Food Security Key to Taming Inflation
Food security is crucial to keeping prices stable and ensuring the inflation rate stays within the target. While sufficiency through local production is an ideal and patriotic goal, we should keep our trade borders open to prepare for any emergency and ensure that our food stock is adequate to feed our population today and tomorrow.
Data analysis and foresight are important in monitoring and predicting our national food supply. If companies are tapping data analytics to avoid disruption in their production and inventories, it is all the more important to do the same at the national level.
The 4.2-percent inflation rate in January 2021, which exceeded the target of the Bangko Sentral ng Pilipinas, is an eye-opener for us. It was the fastest price increase in two years since the inflation rate hit 4.4 percent in January 2019.
Economic managers linked this to high food prices in January, which likely continued in February. Food inflation climbed to 6.6 percent, while non-food inflation was steady at 2.3 percent in January, based on the data of the Philippine Statistics Authority.
A variety of factors led to the high food inflation last month. The National Economic and Development Authority blamed the outbreak of African swine fever that decimated the hog population in several areas, higher logistics and transportation costs of sourcing pork from farther provinces, the closed fishing season across several regions, and the damage in the countryside from typhoons and floods in October and November last year.
The geographic location that puts us on the path of typhoons makes us very vulnerable to food supply disruptions. With 20 typhoons crossing our islands each year, our food supply is always at the mercy of weather conditions. This is why we should keep our minds open to importation to augment supply in case of emergency. Failing to do so could lead to a tight food supply and excessive food prices.
This does not mean we should not aim for the lofty goal of improving our agriculture. We should continue to support our farmers, while always preparing for fortuitous events beyond our control, like typhoons and outbreaks of animal diseases. Otherwise, we will have a serious challenge of feeding 110 million Filipinos.
Local agriculture production has been actually rising in recent years. The national rice output reached a record 19.4 million metric tons in 2020, exceeding the bumper harvests in the 1970s and 1980s. But we continued importing rice because our population has doubled over the past three decades and will further increase in the next three decades.
Meanwhile, evidence of an outbreak of animal disease or seasonal destructive typhoons should give our government officials enough time to calculate our food stock and determine if an immediate importation of a commodity is necessary. This is what the government did when it temporarily allowed the importation of more meat products to ease the limited local supply and curb the escalating prices.
The Department of Agriculture estimated that the country had a pork supply deficit of 400,000 metric tons as of January this year. It is a serious shortfall because pork accounts for 60 percent of meat consumption in the country.
If there is anything that helped us survive the pandemic last year, it was the low inflation rate that averaged 2.4 percent in 2020, or within the government’s target range of 2 percent to 4 percent.
Although imports will directly affect local farmers and producers such as hog and poultry raisers, we have no choice but to resort to this remedy until the local supply stabilizes.
Meanwhile, I find the scheduling of a Food Security Summit timely to address the challenges faced by the agriculture sector, including the issues of logistics. The summit seeks to develop a National Food Security Plan that will ensure unhampered movement of agricultural commodities, accessibility and price stability.
I hope the summit will also discuss the need to adopt data analytics so that we will have an accurate foresight on production, inventory and importation. Predictability and management of food supply and prices are the key to making sure our inflation rate is stable and our population has constant access to affordable products.