Should we brace for a food price tsunami?

First published on Blogwatch.ph

Is Sen. Edgardo Angara being alarmist when he warned of a looming food crisis? Or is there a grain of truth in it?

Last week, Angara called on the Aquino government to act on a looming food price hikes in light of the rising prices of oil products allegedly spurred by the ongoing unrest in the North African and Middle East countries.

But the Palace downplayed the alarm, insisting that there is no food crisis at the moment. The government said though that President Benigno “Noynoy” Aquino III will meet top officials of the National Food Authority (NFA) and the agriculture department upon his return from the Indonesia and Singapore trip.

Amid concerns over a looming food crisis, the Department of Trade and Industry (DTI) assured the public of a stable supply of basic goods, preposterously warning the people against panic buying.

Someone should have told the President and the DTI that the prices of almost all basic goods – from bread to rice and vegetables – have unusually increased several times since the start of the year despite stable supply.

In the latest round of food price hikes, prices of loaf bread increased by P2 last March 7 while vegetable prices recently spiked alongside non-stop oil price hikes.  Even processed meat has joined the price hike bandwagon. Meanwhile, sugar (refined) remains steeply priced at around P65 per kilo.

Put this barrage of price hikes side by side with stagnant wages and dismal employment situation, and we’ll more or less see how panic buying, as what the DTI has forecast, can be close to impossible. How can the majority of Filipinos resort to panic-buying when they barely have anything to spend on? As it appears, the problem with the Aquino government’s diagnosis of the food situation is its penchant to focus on the supply side even without taking into account the wages of Filipinos.

After all, the problem boils down to food accessibility. When you have 45 percent of the population living on $2 a day, any price hike will certainly hurt. Sadly, the Aquino government plays blind to this as it uses to the new poverty yardstick, which ridiculously pegs the tolerable standard of living at just P46 per person per day.

Another reason why Aquino should not belittle the current food price hikes is the fact that global prices of food commodities have sharply risen since late last year. Based on the Food and Agriculture Organization’s (FAO) world food price index, current food prices are the highest in 20 years, even higher than the levels during the 2008 world food crisis which sparked food riots across the globe.

Such upsurge in global food prices lays down the context of the continuing unrest in North African and Middle East countries. Soaring commodity prices, aside from unemployment, were the primary drivers for the mass protests rocking the Arab world. In Egypt for instance, commodity prices increased by a whopping 17 percent. This is what mainstream reportage has often missed out, as it zoomed in on the violent stream of events in many parts of the region.

It should be noted however that global food prices are surging not primarily due to supply and demand problems, as what mainstream economists are insisting. The FAO itself said that there is no significant change in the global food supply and demand at the moment. The recent spikes in global food prices are actually chiefly caused by intensified speculation of the Wall Street and other banks. After speculating on various industries and sectors, financial oligarchs are now shifting to food commodity speculation in their drive to extract more profits.

So why should the Aquino government be concerned? Any drastic food price adjustment can potentially affect local prices since agricultural trade is liberalized. Should the price of rice in the world market for instance scale up, Filipinos could be hardly hit as our country is the world’s biggest rice importer, thanks to the neoliberal policies of past and present regimes. From heavy import dependence to widescale conversion of farmlands, the neoliberal project in agriculture has only exposed the country to greater peril.

The country’s vulnerability to food price shocks is even magnified by the policies of the Aquino government. Even if the National Land Use Act (a priority bill of the Aquino administration) is not yet legislated, massive conversion of farmlands into agro-industrial plantations and residential areas are already being undertaken. For instance, President Aquino boasted last year of the conversion of 11,000 hectares of land in Isabela into a bioethanol plantation after his trip to Japan. The target area is roughly equal to the size of Manila, Pasig City and Kalookan City combined, and will displace hundreds of farmers from their lands.

In Aurora, hundreds more farmers will be evicted as the Aurora Pacific Economic Zone and Freeport Authority (APECO) will be established on 13,000 hectares of land, including prime agricultural lands. Ironically, this project is actively being pushed by Sen. Angara, who has warned the government of a food crisis.

Alarmingly, President Aquino is also hinting at abolishing the NFA, supposedly the agency that will ensure that rice will be accessible to the poor. The plan came out as the government highlighted the P177 billion debt incurred by the agency, which is by the way the result of over-importing. As voiced out by militant groups, such move will not solve the problem – it will instead make poor Filipinos vulnerable to price shocks.

Obviously, there is an urgent need for the government to focus on agricultural self-sufficiency through genuine land reform rather than subscribe to the discredited mantra of agricultural trade liberalization. Unless the Aquino government pursues this policy change in agriculture, we will always be caught flat-footed in the face of a food price tsunami. #

2 thoughts on “Should we brace for a food price tsunami?

  1. “Obviously, there is an urgent need for the government to focus on agricultural self-sufficiency through genuine land reform rather than subscribe to the discredited mantra of agricultural trade liberalization.”

    —and how would you react with regards to the ongoing Doha Rounds of WTO especially the subsidies of Europe and US with regards to their agricultural sector? How do you think we will be able to minimize food prices if we close our trade from abroad? Do you think it would result to lower food prices..? And who the fool President would do that? It is close to impossible – even before Noynoy gain the recognition of lowering agricultural food prices he would be impeached if not shot dead because of escalating food prices in the short run. How would you make local farmers compete with Chinese goods or import prices? It is easy to say and blame government to be negligent but you should also suggest ways you think would help them in a more detailed way because if you cannot then how would you expect them to? Aren’t you more intelligent than them?

  2. As i can see it, we should aim more on energy independence. This is both less politically charged and the same time we have the competitive advantage with regards to this – Malampaya, Geothermal and Hydro energies other countries only wish they have like Singapore. Energy independence will pave they way for lower transportation costs and commodity prices –not just food prices. We CANNOT do much about international oil prices and we should admit the fact the we have lost the race in the agricultural sector because we slacked on the technological race and huge capital requirements and what we can do is to minimise costs through other pathways like transportation through highways, exchange rate stabilization, lower interest rates, strengthening the microfinancing sector in order to empower women, poor farmers and rural entrepreneurs. We shall abolish the corruption laden Development Banks that wrecks havoc to the rural finances through subsidized interest rates – which is being utilized by politicians (pre-election borrowings) and the rich that block its efficient use.

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