year-on-year inflation in sugar can no longer be justified by protecting the local sector, which is heavily unequal on its own,” he said.

Also, the lawmaker said stubborn protectionism of the sugar sector will stunt the growth of the food industry, and force the country to import more sugar-heavy finished goods.

“That’s worse for the balance of trade.  As such, some form of sugar trade liberalization must remain on the policy table,” he said.

Salceda noted corn prices are also skyrocketing, with consequences on meat costs.

“I urge the President and his economic team to consider increasing the Minimum Access Volume for corn immediately. By our calculations, foreign-sourced corn is already more expensive once landed, due to high out-quota tariff rates. We are thus forced to make do with insufficient domestic supply,” he added.

Salceda said the domestic vegetable sector, where prices have soared, continues to be highly susceptible to climate change and pestilence.

“The problem appears to me to be the ability of our farmers to address these threats. In good years, our farmers are able to produce big surpluses in vegetables. Technology, climate prediction, integrated pest control, and other capacity development resources must be made available. The role of more robust and active Agricultural Training Institute and DA Regional Field Offices, as well as better Municipal Agriculturist Offices will be crucial,” he said.

In the House, Salceda said he will continue to push for the classification of large-scale food price manipulation as economic sabotage.

“The leadership supports that move, and the committee on food and agriculture has already considered my suggestions in its hearings on economic sabotage,” he added.

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